Exhibit 10(o)2

ALLETE, INC.
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTOR COMPENSATION DEFERRAL PLAN II

Effective July 24, 2012

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TABLE OF CONTENTS

 
 
 
 
 
 
 
Page
ARTICLE 1
 
 
Establishment and
Purpose............................................................
1
ARTICLE 2
 
 
Administration...............................................................................
1
 
2.1
 
Administrator.............................................................................................
1
 
2.2
 
Duties........................................................................................................
1
 
2.3
 
Agents........................................................................................................
1
 
2.4
 
Binding Effect of
Decisions......................................................................
2
 
2.5
 
Company
Information...............................................................................
2
ARTICLE 3
 
 
Participation...................................................................................
2
ARTICLE 4
 
 
Deferral
Elections..........................................................................
2
 
4.1
 
Annual Deferral
Election..........................................................................
2
 
4.2
 
Initial Deferral
Election.............................................................................
2
 
4.3
 
Cancellations of Deferral Elections due to Unforeseeable Emergency.....
3
ARTICLE 5
 
 
Accounts........................................................................................
3
 
5.1
 
Accounts...................................................................................................
3
 
5.2
 
Cash
Account.............................................................................................
3
 
 
 
5.2.1
 
Establishment of Cash Account...................................................
3
 
 
 
5.2.2
 
Timing of Credits to Cash Accounts...........................................
3
 
 
 
5.2.3
 
Investments..................................................................................
3
 
 
 
5.2.4
 
Valuation
Date.............................................................................
4
 
5.3
 
Stock
Account...........................................................................................
4
 
 
 
5.3.1
 
Establishment of Stock Account.................................................
4
 
 
 
5.3.2
 
Credits to Stock
Accounts...........................................................
4
 
 
 
5.3.3
 
Dividend
Equivalents..................................................................
4
 
 
 
5.3.4
 
Adjustments in Case of Changes in Common Stock...................
4
ARTICLE 6
 
 
Distributions...................................................................................
5
 
6.1
 
Distributions..............................................................................................
5
 
 
 
6.1.1
 
Specified
Year..............................................................................
5
 
 
 
6.1.2
 
Separation from
Service..............................................................
6
 
 
 
6.1.3
 
Unforeseeable
Emergency...........................................................
6
 
6.2
 
Additional Distribution
Rules...................................................................
6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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6.2.1
 
Medium of
Payment....................................................................
6
 
 
 
6.2.2
 
Default Time and Form of Payment............................................
6
 
 
 
6.2.3
 
Rules Applicable to All Distributions..........................................
6
 
 
 
6.2.4
 
Installment
Payments..................................................................
7
 
 
 
6.2.5
 
Death After Commencement of Distributions.............................
7
 
6.3
 
Subsequent Changes in Time and Form of Payment.................................
7
ARTICLE 7
 
 
Payment Acceleration and
Delay...................................................
8
 
7.1
 
Permitted Accelerations of
Payment.........................................................
8
 
7.2
 
Permissible Distribution
Delays................................................................
8
 
7.3
 
Suspension Not
Allowed...........................................................................
9
ARTICLE 8
 
 
 
Beneficiary
Designation..............................................................
9
 
8.1
 
Beneficiary................................................................................................
9
 
8.2
 
No Beneficiary
Designation......................................................................
9
ARTICLE 9
 
 
 
Claims
Procedures.......................................................................
9
ARTICLE 10
 
 
Amendment or Termination........................................................
10
ARTICLE 11
 
 
Miscellaneous
Provisions............................................................
10
 
11.1
 
Unsecured General
Creditor......................................................................
10
 
11.2
 
Trust
Fund.................................................................................................
10
 
11.3
 
Section 409A
Compliance.........................................................................
10
 
11.4
 
Company's
Liability..................................................................................
10
 
11.5
 
Nonassignability........................................................................................
11
 
11.6
 
No Right to Board
Position.......................................................................
11
 
11.7
 
Incompetency............................................................................................
11
 
11.8
 
Furnishing
Information.............................................................................
11
 
11.9
 
Notice........................................................................................................
11
 
11.10
 
Compliance with Government
Regulations..............................................
11
 
11.11
 
Exchange Act
Exemption..........................................................................
12
 
11.12
 
Gender and
Number..................................................................................
12
 
11.13
 
Headings....................................................................................................
12
 
11.14
 
Applicable Law and
Construction.............................................................
12
 
11.15
 
Invalid or Unenforceable
Provisions.........................................................
12
 
11.16
 
Successors.................................................................................................
12
ARTICLE 12
 
 
Definitions...................................................................................
13

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ALLETE, INC.
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTOR COMPENSATION DEFERRAL PLAN II

Effective July 24, 2012
ARTICLE 1
Establishment and Purpose

This document includes the terms of the ALLETE, Inc. Amended and Restated
Non-Employee Director Compensation Deferral Plan II, the purpose of which is to
provide Directors an opportunity to elect to defer his or her Annual Retainer.
The Plan is a successor to the ALLETE Director Compensation Deferral Plan (the
“Predecessor Plan”). On December 31, 2004, the Company froze the Predecessor
Plan, and on January 1, 2005, the Company established the Plan to govern amounts
initially deferred after December 31, 2004 and investment earnings thereon. 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. Effective January 1,
2009, the Company amended and restated the Plan in its entirety to comply with
Section 409A. Effective May 1, 2009, the Company amended the Plan to expand the
types of compensation that Directors may defer. Effective July 24, 2012, the
Company further amends the Plan to eliminate the fixed crediting rate.
Capitalized terms, unless otherwise defined herein, shall have the meaning
provided in Article 12.
ARTICLE 2
Administration

2.1
Administrator. The Executive Compensation Committee of the Board shall
administer the Plan. Notwithstanding the foregoing, the Administrator may
delegate any of its duties to such other person or persons from time to time as
it may designate. Members of the Executive Compensation Committee may
participate in the Plan; however, any Director serving on the Executive
Compensation Committee shall not vote or act on any matter relating solely to
himself or herself.

2.2
Duties. The Administrator has the authority to construe and interpret all
provisions of the Plan, to resolve any ambiguities, to adopt rules and practices
concerning the administration of the Plan, to make any determinations and
calculations necessary or appropriate hereunder, and, to the maximum extent
permitted by Section 409A, the authority to remedy any errors, inconsistencies
or omissions. The Company shall pay all expenses and liabilities incurred in
connection with Plan administration.

2.3
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.

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2.4
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.

2.5
Company Information. To enable the Administrator to perform its duties, the
Company shall supply full and timely information to the Administrator on all
matters relating to the Annual Retainer, the Directors, the date and
circumstances of a Director's Separation from Service, and other pertinent
information as the Administrator may reasonably require.

ARTICLE 3
Participation

Directors may participate in the Plan. Each Plan Year, the Administrator shall
notify Directors of their eligibility to participate in the Plan and defer
compensation to be paid on account of services as a Director during the next
Service Period.  A Director who is eligible to participate shall become a
participant by completing an election form on which the Director elects to defer
some or all of his or her Annual Retainer and delivering the completed form to
the Company as specified in the Plan. The terms of this Plan shall continue to
govern a Director's Accounts until the Accounts are paid in full.
ARTICLE 4
Deferral Elections

4.1
Annual Deferral Election. Each Plan Year, a Director may elect: (i) to defer
some or all of the Director's Annual Cash Retainer, the Annual Stock Retainer,
or both, attributable to the next Service Period; and (ii) to the extent
permitted by this Plan, the time and form of distribution of Cash Deferrals and
Stock Deferrals. Elections become irrevocable no later than the date specified
by the Administrator, but in any event before the beginning of the Plan Year
with which or during which occurs the Service Period to which the elections
relate. A Director's election will become effective only if the forms required
by the Administrator have been properly completed and signed by the Director,
timely delivered to, and accepted by, the Administrator. A Director who fails to
file the election before the required date will be treated as having elected not
to defer any portion of the Annual Retainer for the following Service Period.

4.2
Initial Deferral Election. A Director who first becomes eligible to participate
in the Plan during a Plan Year may elect to defer some or all of the Director's
Annual Cash Retainer and Annual Stock Retainer by filing a signed election form
with the Administrator no later than 30 days after the

Director first becomes eligible to participate in the Plan. Such election shall
be effective only with respect to the Director's Annual Retainer earned after
the filing of such election. The election shall become irrevocable with respect
to the Service Period covered by the election on the 30th day following the date
on which the Director first becomes eligible to participate in the Plan. This
election relating to initial participation in the Plan is available only to
Directors who do not participate in any other nonqualified deferred compensation
elective account balance plans (within the meaning of Section 409A) maintained
by the Company or any Related Company. If a Director whose participation in the
Plan is terminated again becomes a Director, he or she may elect to

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defer pursuant to this Section only if the Director was ineligible to defer
compensation in this Plan and all other Related Company elective account balance
plans for the 24 months preceding the date on which the Director again became
eligible to participate in this Plan.

4.3
Cancellations of Deferral Elections due to Unforeseeable Emergency. If a
Director experiences an Unforeseeable Emergency, the Director may submit to the
Administrator a written request to cancel Deferrals for the Service Period to
satisfy the Unforeseeable Emergency. If the Administrator either approves the
Director's request to cancel Deferrals for the Service Period, or approves a
request for a distribution of prior Deferrals in accordance with Section 6.1.3,
then effective as of the date the request is approved the Administrator shall
cancel the Director's deferral elections for the remainder of the Service
Period. A Director whose Deferrals are canceled in accordance with this section
may elect Deferrals for the following Service Period.

ARTICLE 5
Accounts

5.1
Accounts. The Company will establish notional accounts and sub-accounts for each
Director as the Administrator deems necessary or advisable from time to time.
The Company will establish a Director's Accounts during the year in which the
Director first elects to defer any amounts. All amounts in a Director's Accounts
are fully vested at all times.

5.2
Cash Account.

5.2.1
Establishment of Cash Account. The Company shall establish and maintain a Cash
Account for each Director who has elected to defer any portion of the Annual
Cash Retainer. A Director's Cash Account shall be credited as appropriate for
Cash Deferrals and earnings with respect to Cash Deferrals and debited for
distributions from the Cash Account.

5.2.2
Timing of Credits to Cash Accounts. No later than the end of the calendar year
during which the Company would otherwise have paid the Annual Cash Retainer to
the Director but for the Director's deferral election, the Administrator shall
credit the Director's Cash Account with an amount equal to the portion of the
Annual Cash Retainer that the Director elected to defer.

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5.2.3
Investments. The Administrator may select investment funds to use for measuring
notional gains and losses with respect to Cash Deferrals. The Administrator will
establish, from time to time, rules and procedures for allowing each Director 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 Director's
Cash Account.

5.2.4
Valuation Date. As of each Valuation Date, each Cash 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.

5.3
Stock Account.

5.3.1
Establishment of Stock Account. The Company shall establish and maintain a Stock
Account for each Director who has elected to defer any portion of the Annual
Stock Retainer. A Director's Stock Account shall be credited as appropriate for
Stock Deferrals and Dividend Equivalents and debited for distributions from the
Stock Account. Stock Deferrals credited to a Director's Stock Account shall be
used solely as a device for determining the number of shares of Common Stock to
be distributed to such Director at a later time in accordance with this Plan.
Stock Deferrals credited (and the Common Stock to which the Director is entitled
under this Plan) shall be subject to adjustment in accordance with Section 5.3.4
of this Plan.

5.3.2
Credits to Stock Accounts. The Administrator shall credit a Director's Stock
Account with Stock Deferrals as of the day on which the Annual Stock Retainer
would otherwise have been paid to the Director pursuant to the Stock Plan but
for the Director's deferral election. The number of Stock Deferrals credited to
the Stock Account shall equal the number of shares of Common Stock that would
have been issued to the Director pursuant to the Stock Plan in the absence of a
deferral election.

5.3.3
Dividend Equivalents. Stock Deferrals credited to a Director's Stock Account
shall be credited with Dividend Equivalents equal to cash dividends that are
declared and paid on Common Stock. The Company will credit each Director's Stock
Account with Dividend Equivalents as of the date that the Company pays a
dividend on its Common Stock, and will convert the Dividend Equivalents into
additional Stock Deferrals by dividing the amount of the Dividend Equivalents by
the Fair Market Value of a share of Common Stock on that date.

5.3.4
Adjustments in Case of Changes in Common Stock. If the outstanding shares of
Common Stock of the Company are increased, decreased, or exchanged for a
different number or kind of shares or other securities, or if additional shares
or new or different shares or other securities are distributed with respect to
such shares of

Common Stock or other securities, through merger, consolidation, sale of all or
substantially all of the property of the Company, reorganization or
recapitalization, reclassification, stock dividend, stock split, reverse stock
split, combinations of shares, rights offering, distribution of assets or other
distribution with respect to

4

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such shares of Common Stock or other securities or other change in the corporate
structure or shares of Common Stock, the number of Stock Deferrals in a
Director's Stock Account and the kind of shares that may be issued under the
Plan or both shall be appropriately adjusted by the Committee. Any determination
by the Committee as to any such adjustment will be final, binding, and
conclusive.

ARTICLE 6
Distributions

6.1
Distributions. The Plan provides for distributions in a Specified Year, upon a
Separation from Service or upon an Unforeseeable Emergency. As described in
Section 6.1.1, each Plan Year a Director may elect to have all or a portion of
the Cash Deferrals, Stock Deferrals, or both, attributable to the next Service
Period distributed in a Specified Year. With respect to Deferrals not subject to
distribution in a Specified Year, the Plan requires distribution upon Separation
from Service at a time and in a form elected by the Director, or for Directors
who fail to elect, at a time and in a form specified by the Plan. A Director
wishing to elect a time and form of distribution upon Separation from Service
must, at the time of the Director's initial Deferrals, submit a distribution
election, which may provide a different time and form of distribution upon
Separation from Service for Cash Deferrals and Stock Deferrals. A Director's
distribution elections are irrevocable and will govern the Deferrals to which
the election relates until the Deferrals covered by the election are paid in
full or until subsequently changed in accordance with Section 6.3.
Notwithstanding any elections by a Director, all distributions are subject to
the provisions of Section 6.2.

6.1.1
Specified Year. A Director may elect to receive a distribution of Cash Deferrals
and Stock Deferrals in the same or different Specified Years. The Specified
Year(s) elected may be no earlier than the third Plan Year beginning after the
date on which the Director initially elects to receive a distribution in a
Specified Year. Except as otherwise provided in this subsection or in Section
6.3, once a Director has elected to receive a distribution of Cash Deferrals in
a Specified Year, the Director may not elect to receive a distribution of Cash
Deferrals in a different Specified Year and, once a Director has elected to
receive a distribution of Stock Deferrals in a Specified Year, the Director may
not elect to receive a distribution of Stock Deferrals in a different Specified
Year. Beginning during the year preceding a Specified Year previously elected by
the Director, the Director may elect to receive a distribution of future
Deferrals in a later Specified Year, subject, however, to the restrictions of
this subsection. All amounts distributable in a Specified Year will be

paid in a single lump sum, in the case of Cash Deferrals, or in a single
distribution of Common Stock, in the case of Stock Deferrals.

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6.1.2
Separation from Service. A Director may elect to receive a distribution of
Deferrals commencing upon Separation from Service or during any of the first
five years following the year of the Separation from Service. A Director may
elect to receive the distribution in the form of a lump sum, annual installments
over a period of five (5), ten (10), or fifteen (15) years, or a combination of
both a lump sum and installments. A Director may elect a different time and form
of distribution upon Separation from Service for Cash Deferrals and Stock
Deferrals.

6.1.3
Unforeseeable Emergency. A Director may submit a written request for a
distribution on account of an Unforeseeable Emergency. Upon approval by the
Administrator of a Director's request, the Director's Accounts, or that portion
of the Director's Accounts deemed necessary by the Administrator to satisfy the
Unforeseeable Emergency plus amounts necessary to pay taxes reasonably
anticipated because of the distribution, will be distributed in a single lump
sum in a manner consistent with Section 409A.

6.2
Additional Distribution Rules.

6.2.1
Medium of Payment. All amounts in a Director's Cash Account shall be paid in
cash. All amounts in a Director's Stock Account shall be paid in the form of an
equivalent number of whole shares of Common Stock. Fractional shares may be
distributed in cash.

6.2.2
Default Time and Form of Payment. If a Director fails timely to elect a time and
form of payment, the Director's Accounts will be distributed upon any Separation
from Service in the form of a single lump sum payment.

6.2.3
Rules Applicable to All Distributions. Except as otherwise provided in this
section, if a Director has elected to receive a distribution commencing upon a
Distribution Event, or if the distribution is required upon Separation from
Service, the distribution will commence between the date of the Distribution
Event and the end of the year in which the Distribution Event occurs. If a
Director 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 Director
will not be permitted, directly or indirectly, to designate the taxable year of
the distribution. If a Director has elected to receive a

distribution commencing during any of the first five years following a
Separation from Service, the distribution will commence during the year elected
by the Director. If a Director 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.

6

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6.2.4
Installment Payments. If a Director elects to receive distributions in annual
installments, the Director's Account(s) will be paid in substantially equal
installments in consecutive years over the period elected by the Director. The
Director's Cash Account will be credited or debited with notional gains and
losses based on the investment funds selected by the Director, from among the
options provided by the Company, until all amounts credited to the Director's
Cash Account have been distributed. The Director's Stock Account will continue
to be credited with Dividend Equivalents pursuant to Section 5.3.3, until all
amounts credited to the Director's Accounts have been distributed. Each annual
installment will be paid during the Plan Year in which it is due. 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.

6.2.5
Death After Commencement of Distributions. Upon the death of a Director after
distributions of the Director's Accounts have commenced, the balance of the
Director's Accounts will be distributed to the Director's Beneficiary at the
same times and in the same forms that the Accounts would have been distributed
to the Director if the Director had survived.

6.3
Subsequent Changes in Time and Form of Payment. A Director may, in accordance
with rules, procedures and forms specified from time to time by the
Administrator, elect to change the time of payment or change the form in which
the Director's Accounts are distributed or both, provided that: (i) the Director
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 years from the date the
distributions would otherwise have been paid, or in the case of installment
payments, five 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
distributions on account of a Separation from Service are considered to commence
on the date of the Separation from Service, or if the Director has elected to
receive a distribution of Deferrals commencing during any of the first five
years following the year of the Separation from Service, January 1 of the year
elected by the Director. Any such election shall be irrevocable on the date it
is filed with the Administrator unless subsequently changed pursuant to this
Section.

7

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ARTICLE 7
Payment Acceleration and Delay

7.1
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.

7.1.1
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 Director because of a
violation of Section 409A prior to receipt, the Director 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 Director 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
Director'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 Director's request is approved.

7.1.2
Compliance with Ethics Laws or Conflicts of Interests Laws. The Administrator
may, in its sole discretion, 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 Treasury
Regulations section 1.409A-3(j)(4)(iii)(B).

7.1.3
Small Accounts. The Administrator may, in its sole discretion, distribute the
Director's Accounts in a single lump sum provided: (i) the distribution results
in the payment of the Director's entire Accounts and all other account balance
plans required to be aggregated with the Director's Accounts pursuant to Section
409A and (ii) the total distribution does not exceed the applicable dollar limit
under Code section 402(g)(1)(B). The Administrator shall notify the Director in
writing if the Administrator exercises its discretion pursuant to this Section.
Any payment to a Director pursuant to this Section must represent the complete
liquidation of the Director's interest in the Plan.

7.1.4
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 Director and the Company over a
Director's right to a distribution provided that the distribution relates only
to the Deferrals in dispute and the Company is not experiencing a downturn in
financial health.

7.2
Permissible Distribution Delays. Notwithstanding anything in the Plan to the
contrary, to the extent permitted by Section 409A, the Administrator may, in its
sole discretion, delay distribution to a Director:

8

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7.2.1
If the distribution would jeopardize the Company's ability to continue as a
going concern, provided that the delayed distribution is distributed in the
first calendar year in which the distribution would not have such effect.

7.2.2
If the distribution would violate Federal securities or other applicable laws,
provided that the delayed distribution is distributed at the earliest date at
which the Administrator reasonably anticipates that the distribution will not
cause such violation.

7.2.3
If calculation of the distribution is not administratively practicable due to
events beyond the control of the Director, provided that the delayed
distribution is paid in the first calendar year in which the calculation of the
distribution is administratively practicable.

7.3
Suspension Not Allowed. If a Director whose distributions have commenced becomes
eligible again to defer compensation under any plan maintained by a Related
Company, distribution of any remaining amounts in his Accounts may not be
suspended.

ARTICLE 8
Beneficiary Designation

8.1
Beneficiary. Each Director shall have the right, at any time, to designate a
Beneficiary(ies) (both primary as well as contingent) to whom a Director's
Accounts shall be paid if a Director dies prior to complete distribution of the
Accounts. 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 Director's lifetime. Any Beneficiary designation may be changed by a
Director 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 distribution of a
Director's Accounts in the event of the Director's death.

8.2
No Beneficiary Designation. In the absence of an effective Beneficiary
designation, or if all designated Beneficiaries predecease the Director or die
prior to the complete distribution of the Director's Accounts, the Accounts
shall be paid in the following order of precedence: (a) the Director's surviving
spouse; (b) the Director's children (including adopted children), per stirpes;
or (c) the Director's estate.

ARTICLE 9
Claims Procedures

Any Director or Beneficiary, or his or her authorized representative, may file a
claim for benefits due him or her under the Plan by written request to the
Company, setting forth with specificity the facts and events which give rise to
the claim. The Company shall promptly respond, consistent with any legal
requirements that might apply.

9

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ARTCILE 10
Amendment or Termination

The Company hereby reserves the right to amend, modify, or terminate the Plan at
any time by action of the Board, with or without prior notice. No amendment or
termination shall reduce any Director's Accounts without the written consent of
the affected Director. Notwithstanding anything herein to the contrary, to the
extent consistent with Section 409A, the Board may terminate the Plan and
distribute to each Director the amount in his or her Accounts 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, distributions may be accelerated
upon a Plan termination as provided above only if, to the extent required under
Section 409A, (i) all other nonqualified deferred compensation “account balance
plans” (within the meaning of Section 409A), in which any Director participates
are terminated along with the Plan, and (ii) the Company does not adopt any new
nonqualified deferred compensation “account balance plan” (within the meaning of
Section 409A), for three years following the date of Plan termination.
ARTICLE 11
Miscellaneous Provisions

11.1
Unsecured General Creditor. Directors and their Beneficiaries, heirs, successors
and assigns shall have no legal or equitable rights, interests or claims in any
property or assets of the Company. Any and all of the Company's assets shall be,
and remain, the general, unpledged unrestricted assets of the Company. The
Company's obligation under the Plan shall be merely that of an unfunded and
unsecured promise to pay money in the future.

11.2
Trust Fund. At its discretion, the Company may establish a Trust, with such
trustees as the Company may approve, for the purpose of providing for the
distribution of benefits owed under this Plan. The Trust's assets shall be held
for distribution of all the Company's general creditors in the event of
insolvency or bankruptcy. To the extent any Plan benefits are paid from any such
Trust, the Company shall have no further obligations to pay them. If not paid
from the Trust, such benefits shall remain the obligation of the Company.

11.3
Section 409A Compliance. All provisions of the Plan shall be interpreted and
administered to the extent possible in a manner consistent with Section 409A. 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 Director.

11.4
Company's Liability. The Company's liability for the distribution of benefits
shall be defined only by the Plan. The Company shall have no obligation to a
Director except as expressly provided in the Plan.

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11.5
Nonassignability. Neither a Director 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 Director or
any other person, be transferable by operation of law in the event of a
Director's or any other person's bankruptcy or insolvency or be transferable to
a spouse as a result of a property settlement or otherwise.

11.6
No Right to Board Position. Nothing in the Plan shall be deemed to create any
obligation on the part of the Board to nominate any of its members for
reelection by the Company's stockholders, nor confer upon any Director the right
to remain a member of the Board for any period of time, or at any particular
rate of compensation.

11.7
Incompetency. If the Administrator determines that a distribution under this
Plan is to be paid to a minor, to 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. Any distribution shall be for the
account of the Director and the Director's Beneficiary, as the case may be, and
shall completely discharge any liability for such amount.

11.8
Furnishing Information. A Director 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.

11.9
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.

11.10
Compliance with Government Regulations. Neither the Plan nor the Company shall
be obligated to issue any shares of Common Stock pursuant to the Plan at any
time unless and until all applicable requirements imposed by any federal and
state securities and other laws, rules and regulations, by any regulatory
agencies or by any stock exchanges upon which the Common Stock may be listed
have been fully met. As a condition precedent to any issuance of shares of
Common Stock and delivery of certificates evidencing such shares pursuant to the
Plan, the Board or the Administrator may require a Director to take any such
action and to make any such covenants,

agreements, and representations as the Board or the Administrator, as the case
may be, in its discretion deems necessary or advisable to ensure compliance with
such requirements. The Company shall in no event be obligated to register the
shares of Common Stock deliverable under the Plan pursuant to the Securities Act
of 1933, as amended, or to qualify or register such shares under any securities
laws of any state upon their issuance under the Plan or at any time thereafter,
or to take any other action in order to cause the issuance and delivery of such
shares under the Plan

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or any subsequent offer, sale, or other transfer of such shares to comply with
any such law, regulation, or requirement. Directors are responsible for
complying with all applicable federal and state securities and other laws,
rules, and regulations in connection with any offer, sale, or other transfer of
the shares of Common Stock issued under the Plan or any interest therein
including, without limitation, compliance with the registration requirements of
the Securities Act of 1933 as amended (unless an exception therefrom is
available) or with the provisions of Rule 144 promulgated thereunder, if
applicable, or any successor provisions. Certificates for shares of Common Stock
may be legended as the Administrator shall deem appropriate.

11.11
Exchange Act Exemption. It is the intent of the Company that transactions
pursuant to this Plan satisfy and be interpreted in a manner that satisfies the
applicable requirements of Rule 16b-3 promulgated under the Exchange Act (“Rule
16b-3”) so that, to the extent elections are timely, the crediting of Stock
Deferrals and Dividend Equivalents, the distribution of shares of Common Stock
and any other event with respect to Stock Deferrals under the Plan will be
entitled to the benefits of Rule 16b-3 or other exemptive rules under Section 16
of the Exchange Act and will not be subjected to liability thereunder.

11.12
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.

11.13
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.

11.14
Applicable Law and Construction. 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.

11.15
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.

11.16
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 Company under this Plan, in
the same manner and to the same extent that the Company and each Company would
be required to perform if no such succession had taken place.

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ARTICLE 12
Definitions

The following terms shall have the meanings set forth below:
“Account” or “Accounts” shall mean a Director's Deferral Account, Stock Account,
or both, as the context so requires.
“Administrator” means the Executive Compensation Committee of the Board.
“Annual Cash Retainer” means that portion of the Director's Annual Retainer
payable in cash.
“Annual Retainer” means the compensation, consisting of the Annual Cash Retainer
and the Annual Stock Retainer and excluding perquisites and reimbursements, paid
to a Director pursuant to the Stock Plan for service on the Board and any
committee of the Board.
“Annual Stock Retainer” means that portion of a Director's Annual Retainer
payable in Company Stock.
“Beneficiary” means one or more persons, trusts, estates or other entities,
designated in accordance with this Plan, that are entitled to receive Plan
benefits upon the death of a Director.
“Board” means the Board of Directors of the Company.
“Cash Account” means the bookkeeping account maintained by the Company for each
Director that is credited with Cash Deferrals, and such other accounts or
sub-accounts as the Administrator deems necessary or appropriate.
“Cash Deferral” means any portion of a Director's Annual Cash Retainer that a
Director elects to defer in accordance with the Plan.
“Code” means the Internal Revenue Code of 1986, as it may be amended from time
to time.
“Common Stock” means the common stock of ALLETE, Inc.
“Company” means ALLETE, Inc., a Minnesota Corporation, and any successor to all,
or substantially all, of the Company's assets or business.
“Deferrals” means the Cash Deferrals, Stock Deferrals, or both, that a Director
elects to defer in accordance with the Plan, as the context so requires.

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“Director” means a member of the Board who is not an employee of any Related
Company.
“Distribution Event” means a Specified Year, a Separation from Service or the
Administrator's determination regarding the occurrence of an Unforeseeable
Emergency.
“Dividend Equivalent” means the amount of cash dividends or other cash
distributions paid by the Company on that number of shares of Common Stock equal
to the number of Stock Deferrals credited to a Director's Stock Account as of
the applicable record date for the dividend or other distribution, and which
shall be credited in the form of additional Stock Deferrals to the Director's
Stock Account, as provided in Section 5.3.3.
“Exchange Act” means the Securities Exchange Act of 1934, as amended from time
to time.
“Fair Market Value” means the closing sale price as reported in the composite
reporting system or, if there is no such sale on the relevant date, then on the
last previous day on which a sale was reported.
“IRS” means the Internal Revenue Service.
“Plan” means the ALLETE, Inc. Amended and Restated Non-Employee Director
Compensation Deferral Plan II, as amended from time to time.
“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.
“Section 409A” means section 409A of the Code (and any successor provision), and
regulations and other guidance issued by the Treasury Department and Internal
Revenue Service thereunder.
“Separation from Service” means that the Director ceases to perform services as
a Director and the Company does not then anticipate that the Director will
continue to perform services in any capacity for any Related Company.

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“Service Period” means, with respect to the Annual Cash Retainer, a Plan Year,
and with respect to the Annual Stock Retainer, the 12-month period beginning on
June 1 of each Plan Year or, with respect to a Director who first becomes
eligible to participate in the Plan after June 1 of a Plan Year, such lesser
period beginning on the date the Director joins the Board and ending on the
following May 31.
“Specified Year” means the year specified by a Director as the year in which the
Director will receive a distribution payment of all or a portion of his
Account(s). The Specified Year must be at least two years after the year the
Annual Retainer would have been paid but for the Director's deferral election.
“Stock Account” means the bookkeeping Account maintained by the Company for each
Director that is credited with any Stock Deferrals and Dividend Equivalents with
respect to such Stock Deferrals, and such other accounts or sub-accounts as the
Administrator deems necessary or appropriate.
“Stock Deferral” means a non-voting unit of measurement, which is deemed solely
for bookkeeping purposes under this Plan to be equivalent to one outstanding
share of Common Stock. No Director shall be entitled to any voting or other
stockholder rights with respect to Stock Deferrals credited under this Plan.
“Stock Plan” means the ALLETE Director Stock Plan, dated May 9, 1995, as
amended, or any predecessor or successor plan.
“Trust” means one or more trusts established pursuant to the ALLETE, Inc.
Non-Employee Director Compensation Trust Agreement, effective October 11, 2004,
between the Company and the trustee named therein, as amended from time to time.
“Unforeseeable Emergency” means an unanticipated emergency that is caused by an
event beyond the control of the Director that would result in severe financial
hardship to the Director resulting from (i) an illness or accident of the
Director or the Director's spouse, the Director's beneficiary, or the Director'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 Director'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 Director,
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.

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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 July 24, 2012.
ALLETE, Inc.:
/s/ Alan R. Hodnik

Alan R. Hodnik
Chairman, President & Chief Executive Officer

ATTEST:

/s/ Deborah A. Amberg

Deborah A. Amberg
Senior Vice President, General Counsel and Secretary

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