exhibit_10i5.htm


    Exhibit
10(i)5


      ALLETE 2008 Form 10-K

       

      
 

       

       

       

       

      ALLETE
AND AFFILIATED COMPANIES

       

      SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN II

      


       

      Effective
January 1, 2009

       

      


       

       

       

       

       

       

       

       

       

       

       


      
        
           


        

        
           


          
            

          

        

        
           


        

      


      TABLE OF
CONTENTS

      
        
          	 
      	 
      	
                  PAGE

                
	 
      	 
      	 
      	 
      
	
                  ARTICLE
      1

                	
                  Establishment
      and Purpose

                	
                  2

                
	 
      	 
      	 
      	 
      
	
                  ARTICLE
      2

                	
                  Section
      409A Plans and Organization

                	
                  2

                
	 
      	
                  2.1

                	
                  Section
      409A Plans

                	
                  2

                
	 
      	
                  2.2

                	
                  Organization

                	
                  3

                
	 
      	
                  2.3

                	
                  Section
      409A Compliance

                	
                  3

                
	 
      	 
      	 
      	 
      
	
                  ARTICLE
      3

                	
                  Administration

                	
                  3

                
	 
      	
                  3.1

                	
                  Administrator

                	
                  3

                
	 
      	
                  3.2

                	
                  Duties

                	
                  3

                
	 
      	
                  3.3

                	
                  Agents

                	
                  3

                
	 
      	
                  3.4

                	
                  Binding
      Effect of Decisions

                	
                  3

                
	 
      	
                  3.5

                	
                  Employer
      Information

                	
                  4

                
	 
      	 
      	 
      	 
      
	
                  ARTICLE
      4

                	
                  Participation

                	
                  4

                
	 
      	
                  4.1

                	
                  Eligibility
      and Commencement of Participation

                	
                  4

                
	 
      	
                  4.2

                	
                  Special
      Rule for Initial Participation

                	
                  4

                
	 
      	
                  4.3

                	
                  Termination
      of Participation

                	
                  4

                
	 
      	 
      	 
      	 
      
	
                  ARTICLE
      5

                	
                  Annual
      Make-Up Award

                	
                  4

                
	 
      	
                  5.1

                	
                  Eligibility

                	
                  4

                
	 
      	
                  5.2

                	
                  Amount
      of Annual Make-Up Award

                	
                  5

                
	 
      	
                  5.3

                	
                  Payment

                	
                  6

                
	 
      	 
      	 
      	 
      
	
                  ARTICLE
      6

                	
                  SERP
      II Account Balance Plan for Employees

                	
                  6

                
	 
      	
                  6.1

                	
                  Elective
      Deferrals

                	
                  6

                
	 
      	
                  6.2

                	
                  Non-Elective
      Deferrals

                	
                  7

                
	 
      	
                  6.3

                	
                  FICA
      and Other Taxes

                	
                  8

                
	 
      	
                  6.4

                	
                  Distributions

                	
                  8

                
	 
      	
                  6.5

                	
                  Additional
      Distribution Rules

                	
                  9

                
	 
      	
                  6.6

                	
                  Subsequent
      Changes in Time and Form of Distributions

                	
                  11

                
	 
      	 
      	 
      	 
      
	
                  ARTICLE
      7

                	
                  Accounts
      and Investments

                	
                  11

                
	 
      	
                  7.1

                	
                  Establishment
      of Accounts

                	
                  11

                
	 
      	
                  7.2

                	
                  Timing
      of Credits to Accounts

                	
                  11

                
	 
      	
                  7.3

                	
                  Vesting

                	
                  11

                
	 
      	
                  7.4

                	
                  Investments

                	
                  11

                
	 
      	
                  7.5

                	
                  Valuation
      Date

                	
                  12

                
	 
      	 
      	 
      	 
      
	
                  ARTICLE
      8

                	
                  SERP
      II Retirement Benefit

                	
                  12

                
	 
      	
                  8.1

                	
                  Eligibility

                	
                  12

                
	 
      	
                  8.2

                	
                  Vesting
      and Forfeiture

                	
                  12

                
	 
      	
                  8.3

                	
                  Retirement
      Benefit

                	
                  12

                
	 
      	
                  8.4

                	
                  Time
      and Form of Distributions

                	
                  13

                
	 
      	
                  8.5

                	
                  Additional
      Distribution Rules

                	
                  13

                
	 
      	
                  8.6

                	
                  Subsequent
      Changes in Time and Form of Payment

                	
                  15

                
	 
      	
                  8.7

                	
                  FICA
      and Other Taxes

                	
                  15

                
	 
      	 
      	 
      	 
      
	
                  ARTICLE
      9

                	
                  Payment
      Acceleration and Delay

                	
                  16

                
	 
      	
                  9.1

                	
                  Permitted
      Accelerations of Payment

                	
                  16

                
	 
      	
                  9.2

                	
                  Permissible
      Payment Delays

                	
                  17

                
	 
      	
                  9.3

                	
                  Suspension
      Not Allowed.

                	
                  17

                
	 
      	 
      	 
      	 
      
	
                  ARTICLE
      10

                	
                  Beneficiary
      Designation

                	
                  17

                
	 
      	
                  10.1

                	
                  Beneficiary

                	
                  17

                
	 
      	
                  10.2

                	
                  No
      Beneficiary Designation

                	
                  17

                
	 
      	 
      	 
      	 
      
	
                  ARTICLE
      11

                	
                  Claims
      Procedures

                	
                  18

                
	 
      	
                  11.1

                	
                  Presentation
      of Claim

                	
                  18

                
	 
      	
                  11.2

                	
                  Notification
      of Decision

                	
                  18

                
	 
      	
                  11.3

                	
                  Review
      of a Denied Claim

                	
                  19

                
	 
      	
                  11.4

                	
                  Decision
      on Review

                	
                  19

                
	 
      	
                  11.5

                	
                  Other
      Remedies

                	
                  20

                
	 
      	 
      	 
      	 
      
	
                  ARTICLE
      12

                	
                  Amendment
      or Termination

                	
                  20

                
	 
      	 
      	 
      	 
      
	
                  ARTICLE
      13

                	
                  Miscellaneous
      Provisions

                	
                  20

                
	 
      	
                  13.1

                	
                  Unsecured
      General Creditor

                	
                  20

                
	 
      	
                  13.2

                	
                  Employer’s
      Liability

                	
                  20

                
	 
      	
                  13.3

                	
                  Nonassignability

                	
                  21

                
	 
      	
                  13.4

                	
                  No
      Right to Employment

                	
                  21

                
	 
      	
                  13.5

                	
                  Incompetency

                	
                  21

                
	 
      	
                  13.6

                	
                  Tax
      Withholding

                	
                  21

                
	 
      	
                  13.7

                	
                  Furnishing
      Information

                	
                  21

                
	 
      	
                  13.8

                	
                  Notice

                	
                  21

                
	 
      	
                  13.9

                	
                  Gender
      and Number

                	
                  22

                
	 
      	
                  13.10

                	
                  Headings

                	
                  22

                
	 
      	
                  13.11

                	
                  Applicable
      Law and Construction

                	
                  22

                
	 
      	
                  13.12

                	
                  Invalid
      or Unenforceable Provisions

                	
                  22

                
	 
      	
                  13.13

                	
                  Successors

                	
                  22

                
	 
      	 
      	 
      	 
      
	
                  APPENDIX
      A

                	 
      	 
      	
                  23

                


        

      

      



      
        
           


        

        
           


          
            

          

        

        
           


        

      



      ALLETE
AND AFFILIATED COMPANIES

      


      SUPPLEMENTAL
EXECUTIVE RETIREMENT PLAN II

      


       

      Effective
January 1, 2009

       

      


       

      ARTICLE
1

       

      Establishment and
Purpose

       

      This
document includes the terms of the ALLETE and Affiliated Companies Supplemental
Executive Retirement Plan II.  The purpose of SERP II is to provide
eligible Employees (i) an opportunity to elect to defer compensation and (ii) a
supplemental Retirement Benefit, the primary purpose of which is to compensate
for annual compensation limits and maximum benefit limitations imposed by the
Code on Retirement Plans maintained by the Company.  SERP II is a
successor to the ALLETE and Affiliated Companies Supplemental Executive
Retirement Plan (“SERP I”).  On December 31, 2004, the Company froze
SERP I with respect to all deferrals and vested accrued Retirement Benefits (if
any).  On January 1, 2005, the Company established SERP II to govern
(a) amounts initially deferred after December 31, 2004 and investment
earnings thereon; (b) Retirement Benefit accruals after December 31, 2004;
and (c) accrued but unvested SERP I Retirement Benefits as of December 31,
2004.  From January 1, 2005 to the effective date hereof, the Company
operated and administered the Plan in all material respects in good faith
compliance with the applicable requirements of Section 409A, the final and
proposed Treasury Regulations, IRS Notice 2005-1, and all other IRS
guidance.  The Company now hereby amends and restates SERP II in its
entirety to comply with Section 409A, effective January 1,
2009.  The Company intends that SERP II constitute an unfunded
deferred compensation plan for a select group of management or highly
compensated employees within the meaning of ERISA sections 201(2), 301(a)(3) and
401(a)(1).  All provisions of SERP II shall be interpreted and
administered to the extent possible in a manner consistent with the stated
intentions.  Capitalized terms, unless otherwise defined herein, shall
have the meaning provided in Appendix A.

       

      


       

      ARTICLE
2

       

      Section 409A Plans and
Organization

       

      
        	
                2.1  

              	
                Section
      409A Plans.

              


      

       

      The
provisions of SERP II include terms and conditions applicable to the following
409A Plans:

       

      
        	
                2.1.1  

              	
                An
      elective account balance plan for Employees for purposes of Elective
      Deferrals;

              


      

       

      
        	
                2.1.2  

              	
                A
      non-elective account balance plan for Employees for purposes of
      Non-Elective Deferrals; and

              


      

       

      
        	
                2.1.3  

              	
                A
      non-account balance plan for
Employees.

              


      

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                2.2  

              	
                Organization. Except as otherwise provided in this section
      or in a specific section, all provisions of the Plan apply to all amounts
      deferred under any Article of the
  Plan.

              


      

       

      
        	
                2.2.1  

              	
                The
      provisions of Article 5 apply only for purposes of identifying employees
      eligible to receive an Annual Make-Up Award and the amount of the award,
      if any.

              


      

       

      
        	
                2.2.2  

              	
                The
      provisions of Articles 6 and 7 apply only to the extent that SERP II
      provides for Employees’ Elective Deferrals, or Non-Elective Deferrals or
      both, which, for purposes of Section 409A, represent the elective and
      non-elective account balance plans identified in subsections 2.1.1 and
      2.1.2, respectively.

              


      

       

      
        	
                2.2.3  

              	
                The
      provisions of Article 8 apply only to the extent that SERP II provides for
      Retirement Benefits, which represent the non-account balance plan
      identified in subsection 2.1.3.

              


      

       

      
        	
                2.3  

              	
                Section
      409A Compliance.
      To the extent that
      any provision of the Plan would cause a conflict with the requirements of
      Section 409A, or would cause the administration of the Plan to fail to
      satisfy Section 409A, such provision shall be deemed null and void to the
      extent permitted by applicable law. Nothing herein shall be construed as a
      guarantee of any particular tax treatment to a
      Participant.

              


      

       

      ARTICLE
3

       

      Administration

       

      
        	
                3.1  

              	
                Administrator.

              


      

       

      The
Administrator shall administer the Plan or may delegate any of its duties to
such other person or persons from time to time as it may designate. Members of
the Employee Benefit Plans Committee may participate in SERP II; however, any
individual serving on the Employee Benefit Plans Committee shall not vote or act
on any matter relating solely to himself or herself.

       

      
        	
                3.2  

              	
                Duties.

              


      

       

      The
Administrator has the authority to construe and interpret all provisions of the
Plan and, to the extent permitted by Section 409A, the Administrator is
authorized to remedy any errors, inconsistencies or omissions, to resolve any
ambiguities, to adopt rules and practices concerning the administration of the
Plan, and to make any determinations and calculations necessary or appropriate
hereunder.  The Company shall pay all expenses and liabilities
incurred in connection with Plan administration.

       

      
        	
                3.3  

              	
                Agents.

              


      

       

      The
Administrator may engage the services of accountants, attorneys, actuaries,
investment consultants, and such other professional personnel as are deemed
necessary or advisable to assist in fulfilling the Administrator’s
responsibilities.  The Administrator, the Company and the Board may
rely upon the advice, opinions or valuations of any such persons.

       

      
        	
                3.4  

              	
                Binding
      Effect of Decisions.

              


      

       

      The
decision or action of the Administrator with respect to any question arising out
of or in connection with the administration, interpretation and application of
the Plan and the rules and regulations promulgated hereunder shall be final,
conclusive and binding upon all persons having any interest in the
Plan.  Neither the Administrator, its delegates, nor the Board shall
be personally liable for any good faith action, determination or interpretation
with respect to the Plan, and each shall be fully protected by the Company in
respect of any such action, determination or interpretation.

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	
                3.5  

              	
                Employer
      Information.

              


      

       

      To enable
the Administrator to perform its duties, each Employer shall supply full and
timely information to the Administrator on all matters relating to the
compensation of its Participants, the date and circumstances of the
Participant’s death, Disability or Separation from Service, and other pertinent
information as the Administrator may reasonably require.

       

      


      ARTICLE
4

       

      Participation

       

      
        	
                4.1  

              	
                Eligibility and
      Commencement of
Participation.

              


      

       

      Eligible
Employees may participate in the Plan, except to the extent provided in Section
8.1 regarding eligibility for Retirement Benefits.  Each Plan Year,
the Administrator shall notify Eligible Employees of their eligibility to
participate in the Plan during the following Plan Year.  An Eligible
Employee shall become a Participant either upon the initial submission of an
election form on which the Eligible Employee has elected Elective Deferrals or
upon first receiving an allocation of Non-Elective Deferrals.

       

      
        	
                4.2  

              	
                Special
      Rule for Initial Participation.

              


      

       

      Within 30
days after the date an individual first becomes an Eligible Employee, the
individual may elect to commence participating with respect to compensation to
be paid for services performed after the election is filed.  This
election relating to initial participation in the Plan is available only to
Participants who do not participate in any Aggregated Plans.  If an
Employee whose participation in the Plan is terminated again becomes an Eligible
Employee, he or she may elect to defer pursuant to this Section only if the
Employee was ineligible to defer compensation in this Plan and all other Related
Company elective account balance plans, within the meaning of Section 409A, for
the 24 months preceding the date on which the Participant again became eligible
to participate in this Plan.

       

      
        	
                4.3  

              	
                Termination
      of Participation.

              


      

       

      If the
Administrator determines in good faith that a Participant is no longer an
Eligible Employee, the Participant shall cease active participation in the Plan
on the last day of the Plan Year during which the Participant ceased to be an
Eligible Employee, and the terms of this Plan shall continue to govern
Participant’s Account until the Participant’s Account is paid in
full.

       

      


      ARTICLE
5

       

      Annual
Make-Up Award

       

      
        	
                5.1  

              	
                Eligibility.

              


      

       

      An
Employee who:  (i) was a Participant as of September 30, 2006, (ii)
has continuously remained an Employee in ALLETE management salary grade SA-SM,
and (iii) has continuously participated in the ALLETE Executive Annual Incentive
Plan or been eligible to receive a Bonus shall be eligible to receive an Annual
Make-up Award.  Any other Employee shall be eligible to receive an
Annual Make-up Award if the Employee:  (i) initially becomes, or again
becomes, a Participant after September 30, 2006, (ii) is in ALLETE management
salary grade SF-SM, and (iii) participates in the ALLETE Executive Annual
Incentive Plan or is eligible to receive a Bonus.

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

       

      
        	
                5.2  

              	
                Amount of Annual
      Make-Up Award.

              


      

       

      The
Annual Make-Up Award shall be the sum of the Flexible Dollar Makeup, the RSOP
Allocation Makeup and the RSOP Match Allocation Makeup, each calculated as
described in this section.

       

      
        	
                5.2.1  

              	
                Flexible
      Dollar Makeup.  The
      Flexible Dollar Makeup for a Plan Year shall equal the product of A and B,
      with A equal to the sum of (i) 2% and (ii) the Participant’s life
      insurance percentage under the Minnesota Power and Affiliated Companies
      Flexible Compensation Plan for nonunion employees, and B equal to the sum
      of: (a) the total of the Participant’s Annual Incentive Award and other
      awards (to the extent included in calculations for the Retirement Plans)
      for such year, and (b) the Participant’s Salary (determined as of October
      1 of the prior Plan Year) in excess of the Code section 401(a)(17)
      limitation in effect for that Plan
Year.

              


      

       

      
        	
                5.2.2  

              	
                RSOP
      Allocation Makeup.  For a
      Participant who was a Participant as of September 30, 2006, for so long as
      he remains continuously eligible as a Participant, the RSOP Allocation
      Makeup for a Plan Year shall equal the product of C and D, with C equal to
      the sum of (i) 1.5% and (ii) the percentage (if any) being allocated for
      that year as an excess amount pursuant to the RSOP, and D equal to the sum
      of (a) the total of the Participant’s Annual Incentive Award and other
      award (to the extent included in calculations for the Retirement Plans)
      for such year, and (b) the amount of the Participant’s Salary in excess of
      the Code section 401(a)(17) limitation in effect for that Plan
      Year.

                 

                
                  For
      a Participant who becomes a Participant on or after October 1, 2006, the
      RSOP Allocation Makeup for a Plan Year shall equal the product of E and F,
      with E equal to the sum of: (i) 6% and (ii) the percentage, if any, being
      allocated as an excess amount pursuant to the RSOP; and F equal to the sum
      of (a) the total of the Participant’s Annual Incentive Award and other
      award (to the extent included in calculations for the Retirement Plans)
      for the year, and (b) the amount of the Participant’s Salary in excess of
      the Code section 401(a)(17) limitation in effect for that Plan
      Year.

                   

                  
                    If
      a Participant ceases to be an Eligible Employee during a Plan Year, the
      RSOP Allocation Makeup for that Plan Year will be calculated
      by:  (i) taking into account the full Annual Incentive Award and
      other award (to the extent included in calculations for the Retirement
      Plans) and, (ii) with respect to any Participant whose base salary exceeds
      the Code section 401(a)(17) limitation in effect for that Plan Year,
      prorating the Participant’s Salary to reflect the period during the Plan
      Year for which the Participant was an Eligible
      Employee.

                  

                

              


      

       

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

      
         

      

      
        
        

      

       

      
        	
                5.2.3  

              	
                RSOP
      Match Allocation Makeup.  The RSOP
      Match Allocation Makeup for a Plan Year shall equal the excess of G over
      H, with G equal to the lesser of: (i) the sum of the Participant’s
      Elective Deferrals out of Salary and RSOP deferrals (including both
      pre-tax and Roth after-tax deferrals), and (ii) with respect to any
      Eligible Employee who was a Participant as of September 30, 2006, for so
      long as he remains continuously eligible as a Participant, 4% of the
      Participant’s Salary plus Bonus; or with respect to any Eligible Employee
      who becomes a Participant on or after October 1, 2006, 5% of the
      Participant’s Salary plus Bonus; and H equal to RSOP matching
      contributions for the Plan Year on behalf of the
    Participant.

              


      

       

      
        	
                5.3  

              	
                Payment.

              


      

       

      Except to
the extent deferred in accordance with this Plan, the Annual Make-Up Award for
any year shall be paid between January 1 and March 15 of the year following the
year to which the award relates.

       

      


      ARTICLE
6

       

      SERP II Account Balance Plan
for Employees

       

      
        	
                6.1  

              	
                Elective
      Deferrals.

              


      

       

      
        	
                6.1.1  

              	
                Deferral
      Elections.  For each
      Plan Year, a Participant may elect to defer some or all of Salary, Bonus,
      and, if eligible, an Annual Make-up Award, Severance Pay and Other
      Awards.  Elections are effective on a calendar year basis and
      become irrevocable no later than the date specified by the Administrator,
      but in any event before the beginning of the Plan Year to which the
      elections relate.  A Participant’s elections will become
      effective only if the forms required by the Administrator have been
      properly completed and signed by the Participant, timely delivered to the
      Administrator, and accepted by the Administrator.  A Participant
      who fails to file elections before the required date will be treated as
      having elected not to defer any amounts for the following Plan
      Year.  For any Plan Year the Administrator may, in its sole
      discretion, decide not to allow one or more Participants to defer certain
      types of compensation.

              


      

       

      
        	
                6.1.2  

              	
                Special
      Rule for Performance-Based Compensation.  The
      Administrator, in its complete and sole discretion, may allow a
      Participant to revise a deferral election with respect to a Bonus if the
      Administrator determines that the Bonus is performance-based compensation
      within the meaning of Section 409A and the election becomes irrevocable no
      later than the earlier of: (a) six months preceding the end of the
      performance period to which the Bonus relates; or (b) the date as of which
      the Bonus has become readily ascertainable, within the meaning of Section
      409A.

              


      

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      
        	
                6.1.3  

              	
                Special
      Rule for Severance Pay.  A
      Participant may elect to defer all or a portion of Severance Pay by filing
      with the Administrator an irrevocable deferral election no later than the
      date the Participant obtains a legally binding right to the Severance
      Pay.

              


      

       

      
        	
                6.1.4  

              	
                Cancellation
      of Deferral Election due to Disability.  If a
      Participant becomes disabled, the Administrator may, in its sole
      discretion, cancel the Participant’s deferral election, with respect to
      amounts to be deferred on or after the cancellation, by the end of the
      year during which the Participant becomes disabled, or, if later, the
      15th
      day of the third month following the date on which the Participant becomes
      disabled.  For purposes of this Section, a Participant shall be
      disabled if the Participant is suffering from any medically determinable
      physical or mental impairment resulting in the Participant’s inability to
      perform the duties of his position or any substantially similar position,
      if such impairment can be expected to result in death or can be expected
      to last for a continuous period of six months.

                 

                The Participant may elect to defer amounts for
      the Plan Year Following his return to employment and for every Plan year
      thereafter while an Eligible Employee, provided the Participant's deferral
      election otherwise complies with all of the requirements of this
      Section.

              


      

       

      
        	
                6.1.5  

              	
                Cancellation
      of Deferral Election due to Unforeseeable Emergency.  If a
      Participant experiences an Unforeseeable Emergency during a Plan Year, the
      Participant may submit to the Administrator a written request to cancel
      Elective Deferrals for the Plan Year to satisfy the Unforeseeable
      Emergency.  If the Administrator either approves the
      Participant’s request to cancel Elective Deferrals for the Plan Year, or
      approves a request for a distribution of in accordance with Section 6.4.6,
      then effective as of the date the request is approved the Administrator
      shall cancel the Participant’s deferral elections for the remainder of the
      Plan Year.  A Participant whose Elective Deferrals are canceled
      during a Plan Year in accordance with this section may elect Elective
      Deferrals for the following Plan Year; provided, however, if required to
      comply with Treasury Regulations section 1.401(k)-1(d)(3), the Participant
      may not elect to defer any amounts attributable to periods less than six
      months from the date on which the Participant receives a distribution on
      account of an Unforeseeable
Emergency.

              


      

       

      
        	
                6.1.6  

              	
                Withholding
      of Deferrals.  The
      Administrator will withhold Elective Deferrals not later than the end of
      the calendar year during which the Company would otherwise have paid the
      amounts to the Participant but for the Participant’s deferral
      election.  The Administrator will not withhold Elective
      Deferrals from a Participant’s Salary during any period in which the
      Participant is on an unpaid leave of
absence.

              


      

       

       

      
        
          
          

        

        
          7

          
            

          

        

        
          
          

        

      

       

       

      
        	
                6.2  

              	
                Non-Elective
      Deferrals.

              


      

       

      
        	
                6.2.1  

              	
                Annual
      Make-Up Award.  If the
      Administrator determines that a Participant’s Salary exceeds the Code
      section 401(a)(17) limit, the Administrator shall automatically credit the
      Participant’s Annual Make-up Award to the Participant’s
      Account.

              


      

       

      
        	
                6.2.2  

              	
                162(m)
      Deferrals.  The
      Administrator shall automatically credit a Participant’s 162(m) Deferrals
      to the Participant’s Account.

              


      

       

      
        	
                6.3  

              	
                FICA
      and Other Taxes.

              


      

       

      For each
Plan Year during which a Participant has Deferrals, the Participant’s
Employer(s) shall, in a manner determined by the Employer(s), withhold the
Participant’s share of FICA and other required employment or state, local, and
foreign taxes on Deferrals from that portion of the Participant’s Salary, Bonus,
Annual Make-up Award, Severance Pay, Other Award and in the event of a 162(m)
Deferral, the Participant’s compensation generally, that is not deferred. To the
extent permitted by Section 409A, the Administrator may reduce a Participant’s
Deferrals to the extent necessary to pay FICA and other employment, state, local
and foreign taxes.

       

      
        	
                6.4  

              	
                Distributions.

              


      

       

      The Plan
provides for distributions in a Specified Year, or upon a Separation from
Service, death, Disability, or Unforeseeable Emergency.  At the time
of a Participant’s initial deferral election, a Participant may elect to receive
a distribution:  (i) with respect to Elective Deferrals, in a
Specified Year; and (ii) with respect to all Deferrals, upon the earlier of
Separation from Service, death or Disability.  In each subsequent Plan
year, a Participant may elect to have all or any portion of that year’s Elective
Deferrals distributed either in a Specified Year, subject to the restrictions in
Section 6.4.1, or in accordance with the Participant’s prior elections for
distributions other than in a Specified Year.  Except as otherwise
provided in the Plan, a Participant’s distribution elections are irrevocable and
will govern the Deferrals to which the election relates until the amounts
covered by the election are paid in full or until subsequently changed in
accordance with Section 6.6.  Notwithstanding any elections by a
Participant, all distributions are subject to the provisions of Section
6.5.

       

      
        	
                6.4.1  

              	
                Specified
      Year.  A
      Participant may elect to receive a distribution of Elective Deferrals in a
      Specified Year, which may be no earlier than the third Plan Year beginning
      after the date on which the Participant initially elects to receive a
      distribution in a Specified Year.  Except as otherwise provided
      in this subsection or in Section 6.6, once a Participant has elected to
      receive a distribution in a Specified Year, the Participant may not elect
      to receive a distribution in a different Specified
      Year.  Beginning during the year preceding any Specified Year
      previously elected by the Participant, the Participant may elect to
      receive a distribution of Elective Deferrals in a later Specified Year,
      subject, however, to the restrictions of this subsection.  All
      amounts distributed in a Specified Year will be paid in a single lump
      sum.

              


      

       

      
        	
                6.4.2  

              	
                Separation
      from Service.  A
      Participant may elect to receive a distribution commencing either upon a
      Separation from Service, or during any of the first five years following
      the year of the Separation from Service.  A Participant may
      elect to receive a distribution in the form of a lump sum, monthly
      installments over a period of five (5), ten (10), or fifteen (15) years,
      or a combination of both a lump sum and
  installments.

              


      

       

       

      
        
          
          

        

        
          8

          
            

          

        

        
          
          

        

      

       

       

      
        	
                6.4.3  

              	
                Disability.  A
      Participant may elect to receive a distribution on account of
      Disability.  Distributions upon Disability will commence on the
      earlier of the Participant’s 65th
      birthday or the second anniversary of the Disability, unless changed in
      accordance with Section 6.6.  A Participant may elect to receive
      the distribution in the form of a lump sum, monthly installments over a
      period of five (5), ten (10), or fifteen (15) years, or a combination of
      both a lump sum and installments.  Notwithstanding any other
      election by a Participant relating to a distribution upon Disability, if a
      Participant dies after commencement of a Disability but before the year
      during which distributions would commence, the Participant’s Account shall
      be distributed in accordance with the Participant’s election regarding
      distributions upon death.

              


      

       

      
        	
                6.4.4  

              	
                Death.  A
      Participant may elect to receive a distribution commencing upon death or
      during any of the first five years following the year of death. A
      Participant may elect to receive a distribution in the form of a lump sum,
      monthly installments over a period of five (5), ten (10), or fifteen (15)
      years, or a combination of both a lump sum and
    installments.

              


      

       

      
        	
                6.4.5  

              	
                Unforeseeable
      Emergency.  A
      Participant may submit a written request for a distribution on account of
      an Unforeseeable Emergency.  Upon approval by the Administrator
      of a Participant’s request, the Participant’s Account, or that portion of
      a Participant’s Account deemed necessary by the Administrator to satisfy
      the Unforeseeable Emergency (determined in a manner consistent with
      Section 409A) plus amounts necessary to pay taxes reasonably anticipated
      because of the distribution, will be distributed in a single lump
      sum.

              


      

       

      
        	
                6.5  

              	
                Additional
      Distribution Rules.

              


      

       

      
        	
                6.5.1  

              	
                Default
      Time and Form of Distribution.  If a
      Participant fails timely to elect a time and form of distribution, the
      Participant’s Account will be distributed upon any Separation from
      Service, including death, in the form of a single lump sum
      payment.

              


      

       

       

      
        	
                6.5.2  

              	
                Commencement
      of Distributions.  Except as
      otherwise provided in this section, if a Participant has elected to
      receive a distribution commencing upon a Distribution Event, or if a
      distribution is required upon a Distribution Event, distribution will
      commence between the date of the Distribution Event and the end of the
      year in which the Distribution Event occurs.  If a Participant
      has elected, or is required, to receive a distribution commencing upon a
      Distribution Event, and the Distribution Event occurs on or after October
      1 of a Plan Year, the distribution may, to the extent permitted by Section
      409A, commence after the Distribution Event and on or before the 15th
      day of the third calendar month following the Distribution Event, even if
      after the end of the year during which the Distribution Event occurs;
      provided, however, the Participant will not be permitted, directly or
      indirectly, to designate the taxable year of the
      distribution.  If a Participant has elected to receive a
      distribution commencing during any of the first five years following the
      year of a Distribution Event, the distribution will commence during the
      year elected by the Participant.  If a Participant has elected
      to receive a distribution in a Specified Year, the distribution will occur
      during the Specified Year.  Any distribution that complies with
      this section shall be deemed for all purposes to comply with the Plan
      requirements regarding the time and form of
  distributions.

              


      

       

       

      
        
          
          

        

        
          9

          
            

          

        

        
          
          

        

      

       

       

      
        	
                6.5.3  

              	
                Installments.  If a
      Participant elects to receive distributions in monthly installments, the
      Participant’s Account will be paid in substantially equal monthly
      installments in consecutive years over the period elected by the
      Participant.  Each monthly installment will be paid during the
      Plan Year in which it is due, commencing as described in Section
      6.5.2.  During the Plan Year in which distributions commence,
      the Participant will receive one installment for each calendar month
      beginning after the date of the Distribution Event, or, if the Participant
      has elected to receive a distribution commencing during any of the first
      five years following the year of a Distribution Event, one monthly
      installment for each calendar month beginning after the anniversary date
      of the Distribution Event.  During the distribution period, the
      Participant’s Account will be credited with interest compounded monthly at
      a rate of 7.5% per year.  Any installment distribution that
      complies with this section shall be deemed for all purposes to comply with
      the Plan requirements regarding the time and form of
      distributions.

              


      

       

      
        	
                6.5.4  

              	
                Death
      After Commencement of Distributions.  Upon the
      death of a Participant after distributions of the Participant’s Account
      have commenced, the balance of the Participant’s Account will be
      distributed to the Participant’s Beneficiary at the same times and in the
      same forms that the Account would have been distributed to the Participant
      if the Participant had survived.

              


      

       

      
        	
                6.5.5  

              	
                Distributions
      to Specified Employees.  Notwithstanding
      anything to the contrary in this Plan, if a Participant becomes entitled
      to a distribution on account of a Separation from Service and is a
      Specified Employee on the date of the Separation from Service,
      distributions shall not commence until the earlier of:  (i) the
      expiration of the six-month period beginning on the date of Participant’s
      Separation from Service, or (ii) the date of Participant’s
      death.  Payments to which a Specified Employee would otherwise
      be entitled during this six-month period shall be accumulated and paid,
      together with earnings that have accrued during this six-month delay,
      during the seventh month following the date of the Participant’s
      Separation from Service, or, if earlier, the date of the Participant’s
      death.

              


      

       

      
        	
                6.5.6  

              	
                Effect
      of Change in Control.  Notwithstanding
      a Participant’s elections regarding distributions upon a Separation from
      Service and a distribution in a Specified Year, if (a) the Participant has
      a Separation from Service within two years following a Change in Control
      or (b) a Change in Control occurs within six months after the Participant
      has a Separation from Service, the Participant shall receive a
      distribution of the Participant’s entire Account in a single lump sum upon
      the later of the Separation from Service or the Change in Control, whether
      or not distributions have already
commenced.

              


      

       

       

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

       

      
        	
                6.6  

              	
                Subsequent
      Changes in Time and Form of Distributions.

              


      

       

      A
Participant may, in accordance with rules, procedures and forms specified from
time to time by the Administrator, elect to change the time of commencement or
change the form in which the Participant’s Account is distributed or both,
provided that:  (i) the Participant elects at least twelve (12) months
prior to the date on which payments are otherwise scheduled to commence; (ii)
the new election does not take effect for at least twelve (12) months; and (iii)
with respect to changes applicable to distributions in a Specified Year or upon
Separation from Service, the distributions must be deferred for at least five
(5) years from the date the distributions would otherwise have been paid, or in
the case of installment payments, five (5) years from the date the installments
were scheduled to commence.  For purposes of this section,
distributions on account of a Specified Year are considered scheduled to
commence on January 1 of the Specified Year and all other distributions are
considered to commence on the date of the Distribution Event, or if the
Participant has elected a later year for commencement, January 1 of the year
elected by the Participant.  Any election in accordance with this
section to change the time or form or both shall be irrevocable on the date it
is filed with the Administrator unless subsequently changed pursuant to this
Section.

       

      ARTICLE
7

       

      Accounts and
Investments

       

      
        	
                7.1  

              	
                Establishment of
      Accounts.

              


      

       

      The
Company will establish notional accounts for each Participant as the
Administrator deems necessary or advisable from time to time.  The
Company will establish a Participant’s Account at the earlier of the time a
Participant first elects to defer any amounts into the Account or the time the
Company first credits non-elective amounts to the Account.  Each
Account shall be credited as appropriate with deferrals and earnings with
respect to deferrals and debited for distributions from the
Account.

       

      
        	
                7.2  

              	
                Timing of Credits to
      Accounts.

              


      

       

      The
Administrator shall credit a Participant’s Elective Deferrals to the
Participant’s Account(s) not later than the end of the calendar year during
which the Company would otherwise have paid the amounts to the Participant but
for the Participant’s deferral election.  The Administrator shall
credit Non-Elective Deferrals at such times and in such amounts as the
Administrator determines.

       

      
        	
                7.3  

              	
                Vesting.

              


      

       

      All
Participant Accounts are fully vested at all times.

       

      
        	
                7.4  

              	
                Investments.

              


      

       

      The
Administrator may select investment funds to use for measuring notional gains
and losses credited or debited to Participant’s Accounts.  The
Administrator will establish, from time to time, rules and procedures for
allowing each Participant who has not had a Distribution Event to designate
which one or more of the selected investment funds will be used to determine the
notional gains and losses credited or debited to the Participant’s Accounts
prior to commencement of distributions.

       

       

      
        
          
          

        

        
          11

          
            

          

        

        
          
          

        

      

       

       

      
        	
                7.5  

              	
                Valuation
      Date.

              


      

       

      As of
each Valuation Date, each Account will be adjusted to reflect the effect of
notional investment gains or losses, additions, distributions, transfers and all
other transactions with respect to that Account since the previous Valuation
Date.

       

      


      ARTICLE
8

       

      SERP II Retirement
Benefit

       

      
        	
                8.1  

              	
                Eligibility.

              


      

       

      The
provisions of Article 8 apply only to Eligible Employees who were eligible for
Retirement Benefits on September 30, 2006.  Effective October 1, 2006,
the Company froze eligibility for Retirement Benefits and individuals who were
not Participants on that date are not eligible for Retirement
Benefits.  Any Participant who was accruing Retirement Benefits on
September 30, 2006 or who was eligible to accrue Retirement Benefits on that
date because the Participant received an Annual Incentive Award or Other Award
and was serving in management salary grades SA – SM, will remain eligible for
Retirement Benefits in accordance with this section; provided the Participant
remains an Employee of a Related Company.

       

      
        	
                8.2  

              	
                Vesting
      and Forfeiture.

              


      

       

      Participants
will fully vest in the Retirement Benefit upon:  (i) Retirement; (ii)
becoming Disabled after attaining both age 50 and 10 years of Vesting Service;
or (iii) upon attaining age 50 and 10 years of Vesting Service after becoming
Disabled.  Participants will forfeit unvested Retirement Benefits and
prior years of Vesting Service upon Separation from Service or death prior to
full vesting.

       

      
        	
                8.3  

              	
                Retirement
      Benefit.

              


      

       

      The
amount of the Retirement Benefit shall equal a single life annuity determined in
the manner provided in the Retirement Plans, including any applicable early
retirement factors and cost of living adjustments, but using a Participant’s
Final Average Earnings and years of Credited Service as described in this
section.

       

      
        	
                8.3.1  

              	
                Final
      Average Earnings.  Final
      Average Earnings include the sum of:  (i) the Participant’s four
      highest consecutive Annual Incentive Awards and Other Awards within the
      “applicable 15-year period,” and (ii) the Participant’s highest Basic
      Compensation during any consecutive 48-month period within the “applicable
      15-year period” to the extent that Basic Compensation exceeds the
      limitation on compensation imposed by Code section
      401(a)(17).  Compensation in excess of the limitation on
      compensation imposed by Code section 401(a)(17) shall be determined by
      using the limit in effect on the first day of the 48-month period
      described in (i) and the next three anniversaries of that
      date.  With respect to a Participant who becomes entitled to a
      distribution upon Retirement, the “applicable 15-year period” shall be the
      fifteen (15) years preceding the date of Retirement.  With
      respect to a Participant who becomes entitled to a distribution because of
      Disability, the “applicable 15-year period” shall be the 15-year period
      that: (i) ends no earlier than the Participant’s Disability and no later
      than the Participant’s sixty-fifth (65th)
      birthday; and (ii) would result in the greatest Retirement
      Benefit.

              


      

       

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

       

      
        	
                8.3.2  

              	
                Years
      of Credited Service.  A
      Participant will receive credit for years of Credited Service after
      September 30, 2006, only to the extent that: (i) the Participant has been
      continuously employed since that date by a Related Company in management
      salary grades SA – SM; and (ii) distributions of Retirement Benefits have
      not commenced.

              


      

       

      
        	
                8.4  

              	
                Time
      and Form of Distributions.

              


      

       

      Subject
to the provisions of Section 8.5, a Participant will become entitled to a
distribution of vested Retirement Benefits, in the form determined by this
section, upon the earlier of:  (i) Retirement; (ii) Disability; or
(iii) solely with respect to a Participant who vests after becoming Disabled,
the earlier of death or attainment of age 65.

       

      
        	
                8.4.1  

              	
                Election
      of Alternative Forms of Distribution.  A
      Participant may elect to receive the Retirement Benefit in one of the
      following forms, each of which shall be actuarially
      equivalent:  (i) monthly installments over a 15-year period,
      (ii) a monthly life annuity, (iii) a lump sum payment; or (iv) a
      combination of a lump sum and either (i) or (ii).  Actuarially
      equivalence will be calculated using actuarial factors adopted by the
      Administrator from time to time.  Effective as of December 31,
      2008, Participant elections regarding the form of distribution are
      irrevocable and will remain in effect until the Retirement Benefits are
      paid in full unless a Participant elects to change the time and form of
      payment in accordance with Section
8.6.

              


      

       

      
        	
                8.4.2  

              	
                Default
      Form of Payment.  If a
      Participant fails to elect a form of payment with respect to the
      Participant’s Retirement Benefit before December 31, 2008, the Retirement
      Benefit will be paid in the form of monthly installments over a 15-year
      period unless the Participant elects to change the time and form of
      payment in accordance with Section
8.6.

              


      

       

      
        	
                8.5  

              	
                Additional
      Distribution Rules.

              


      

       

      
        	
                8.5.1  

              	
                Commencement
      of Distributions.  Distributions
      on account of a Distribution Event other than Disability will commence
      between the date of the Distribution Event and the end of the year in
      which the Distribution Event occurs.  If a Distribution Event
      other than Disability occurs on or after October 1 of a Plan Year, the
      distribution may, to the extent permitted by Section 409A, commence after
      the Distribution Event and on or before the 15th
      day of the third calendar month following the Distribution Event, even if
      after the end of the year during which the Distribution Event occurs;
      provided, however, the Participant will not be permitted, directly or
      indirectly, to designate the taxable year of the
      distribution.  Any distribution that complies with this section
      shall be deemed for all purposes to comply with the Plan requirements
      regarding the time and form of
distributions.

              


      

       

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

       

      
        	
                8.5.2  

              	
                Distributions
      to Specified Employees.  Notwithstanding
      anything to the contrary in this Plan, if a Participant becomes entitled
      to a distribution on account of a Retirement and is a Specified Employee
      on the date of the Retirement, distributions shall not commence until the
      earlier of:  (i) the expiration of the six-month period
      beginning on the date of Participant’s Retirement, or (ii) the date of the
      Participant’s death.  Payments to which a Specified Employee
      would otherwise be entitled during this six-month period shall be
      accumulated and paid, together with earnings (calculated using the
      interest rate adopted by the Administrator for determining actuarial
      equivalence) that have accrued during this six-month delay, during the
      seventh month following the date of the Participant’s Retirement, or, if
      earlier, the date of the Participant’s
death.

              


      

       

      
        	
                8.5.3  

              	
                Disability.  Unless
      subsequently changed in accordance with the Plan, distributions on account
      of Disability will commence on the earlier of the Participant’s 65th
      birthday or the second anniversary of the
  Disability.

              


      

       

      
        	
                8.5.4  

              	
                Annuity
      Payments and Installments.  If a
      Participant elects to receive all or a portion of the distributions in
      monthly installments, that portion to be paid in installments will be paid
      in substantially equal monthly installments in consecutive months over a
      15-year period.  If a Participant elects to receive all or a
      portion of the distributions in the form of a life annuity, that portion
      to be paid as a life annuity will be paid in monthly installments in
      consecutive months for the remainder of the Participant’s life, in the
      case of a unmarried Participant, and in the case of a married Participant
      over the lives of the Participant and the Participant’s Eligible Surviving
      Spouse.  Each monthly installment or life annuity payment will
      be paid during the Plan Year in which it is due, commencing as described
      in Section 8.5.1.  During the Plan Year in which distributions
      commence, the Participant will receive one installment or life annuity
      payment for each calendar month beginning after the date of the
      Distribution Event.  If the Participant has elected to be paid
      in installments, during the distribution period the portion of the
      Participant’s Account to be paid in installments will be credited with
      interest compounded monthly at the interest rate used by the Administrator
      to determine actuarial equivalence.  Any distribution that
      complies with this section shall be deemed for all purposes to comply with
      the Plan requirements regarding the time and form of
      distributions.

              


      

       

      
        	
                8.5.5  

              	
                Death
      After Commencement of Benefits.  Upon the
      death of a Participant after distributions of the Participant’s Retirement
      Benefit have commenced, the remainder of the Participant’s Retirement
      Benefit will continue to be distributed to the Participant’s Beneficiary
      at the same time and in the same form as the benefit would have been
      distributed to the Participant had the Participant survived, except to the
      extent that the Participant had elected a life annuity: (i) if the
      Participant has an Eligible Surviving Spouse on the date of death, the
      surviving spouse will receive 60% of the Participant’s life annuity
      benefit for the remainder of the spouse’s life and (ii) if the Participant
      does not have an Eligible Surviving Spouse, the annuity will cease as of
      the first day of the month following the month during which the
      Participant died.

              


      

       

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

       

      
        	
                8.5.6  

              	
                Effect
      of Change of Control.  With
      respect to any Participant whose Retirement Benefit distributions have
      commenced, or would commence, upon a Separation from Service, if (a) the
      Participant’s Separation from Service occurs within two years following a
      Change in Control or (b) a Change in Control occurs within six months
      after the Participant’s Separation from Service, then notwithstanding the
      Participant’s elections regarding distributions upon a Separation from
      Service, the Participant shall receive a distribution of the Participant’s
      entire remaining vested Retirement Benefit in a single lump sum upon the
      later of the Separation from Service or the Change in Control, whether or
      not distributions have already commenced.  Any Retirement
      Benefit that does not become payable in a lump sum in accordance with this
      section will vest, if at all, in accordance with Section 8.2, will become
      payable in accordance with Section 8.4, and will otherwise remain subject
      to the provisions of Article 8.

              


      

       

      
        	
                8.6  

              	
                Subsequent
      Changes in Time and Form of Payment.

              


      

       

      A
Participant may, in accordance with rules, procedures and forms specified from
time to time by the Administrator, elect to change the form in which the
Participant’s Retirement Benefit is distributed, provided that:  (i)
the Participant elects at least twelve (12) months prior to the date on which
payments are otherwise scheduled to commence; (ii) the new election does not
take effect for at least twelve (12) months; and (iii) with respect to changes
applicable to distributions upon Retirement or, solely with respect to a
Participant who vests after becoming Disabled, distributions upon attaining age
65, distributions must be deferred for at least five years from the date the
distributions would otherwise have been paid, or in the case of installment
payments or life annuity payments, five years from the date the installments or
life annuity payments were scheduled to commence.  Any such election
shall be irrevocable on the date it is filed with the Administrator unless
subsequently changed pursuant to this section.  For purposes of this
section, distributions are considered to commence on the date of the
Distribution Event.

       

      
        	
                8.7  

              	
                FICA
      and Other Taxes.

              


      

       

      At the
time of a Participant’s Distribution Event, the Participant’s Employer(s) shall,
in a manner determined by the Employer(s), calculate the FICA and other required
employment or state, local, and foreign taxes due on the lump sum present value,
calculated using the factors adopted by the Administrator for determining
actuarial equivalence, of the Participant’s Retirement Benefit and shall reduce
the Participant’s Retirement Benefit by the amount of any such taxes payable by
the Participant.  The amount of the Participant’s Retirement Benefit
remaining after reduction for any taxes shall be payable in accordance with
Sections 8.5 and 8.6.

       

       

      
        
          
          

        

        
          15

          
            

          

        

        
          
          

        

      

       

      ARTICLE
9

       

      Payment Acceleration and
Delay

       

      
        	
                9.1  

              	
                Permitted
      Accelerations of Payment.

              


      

       

      Except as
otherwise provided herein or permitted by Section 409A, the Plan prohibits the
acceleration of the time or schedule of any payment due under the
Plan.

       

      
        	
                9.1.1  

              	
                Distribution
      in the Event of Taxation.  If, for any
      reason, all or any portion of any benefit provided by the Plan becomes
      taxable to a Participant because of a violation of Section 409A prior to
      receipt, the Participant may file a written request with the Administrator
      for a distribution of that portion of the Plan benefit that has become
      taxable.  Upon the grant of such a request, which grant shall
      not be unreasonably withheld, the Participant shall receive a distribution
      equal to the taxable portion of the Plan benefit.  If the
      request is granted, the tax liability distribution shall be paid between
      the date on which the Participant’s request is approved and the end of the
      Plan Year during which the approval occurred, or if later, the 15th
      day of the third calendar month following the date on which the
      Participant’s request is approved.

              


      

       

      
        	
                9.1.2  

              	
                Compliance
      with Ethics Laws or Conflicts of Interests Laws.  The
      Administrator is authorized, in its sole discretion, to accelerate the
      time or schedule of a payment to the extent necessary to avoid the
      violation of any applicable federal, state, local, or foreign ethics law
      or conflicts of interest law as provided in Section
  409A.

              


      

       

      
        	
                9.1.3  

              	
                Small
      Accounts.  The
      Administrator may, in its sole discretion, distribute in a single lump sum
      the aggregate amounts of Deferrals or Elective Deferrals or both credited
      to the Participant’s Account, along with any related earnings, provided:
      (i) the distribution results in the payment of the Participant’s entire
      interest in the Account and all Aggregated Plans, and (ii) the total
      payment does not exceed the applicable dollar limit under Code section
      402(g)(1)(B).  The Administrator shall notify the Participant in
      writing if the Administrator exercises its discretion pursuant to this
      Section.

              


      

       

      
        	
                9.1.4  

              	
                Settlement
      of a Bona Fide Dispute.  The
      Administrator may, in its sole discretion, accelerate the time or schedule
      of a distribution as part of a settlement of a bona fide dispute between
      the Participant and the Employer over the Participant’s right to a
      distribution provided that the distribution relates only to the deferred
      compensation in dispute and the Employer is not experiencing a downturn in
      financial health.

              


      

       

      
        	
                9.1.5  

              	
                Settlement
      of Debt.  The
      Administrator may, in its sole discretion, accelerate the time or schedule
      of a payment to satisfy an ordinary debt owed by the Participant to the
      Employer at the time the debt becomes due as provided in Section
      409A.

              


      

       

       

      
        
          
          

        

        
          16

          
            

          

        

        
          
          

        

      

       

       

      
        	
                9.2  

              	
                Permissible
      Payment Delays.

              


      

       

      Notwithstanding
anything in the Plan to the contrary, to the extent permitted by Section 409A,
the Administrator may, in its sole discretion, delay a distribution to a
Participant:

       

      
        	
                9.2.1  

              	
                If
      the distribution would jeopardize the Employer’s ability to continue as a
      going concern, provided that the delayed amount is distributed in the
      first calendar year in which the payment would not have such
      effect.

              


      

       

      
        	
                9.2.2  

              	
                If
      the Company reasonably anticipates that its deduction with respect to a
      distribution, if paid as scheduled, could be limited or barred by the
      application of Code section 162(m), provided the delayed amount is
      distributed in the first calendar year in which the Company reasonably
      anticipates that the deduction would not be limited or barred by the
      application of Code section 162(m).

              


      

       

      
        	
                9.2.3  

              	
                If
      the distribution would violate Federal securities or other applicable
      laws, provided that the delayed amount is distributed at the earliest date
      at which the Administrator reasonably anticipates that the distribution
      will not cause such violation.

              


      

       

      
        	
                9.2.4  

              	
                If
      calculation of the distribution is not administratively practicable due to
      events beyond the control of the Participant, provided that the delayed
      amount is distributed in the first calendar year in which the calculation
      of the distribution is administratively
  practicable.

              


      

       

      
        	
                9.3  

              	
                Suspension
      Not Allowed.

              


      

       

      If a
Participant whose distributions have commenced becomes eligible again to defer
compensation as a Participant in any plan subject to Section 409A maintained by
a Related Company, distribution of the Participant’s Retirement Benefit or
Account may not be suspended.

       

      ARTICLE
10

       

      Beneficiary
Designation

       

      
        	
                10.1  

              	
                Beneficiary.

              


      

       

      Each
Participant shall have the right, in accordance with procedures established from
time to time by the Administrator, to designate a Beneficiary(ies) (both primary
as well as contingent) to whom Plan benefits shall, if permitted by the Plan, be
paid if a Participant dies prior to complete distribution of
benefits.  Each Beneficiary designation shall be in a written form
prescribed by the Administrator, and will be effective only when filed with the
Administrator during the Participant’s lifetime.  Any Beneficiary
designation may be changed by a Participant without the consent of the
previously named Beneficiary by filing a new Beneficiary designation with the
Administrator.  The most recent Beneficiary designation received by
the Administrator shall control the payment of all benefits under the Plan in
the event of the Participant’s death.

       

      
        	
                10.2  

              	
                No
      Beneficiary Designation.

              


      

       

      In the
absence of an effective Beneficiary designation, or if all designated
Beneficiaries predecease the Participant or die prior to the complete
distribution of the Participant’s benefits, benefits shall be paid in the
following order of precedence: (a) the Participant’s surviving spouse; (b) the
Participant’s children (including adopted children), per stirpes; or (c) the
Participant’s estate.

       

      
        
          
          

        

        
          17

          
            

          

        

        
          
          

        

      

       

      ARTICLE
11

       

      Claims
Procedures

       

      
        	
                11.1  

              	
                Presentation
      of Claim.

              


      

       

      Any
Participant or Beneficiary of a deceased Participant (such Participant or
Beneficiary being referred to below as a “Claimant”) may file with the
Administrator a written claim for a determination with respect to Plan
benefits.  The claim must state with particularity the determination
desired by the Claimant.

       

      
        	
                11.2  

              	
                Notification
      of Decision.

              


      

       

      The
Administrator shall consider a Claimant’s claim, and, except as provided below,
within 90 days after the claim is received, shall notify the Claimant in
writing:

       

      
        	
                11.2.1  

              	
                That
      the claim has been allowed in full;
or

              


      

       

      
        	
                11.2.2  

              	
                That
      the claim has been denied, in whole or in part, and such notice must set
      forth in a manner calculated to be understood by the
    Claimant:

              


      

       

      
        	
                (a)  

              	
                The
      specific reason(s) for the denial of the claim, or any part of
      it;

              


      

       

      
        	
                (b)  

              	
                Specific
      reference(s) to pertinent provisions of the Plan upon which such denial
      was based;

              


      

       

      
        	
                (c)  

              	
                A
      description of any additional material or information necessary for the
      Claimant to perfect the claim, and an explanation of why such material or
      information is necessary; and

              


      

       

      
        	
                (d)  

              	
                An
      explanation of the claim review procedures and time limits, including a
      statement of the Claimant’s right to initiate a civil action pursuant to
      section 502(a) of ERISA following an adverse determination upon
      review.

              


      

       

      
        	
                11.2.3  

              	
                If
      the Administrator determines that an extension of time for processing is
      required, written notice of the extension shall be furnished to the
      Claimant prior to termination of the original 90-day period.  In
      no event shall such extension exceed 90 days from the end of such initial
      period.

              


      

       

      
        	
                11.2.4  

              	
                In
      the case of a claim for disability benefits, the Administrator shall
      notify the Claimant, in accordance with subsection 11.2.2 above, within 45
      days after the claim is received.  The notification shall advise
      the Claimant whether the Administrator’s denial relied upon any specific
      rule, guideline, protocol or scientific or clinical
    judgment.

              


      

       

       

      
        
          
          

        

        
          18

          
            

          

        

        
          
          

        

      

       

      
        	
                11.2.5  

              	
                In
      the case of a claim for disability benefits, if the Administrator
      determines that an extension of time for processing is required due to
      matters beyond the control of the Plan, written notice of the extension
      shall be furnished to the Claimant prior to termination of the original
      45-day period.  Such extension shall not exceed 30 days from the
      end of the initial period.  If, prior to the end of the first
      30-day extension period, the Administrator determines that, due to matters
      beyond the control of the Plan, an additional extension of time for
      processing is required, written notice of a second 30-day extension shall
      be furnished to the Claimant prior to termination of the first 30-day
      extension.

              


      

       

      
        	
                11.3  

              	
                Review
      of a Denied Claim.

              


      

       

      Within 90
days after receiving a notice from the Administrator that a claim has been
denied, in whole or in part, a Claimant (or the Claimant’s duly authorized
representative) may file a written request for a review of the denial of the
claim and of pertinent documents.  The Claimant (or the Claimant’s
duly authorized representative):

       

      
        	
                11.3.1  

              	
                May
      request reasonable access to, and copies of, all documents, records, and
      other information relevant to the claim, which shall be provided to
      Claimant free of charge; and

              


      

       

      
        	
                11.3.2  

              	
                May
      submit written comments or other
documents.

              


      

       

      
        	
                11.4  

              	
                Decision
      on Review.

              


      

       

      The
Administrator shall review all comments or other documents submitted by the
Claimant relating to the claim, without regard to whether such information was
submitted or considered in the initial benefit determination.  The
Administrator shall render its decision on review promptly, and not later than
60 days after the filing of a written request for review of the denial (or, if
other special circumstances require additional time and written notice of such
extension and circumstances is given to the Claimant within the initial 60-day
period).  The Administrator shall notify the Claimant, in language
calculated to be understood by the Claimant:

       

      
        	
                11.4.1  

              	
                That
      the claim has been allowed in full;
or

              


      

       

      
        	
                11.4.2  

              	
                That
      the claim has been denied, in whole or in part, and such notice must set
      forth:

              


      

       

      
        	
                (a)  

              	
                Specific
      reasons for the decision;

              


      

       

      
        	
                (b)  

              	
                Specific
      reference(s) to the pertinent Plan provisions upon which the decision was
      based;

              


      

       

      
        	
                (c)  

              	
                A
      statement that Claimant is entitled to reasonable access to, and copies
      of, all documents, records or other information relevant to the claim upon
      request and free of charge;

              


      

       

      
        	
                (d)  

              	
                A
      statement regarding the Claimant’s right to initiate an action pursuant to
      section 502(a) of ERISA; and

              


      

       

      
        
          
          

        

        
          19

          
            

          

        

        
          
          

        

      

       

      
        	
                (e)  

              	
                Such
      other matters as the Administrator deems
  relevant.

              


      

       

      
        	
                11.4.3  

              	
                In
      the case of a claim for disability benefits, the notice shall set
      forth:

              


      

       

      
        	
                (a)  

              	
                Whether
      the Administrator’s denial relied upon any specific rule, guideline,
      protocol or scientific or clinical judgment;
and

              


      

       

      
        	
                (b)  

              	
                The
      following statement: “You and your Plan may have other voluntary
      alternative dispute resolution options, such as mediation.  One
      way to find out what may be available is to contact your local U.S.
      Department of Labor Office and your State insurance regulatory
      agency.”

              


      

       

      
        	
                11.5  

              	
                Other
      Remedies.

              


      

       

      A
Claimant’s compliance with the foregoing procedures is a mandatory prerequisite
to a Claimant’s right to pursue any other remedy with respect to any claim
relating to this Plan.

       

      


      ARTICLE
12

       

      Amendment or
Termination

       

      The
Company hereby reserves the right to amend, modify, or terminate any one or
more of the 409A Plans, at any time by action of the Board, with or without
prior notice.  No amendment or termination shall reduce any
Participant’s Account or Retirement Benefit without the written consent of the
affected Participant.  Notwithstanding anything herein to the
contrary, to the extent consistent with Section 409A, the Board may
terminate the Plan and distribute to each Participant the Participant’s Account
and the Participant’s Retirement Benefit, if any, in a lump sum; provided that
all distributions (i) commence no earlier than the date that is twelve (12)
months following the termination date (or any earlier date that would comply
with Section 409A) and (ii) are completed by the date that is
twenty-four (24) months following the termination date (or any later date that
would comply with Section 409A).  In addition, payments may be
accelerated upon termination of any 409A Plan only if, to the extent required
under Section 409A, (i) the Company terminates all Aggregated Plans,
and (ii) for three years following the date of termination of the 409A
Plan, the Company does not adopt any new arrangement that would have been an
Aggregated Plan of the terminated 409A Plan.

       

      ARTICLE
13

       

      Miscellaneous
Provisions

       

      
        	
                13.1  

              	
                Unsecured
      General Creditor.

              


      

       

      Participants
and their Beneficiaries, heirs, successors and assigns shall have no legal or
equitable rights, interests or claims in any property or assets of an
Employer.  An Employer’s obligation under the Plan shall be merely
that of an unfunded and unsecured promise to pay money in the
future.

       

      
        	
                13.2  

              	
                Employer’s
      Liability.

              


      

       

      An
Employer’s liability for benefits shall be defined only by the
Plan.  An Employer shall have no obligation to a Participant except as
expressly provided in the Plan.

       

       

      
        
          
          

        

        
          20

          
            

          

        

        
          
          

        

      

       

       

      
        	
                13.3  

              	
                Nonassignability.

              


      

       

      Neither a
Participant nor any other person shall have any right to commute, sell, assign,
transfer, pledge, anticipate, mortgage or otherwise encumber, transfer,
hypothecate, alienate or convey in advance of actual receipt, the amounts, if
any, payable hereunder, or any part thereof, which are, and all rights to which
are expressly declared to be, unassignable and non-transferable.  No
part of the amounts payable shall, prior to actual payment, be subject to
seizure, attachment, garnishment or sequestration for the payment of any debts,
judgments, alimony or separate maintenance owed by a Participant or any other
person, be transferable by operation of law in the event of a Participant’s or
any other person’s bankruptcy or insolvency or be transferable to a spouse as a
result of a property settlement or otherwise.

       

      
        	
                13.4  

              	
                No
      Right to Employment.

              


      

       

      Nothing
contained in this Plan or any documents relating to the Plan shall: (a) confer
on a Participant any right to continue in the employ of a Related Company, (b)
constitute any contract or agreement of employment, (c) interfere with the right
of a Related Company to terminate the Participant’s employment at any time, with
or without cause.

       

      
        	
                13.5  

              	
                Incompetency.

              


      

       

      If the
Administrator determines that a distribution under this Plan is to be paid to a
minor, a person declared incompetent or to a person incapable of handling the
disposition of that person’s property, the Administrator may direct such
distribution to be paid to the guardian, legal representative or person having
the care and custody of such minor, incompetent or incapable
person.  The Administrator may require proof of majority, competence,
capacity, guardianship, or status as a legal representative as it may deem
appropriate prior to distribution of a payment.  Any distribution
shall be a payment for the account of the Participant and the Participant’s
Beneficiary, as the case may be, and shall be a complete discharge of any
liability for such payment amount.

       

      
        	
                13.6  

              	
                Tax
      Withholding.

              


      

       

      To the
extent required by the law in effect at the time of any distribution, the
Participant’s Employer shall withhold from any payments to a Participant
hereunder any taxes required to be withheld by the federal or any state or local
government, in amounts and in a manner to be determined in the sole discretion
of the Employer(s).

       

      
        	
                13.7  

              	
                Furnishing
      Information.

              


      

       

      A
Participant or his Beneficiary will cooperate with the Administrator by
furnishing any and all information requested by the Administrator and take such
other actions as may be requested in order to facilitate the administration of
the Plan and the distributions hereunder, including but not limited to taking
such physical examinations as the Administrator may deem necessary.

       

      
        	
                13.8  

              	
                Notice.

              


      

       

      Any
notice or filing required or permitted under the Plan shall be sufficient if in
writing and if (i) hand-delivered or sent by telecopy, (ii) sent by registered
or certified mail, or (iii) sent by nationally-recognized overnight
courier.  Such notice shall be deemed given as of  (i) the
date of delivery if hand-delivered or sent by telecopy, (ii) as of the date
shown on the postmark on the receipt for registration or certification, if
delivery is by mail, or (iii) on the first business day after dispatch, if sent
by nationally-recognized overnight courier.

       

       

       

      
        
          
          

        

        
          21

          
            

          

        

        
          
          

        

      

       

      
        	
                13.9  

              	
                Gender
      and Number.

              


      

       

      Except
when otherwise indicated by context, words in the masculine gender shall include
the feminine and neuter genders, the singular shall include the plural, and the
plural shall include the singular.

       

      
        	
                13.10  

              	
                Headings.

              


      

       

      The
headings contained in this Plan are for convenience only and will not control or
affect the meaning or construction of any of the terms or provisions of this
Plan.

       

      
        	
                13.11  

              	
                Applicable
      Law and Construction.

              


      

       

      The Plan
shall be governed by, construed and administered in accordance with the
applicable provisions of ERISA, and any other applicable Federal law, including
Section 409A, and to the extent not preempted by Federal law, this Plan shall be
governed by, construed and administered in accordance with the laws of the State
of Minnesota, other than its laws respecting choice of law.

       

      
        	
                13.12  

              	
                Invalid
      or Unenforceable Provisions.

              


      

       

      If any
provision of this Plan shall be held invalid or unenforceable, such invalidity
or unenforceability shall not affect any other provisions hereof and the
Administrator may elect in its sole discretion to construe such invalid or
unenforceable provisions in a manner that conforms to applicable law or as if
such provisions, to the extent invalid or unenforceable, had not been
included.

       

      
        	
                13.13  

              	
                Successors.

              


      

       

      This Plan
shall bind any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company, in the same manner and to the same extent that the
Company would be obligated under this Plan if no succession had taken
place.  In the case of any transaction in which a successor would not
by the foregoing provision or by operation of law be bound by this Plan, the
Company shall require such successor expressly and unconditionally to assume and
agree to perform the obligations of the Company and each Employer under this
Plan, in the same manner and to the same extent that the Company and each
Employer would be required to perform if no such succession had taken
place.

       

      



      
        
           


        

        
          22

          
            

          

        

        
           


        

      


      


      APPENDIX
A

       

      “162(m)
Deferrals” means the portion of a Participant’s Annual Incentive Award for a
Plan Year that the Company reasonably anticipates is not deductible by the
application of Code section 162(m).

       

      “409A
Plan” means one of the separate non-qualified deferred compensation arrangements
described in Section 2.1.

       

      “Account”
means the Company’s bookkeeping entry representing a Participant’s Deferrals,
and such other accounts or sub-accounts as the Administrator deems necessary or
appropriate.

       

      “Administrator”
means the Employee Benefit Plans Committee appointed by the Board or delegates
of the Employee Benefit Plans Committee.

       

      “Aggregated
Plans” means, with respect to any 409A Plan, that plan and all other
non-qualified deferred compensation plans which must be aggregated with that
plan in accordance with the plan aggregation rules of Section 409A.

       

      “Annual
Incentive Award” means the annual award received by a Participant under the
ALLETE Executive Annual Incentive Plan or any predecessor or successor
plan.

       

      “Basic
Compensation” shall have the meaning prescribed in Retirement Plan A, but shall
be calculated without regard to the limitation on compensation imposed by Code
section 401(a)(17).

       

      “Beneficiary”
means one or more persons, trusts, estates or other entities, designated in
accordance this Plan, that are entitled to receive Plan benefits upon the death
of a Participant.

       

      “Board”
means the Board of Directors of the Company.

       

      “Bonus”
means any incentive compensation, including Annual Incentive Awards, that is
payable to the Participant in addition to the Participant’s Salary.

       

      “Change
in Control” means the earliest of:

       

      
        	
                (i)  

              	
                the
      date any one Person, or more than one Person acting as a group (as the
      term “group” is used in Treasury Regulations section
      1.409A-3(i)(5)(v)(B)), acquires ownership of stock of the Company that,
      together with stock previously held by the acquirer, constitutes more than
      fifty (50%) percent of the total fair market value or total voting power
      of Company stock.  If any one Person, or more than one Person
      acting as a group, is considered to own more than fifty (50%) percent of
      the total fair market value or total voting power of Company stock, the
      acquisition of additional stock by the same Person or Persons acting as a
      group does not cause a Change in Control.  An increase in the
      percentage of stock owned by any one Person, or Persons acting as a group,
      as a result of a transaction in which Company acquires its stock in
      exchange for property, is treated as an acquisition of
    stock;

              


      

       

      
        	
                (ii)  

              	
                (b)
      the date any one Person, or more than one Person acting as a group (as the
      term “group” is used in Treasury Regulations section
      1.409A-3(i)(5)(v)(B)), acquires (or has acquired during the twelve (12)
      month period ending on the date of the most recent acquisition by that
      Person or Persons) ownership of Company stock possessing at least thirty
      (30%) percent of the total voting power of Company
  stock;

              


      

       

      
        	
                (iii)  

              	
                (c)
      the date a majority of the members of the Company’s board of directors is
      replaced during any twelve (12) month period by directors whose
      appointment or election is not endorsed by a majority of the members of
      the board of directors prior to the date of appointment or election;
      or

              


      

       

      
        	
                (iv)  

              	
                (d)
      the date any one Person, or more than one Person acting as a group (as the
      term “group” is used in Treasury Regulations section
      1.409A-3(i)(5)(v)(B)), acquires (or has acquired during the twelve (12)
      month period ending on the date of the most recent acquisition by that
      Person or Persons) assets from the Company that have a total gross fair
      market value equal to at least forty (40%) percent of the total gross fair
      market value of all the Company’s assets immediately prior to the
      acquisition or acquisitions.  For this purpose, “gross fair
      market value” means the value of the corporation’s assets, or the value of
      the assets being disposed of, without regard to any liabilities associated
      with these assets.

              


      

       

      In
determining whether a Change in Control occurs, the attribution rules of Code
section 318 apply to determine stock ownership.  The stock underlying
a vested option is treated as owned by the individual who holds the vested
option, and the stock underlying an unvested option is not treated as owned by
the individual who holds the unvested option.  The term “Person” used
in this definition means any individual, corporation (including any non-profit
corporation), general, limited or limited liability partnership, limited
liability company, joint venture, estate, trust, firm, association, organization
or other entity or any governmental or quasi-governmental authority,
organization, agency or body.

       

      “Claimant”
shall have the meaning set forth in Section 11.1.

       

      “Code”
means the Internal Revenue Code of 1986, as it may be amended from time to
time.

       

      “Company”
means ALLETE, Inc., a Minnesota Corporation, and any successor to all, or
substantially all, of the Company’s assets or business.

       

      “Credited
Service” shall have the meaning prescribed in the Retirement Plan
A.

       

      “Deferrals”
means Elective Deferrals and Non-Elective Deferrals.

       

      “Disability”
or “Disabled,” when used with an initial capital letter, means a physical or
mental condition in which the Participant is:

       

      
        	
                (i)  

              	
                unable
      to engage in any substantial gainful activity by reason of any medically
      determinable physical or mental impairment that can be expected to result
      in death or can be expected to last for a continuous period of not less
      than twelve (12) months;

              


      

       

      
        	
                (ii)  

              	
                by
      reason of any medically determinable physical or mental impairment which
      can be expected to result in death or can be expected to last for a
      continuous period of not less than twelve (12) months, receiving income
      replacement benefits for a period of not less than three (3) months under
      the Employer’s accident and health
plan;

              


      

       

      
        	
                (iii)  

              	
                determined
      to be totally disabled by the Social Security Administration;
      or

              


      

       

      
        	
                (iv)  

              	
                disabled
      pursuant to an Employer-sponsored disability insurance arrangement
      provided that the definition of disability applied under such disability
      insurance program complies with the foregoing definition of
      Disability.

              


      

       

      When the
term “disability” (without an initial capital letter) is used in the Plan, it
shall have the meaning prescribed in the definition of “Separation from
Service.”

       

      “Distribution
Event” means, with respect to Article 6, a Specified Year, a Separation from
Service, death, Disability or the Administrator’s determination regarding the
occurrence of an Unforeseeable Emergency and, with respect to Article 8,
Retirement, Disability or solely with respect to a Participant who vests after
becoming Disabled, the earlier of death or attainment of age 65.

       

      “Elective
Deferrals” means any portion of a Participant’s Salary, Bonus, Severance Pay,
Annual Make-up Award or Other Award that a Participant irrevocably elects to
defer.

       

      “Eligible
Employee” means an Employee in management salary grades SA-SM, who has been
notified in writing by the Administrator of eligibility to participate in the
Plan.

       

      “Eligible
Surviving Spouse” shall have the meaning prescribed in Retirement Plan
A.

       

      “Employee”
means a person who is a common-law employee of any Related Company.

       

      “Employer(s)”
means the Company and any Related Company (now in existence or hereafter formed
or acquired) that have been selected by the Administrator to participate in the
Plan.

       

      “ERISA”
means the Employee Retirement Income Security Act of 1974, as it may be amended
from time to time.

       

      “IRS”
means the Internal Revenue Service.

       

      “Non-Elective
Deferrals” means 162(m) Deferrals and the Annual Make-up Award credited to the
Account of any Participant whose Salary exceeds the Code section 401(a)(17)
limit.

       

      “Other
Award” means an award, other than an Annual Incentive Award or Severance Pay,
that a Participant may defer at the Administrator’s discretion.

       

      “Participant”
means any Eligible Employee (i) who has elected to defer amounts under the Plan,
(ii) who is eligible to receive a Retirement Benefit or (iii) whose
compensation, or a portion thereof, was deferred as a Non-Elective
Deferral.

       

      “Plan”
means SERP II.

       

      “Plan
Year” means a period beginning on January 1 of each calendar year and continuing
through December 31 of such calendar year.

       

      “Related
Company” means the Company and all persons with whom the Company would be
considered a single employer under Code section 414(b) (employees of controlled
group of corporations), and all persons with whom such person would be
considered a single employer under Code section 414(c) (employees of
partnerships, proprietorships, etc., under common control); provided that in
applying Code sections 1563(a)(1), (2), and (3) for purposes of determining a
controlled group of corporations under Code section 414(b), the language “at
least 50 percent” is used instead of “at least 80 percent” each place it appears
in Code sections 1563(a)(1), (2), and (3), and in applying Treasury Regulations
section 1.414(c)-2 for purposes of determining trades or businesses (whether or
not incorporated) that are under common control for purposes of Code section
414(c), “at least 50 percent” is used instead of “at least 80 percent” each
place it appears in Treasury Regulations section 1.414(c)-2.

       

      “Retirement”
means Separation from Service, for reasons other than death, on or after
attaining both 50 years of age and 10 years of Vesting Service.

       

      “Retirement
Benefit” means the benefit payable pursuant to Article 8.

       

      “Retirement
Plans” mean the Minnesota Power and Affiliated Companies Retirement Plan A and
Minnesota Power and Affiliated Companies Retirement Plan B, as amended from time
to time.

       

      “Retirement
Savings and Stock Ownership Plan” or “RSOP” means the Minnesota Power and
Affiliated Companies Retirement Savings and Stock Ownership Plan, as amended
from time to time.

       

      “Salary”
means the Participant’s earnings during a calendar year, before any reduction
pursuant to Code sections 125, 132(f)(4), or 401(k) and this Plan.  It
does not include overtime compensation, if any, Bonuses, Annual Incentive Awards
and Other Awards, expense reimbursements, allowances, commission payments,
employer contributions or awards under this Plan or other employee benefit
plans, imputed income (whether such imputed income is from vehicle use, life
insurance premiums, or any other source) payments made pursuant to the Results
Sharing Program, payment of stock options and performance shares under the Long
Term Incentive Compensation Plan, and any other payments of a similar
nature.  In the case of a Participant who is employed jointly by the
Company and an affiliated company (as defined in the RSOP), Salary as defined
herein shall include amounts received from all such companies.

       

      “Section
409A” means both section 409A of the Code and Treasury Regulations section
1.409A-1 et seq., as they both may be amended from time to time, and other
guidance issued by the Treasury Department and Internal Revenue Service
thereunder.

       

      “Separation
from Service” means that the Participant terminates employment within the
meaning of Treasury Regulations section 1.409A-1(h) and other applicable
guidance with all Related Companies.  Whether a termination of
employment has occurred is determined under the facts and circumstances, and a
termination of employment shall occur if all Related Companies and the
Participant reasonably anticipate that no further services shall be performed
after a certain date or that the level of bona fide services the Participant
shall perform after such date (as an employee or an independent contractor)
shall permanently decrease to no more than 20 percent of the average level of
bona fide services performed (whether as an employee or an independent
contractor) over the immediately preceding 36-month period (or the full period
of services to the Related Companies if the Participant has been providing
services to the Related Companies less than 36 months).  A Participant
shall not be considered to separate from service during a bona fide leave of
absence for less than six (6) months or longer if the Participant retains a
right to reemployment with any Related Company by contract or
statute.  With respect to disability leave, a Participant shall not be
considered to separate from service for 29 months unless the Participant
otherwise terminates employment or is terminated by all Related
Companies.  For purposes of determining whether a Separation from
Service has occurred on account of a disability, a Participant shall be disabled
if the Participant is suffering from any medically determinable physical or
mental impairment resulting in the Participant’s inability to perform the duties
of his position or any substantially similar position, if such impairment can be
expected to result in death or can be expected to last for a continuous period
of 6 months.

       

      “SERP II”
means the ALLETE and Affiliated Companies Supplemental Executive Retirement Plan
II, as amended from time to time.

       

      “Severance
Pay” means the cash payment(s) to a Participant payable in connection with his
Separation from Service in accordance  with the terms of a severance
arrangement that is the subject of bona fide, arm’s length negotiations between
a Related Company and the Participant at the time of the Separation from
Service.

       

      “Specified
Year” means a calendar year during which a Participant has elected to receive a
distribution of Elective Deferrals.

       

      “Specified
Employee” means an Employee who is subject to the six-month delay rule described
in Code section 409A(2)(B)(i).  The Board shall adopt guidelines for
identifying Specified Employees in a manner consistent with Section 409A, and
may amend the guidelines from time to time as permitted by Section
409A.

       

      “Unforeseeable
Emergency” means an unanticipated emergency that is caused by an event beyond
the control of the Participant that would result in severe financial hardship to
the Participant resulting from (i) an illness or accident of the Participant or
the Participant’s spouse, the Participant’s beneficiary, or the Participant’s
dependent (as defined in Code section 152, without regard to Code sections
152(b)(1), (b)(2), and (d)(1)(B)), (ii) a loss of the Participant’s property due
to casualty, or (iii) such other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant, all as determined in the sole discretion of the
Administrator.

       

      “Valuation
Date” means each day that the U.S. stock markets are open or such other dates as
may be set by the Administrator from time to time.

       

      “Vesting
Service” shall have the meaning prescribed in the Retirement Plan
A.  Participants will continue to receive credit for Vesting Service
after October 1, 2006.  A Disabled Participant will receive credit for
Vesting Service on account of any period after the commencement of the
Disability during which the Participant is characterized as an active employee
on the Related Company’s employment records.

       


      
        
           


        

        
          23

          
            

          

        

        
           


        

      


      IN
WITNESS WHEREOF, ALLETE, Inc. has caused these presents to be signed and its
corporate seal to be hereunto affixed by its duly authorized officers, effective
as of January 1, 2009

       

      


       

      


       

              ALLETE,
Inc.

       

      


       

              By: Donald J.
Shippar                                                               

       

                                                             Donald
J. Shippar

       

      
        	
                 
      

              	
                Its:

              	
                Chairman,
      President and Chief Executive
Officer

              


      

       

      


       

      ATTEST

       

      By:  Deborah A.
Amberg                                                                        

       

      Deborah A. Amberg

       

      Its:           Senior
Vice President, General Counsel and Secretary

       

      


       

      


       


      
        
           


        

        
          24