Document:

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                                                                  EXHIBIT 10(d)2

                               FIRST AMENDMENT TO
              THIRD AMENDED AND RESTATED COMMITTED FACILITY LETTER

          This First Amendment to Third Amended and Restated  Committed Facility
Letter is dated as of December 14, 2004, by and among ALLETE,  INC., a Minnesota
corporation (the "COMPANY"),  the banks from time to time party to the Committed
Facility Letter (as  hereinafter  defined) (each a "BANK" and  collectively  the
"BANKS") and LASALLE BANK NATIONAL ASSOCIATION, in its capacity as agent for the
Banks (in such capacity, the "AGENT").

                                WITNESSETH THAT:

          WHEREAS,  the  Company,  the  Banks  and the  Agent  are party to that
certain  Third  Amended  and  Restated  Committed  Facility  Letter  dated as of
December  23,  2003  (together  with  all  exhibits,   schedules,   attachments,
appendices and amendments thereof, the "COMMITTED FACILITY LETTER"); and

          WHEREAS,  the Company has requested that the Committed Facility Letter
be amended as set forth  herein and the Banks are  agreeable  to such request on
the terms and subject to the conditions set forth herein;

          NOW, THEREFORE,  for good and valuable consideration,  the receipt and
sufficiency  of which is hereby  acknowledged,  the  Company,  the Banks and the
Agent hereby agree as follows:

     1. The  parties  hereto  desire to extend the term of the  Facility  for an
additional  three years.  Accordingly,  the  penultimate  sentence of the second
paragraph of the Committed Facility Letter is hereby deleted in its entirety and
the following sentence is hereby substituted therefor:

          "This Facility  shall  terminate on  December 14, 2007 (the
          "TERMINATION DATE")."

     2. The  definition  of  "Applicable  Margin"  appearing in Section 8 of the
Committed  Facility  Letter is hereby  deleted in its entirety and the following
definition is hereby substituted therefor:

          "APPLICABLE  MARGIN"  means (i) with respect to  Eurodollar
          Loans,  (a)  0.425%  per  annum  for any day Level I Status
          exists;  (b)  0.550%  per annum for any day Level II Status
          exists;  (c)  0.675% per annum for any day Level III Status
          exists;  (d)  0.800%  per annum for any day Level IV Status
          exists; and (e) 1.300% per annum for any day Level V Status
          exists;  and (ii) with  respect  to Prime Rate  Loans,  (a)
          0.000%  per annum for any day  Level I Status  exists;  (b)
          0.000%  per annum for any day Level II Status

<PAGE>

          exists;  (c)  0.000% per annum for any day Level III Status
          exists;  (d)  0.500%  per annum for any day Level IV Status
          exists; and (e) 1.500% per annum for any day Level V Status
          exists.

     3. The parties hereto desire to reduce the aggregate amount available to be
borrowed by the Company under the Facility. Accordingly, the Commitments of each
Bank  shall  equal the amount  set forth  opposite  the name of such Bank on the
signature pages hereto.

     4.  Section  4(b)  specifying  the  conditions   precedent  to  the  Banks'
obligations  to make Loans is hereby  deleted in its entirety and the  following
new Section 4(b) is substituted in lieu thereof:

          "The  obligation  of each Bank to make any Loan  (including
          the  initial  Loan)  shall  be  subject  to  the  following
          statements  being true and correct  before and after giving
          effect to such Loan: (i) the representations and warranties
          set forth in Section 5 shall be true and  correct  with the
          same effect as if then made (unless stated to relate solely
          to an earlier date, in which case such  representations and
          warranties  shall be true and  correct  as of such  earlier
          date);  and (ii) no Event of Default or Unmatured  Event of
          Default  shall have  occurred and be  continuing,  PROVIDED
          that this  subsection  4(b)(ii) shall not apply to an Event
          of  Default   occurring   solely   under  clause  (vii)  of
          subsection  7(a) with  respect to a Loan if the proceeds of
          such Loan will be used  exclusively  to repay the Company's
          commercial  paper (and, in the event of any such Loan,  the
          Agent  may  require  the  Company  to  deliver  information
          sufficient  to disburse the proceeds of such Loan  directly
          to the holders of such  commercial  paper or a paying agent
          therefor)."

     5. Except as expressly  amended hereby,  the Committed  Facility Letter and
all other documents executed in connection  therewith shall remain in full force
and effect in accordance with their  respective  terms.  The Committed  Facility
Letter,  as  amended  hereby,  and all rights and  powers  created  thereby  and
thereunder  or under such  other  documents  are in all  respects  ratified  and
confirmed.  From and after the date hereof,  the Committed Facility Letter shall
be deemed to be  amended  and  modified  as herein  provided  and,  except as so
amended and modified, the Committed Facility Letter shall continue in full force
and effect in accordance  with its terms and the Committed  Facility  Letter and
this  Amendment  shall  be  read,  taken  and  construed  as one  and  the  same
instrument.  On and after the date  hereof the term  "AGREEMENT"  as used in the
Committed  Facility  Letter and all other  references to the Committed  Facility
Letter in the  Committed  Facility  Letter,  the  other  documents  executed  in
connection  therewith  and/or  herewith  or any other  instrument,  document  or
writing  executed by the Company or any other  person or  furnished to the Agent
and/or the Banks by the Company,  or any other person

                                      -2-

<PAGE>

in connection  herewith or  therewith, shall be deemed to  be a reference to the
Committed Facility Letter as hereby amended.

     6. The  effectiveness  of this Amendment is subject to the  satisfaction of
the following conditions precedent:

            (a) The Company  shall pay to the Agent for the account of the Banks
     based upon each Bank's pro rata portion of the aggregate  Commitments,  the
     renewal  fee set  forth in that  certain  renewal  fee  letter of even date
     herewith by and between the Agent and the Company, together with such other
     fees for the  account  of  Agent,  as set forth in that  certain  agent fee
     letter, also of even date herewith;

            (b) The Company shall have executed and delivered  this Amendment to
     Agent  together  with such other  documents  and  instruments  as Agent may
     reasonably require;

            (c) No  Default  or Event of  Default  shall  have  occurred  and be
     continuing;

            (d) The Company shall have executed and delivered to each Bank a new
     Note (in  substitution  and without  effecting  a novation of any  existing
     Note,  which existing Note shall be  surrendered by each such Bank,  marked
     "Cancelled and  Substituted")  corresponding in maximum principal amount to
     the  Commitment  of each  such  Bank as set  forth on the  signature  pages
     hereof;

            (e) Agent  shall have  received an opinion of counsel to the Company
     in form and substance reasonably acceptable to Agent; and

            (f) Agent shall have received a certificate  of the Secretary of the
     Company  having  attached  (i) a copy  of  the  resolution  of the  Company
     authorizing  the execution,  delivery and performance of this Amendment and
     the transactions contemplated hereunder,  certified by the Secretary of the
     Company;  (ii) an incumbency  certificate showing the names and titles, and
     bearing  the  signatures  of, the  officers of the  Company  authorized  to
     execute this Amendment; and (iii) true, correct and complete, copies of its
     constituent and governance documents.

     7. On and as of the date hereof, the Company represents and warrants to the
Banks that:

            (a) The representations  and warranties  contained in this Amendment
     and the  Committed  Facility  Letter are true and  correct in all  material
     respects,  in each case as though made on and as of the date hereof, except
     to the extent  such  representations  and  warranties  relate  solely to an
     earlier date (and then as of such earlier date); and

            (b) Both  before  and  after  giving  effect to this  Amendment,  no
     Default or Event of Default has occurred and is  continuing or would result
     from the execution and delivery of this Amendment; and

                                      -3-

<PAGE>

            (c) The Company is, and will be, in full  compliance with all of the
     material terms,  conditions and all other  provisions of this Amendment and
     the Credit Documents; and

            (d) This Amendment has been duly authorized,  executed and delivered
     on its behalf,  and both the Committed  Facility Letter,  both before being
     amended and supplemented hereby and as amended and supplemented hereby, and
     this  Amendment   constitute  its  legal,   valid  and  binding  obligation
     enforceable against it in accordance with their terms, except to the extent
     that a  remedy  or  default  may be  determined  by a  court  of  competent
     jurisdiction  to  constitute  a  penalty  and  except  to the  extent  that
     enforceability  may be limited by bankruptcy,  insolvency,  reorganization,
     moratorium  or other  similar  laws  relating  to  creditors'  rights or by
     general principles of equity.

     8. This Amendment shall be construed in accordance with and governed by the
internal laws of the State of Illinois,  without regard to its conflicts of laws
principles.

     9. This  Amendment  may be signed in any  number of  counterparts,  each of
which shall be deemed an original,  but all of which together  shall  constitute
one and the same instrument. This Amendment may also be signed by facsimile, and
any  facsimile  signature  hereto  shall for all  purposes be deemed an original
signature.

     10.  Except as otherwise  specified  herein,  this  Amendment  embodies the
entire  agreement  and  understanding  between  the  Company  and the Banks with
respect to the  subject  matter  hereof  and  supersedes  all prior  agreements,
consents and understandings relating to such subject matter.

     11. This  Amendment  shall be binding  upon and inure to the benefit of the
Banks and  their  successors  and  assigns  and the  Company  and its  permitted
successors and assigns.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                      -4-

<PAGE>

          IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused  this  First
Amendment to Third  Amended and Restated  Committed  Facility  Letter to be duly
executed and delivered by their duly authorized  officers as of the day and year
first above written.

THE COMPANY:                          ALLETE, INC., a Minnesota corporation
-----------

                                      By:     /s/ James Vizanko
                                            ------------------------------------
                                      Name:   James K. Vizanko
                                            ------------------------------------
                                      Title:  Sr. Vice President and CFO
                                            ------------------------------------

AGENT/BANKS:                          LASALLE BANK NATIONAL
-----------                           ASSOCIATION, in its individual capacity
                                      as a Bank and as Agent
Commitment: $26,000,000
                                      By:     /s/ Denis J. Campbell, IV
                                            ------------------------------------
                                      Name:   DENIS J. CAMPBELL, IV
                                            ------------------------------------
                                      Title:  SENIOR VICE PRESIDENT
                                            ------------------------------------

                                      By:     /s/ Matthew D. Rodgers
                                            ------------------------------------
                                      Name:   MATTHEW D. RODGERS
                                            ------------------------------------
                                      Title:  ASSISTANT VICE PRESIDENT
                                            ------------------------------------

<PAGE>

                                                                  SIGNATURE PAGE
         FIRST AMENDMENT TO THIRD AMENDED AND RESTATED COMMITTED FACILITY LETTER
                                                               DECEMBER 14, 2004

OTHER BANKS:
-----------

Commitment: $18,500,000               U.S. BANK NATIONAL ASSOCIATION

                                      By:     /s/ Christopher W. Rupp
                                            ------------------------------------
                                      Name:   Christopher W. Rupp
                                            ------------------------------------
                                      Title:  Assistant Vice President
                                            ------------------------------------

Commitment: $18,500,000               WELLS FARGO BANK,
                                      NATIONAL ASSOCIATION

                                      By:     /s/ Mark Halldorson
                                            ------------------------------------
                                      Name:   Mark H. Halldorson
                                            ------------------------------------
                                      Title:  Vice President
                                            ------------------------------------

                                      By:     /s/ Jennifer Barrett
                                            ------------------------------------
                                      Name:   Jennifer D. Barrett
                                            ------------------------------------
                                      Title:  Vice President & Loan Team Manager
                                              Wells Fargo Bank,
                                              National Association
                                            ------------------------------------

Commitment: $22,000,000               JPMORGAN CHASE BANK, N.A.

                                      By:     /s/ Michael J. DeForge
                                            ------------------------------------
                                      Name:   MICHAEL J. DeFORGE
                                            ------------------------------------
                                      Title:  VICE PRESIDENT
                                            ------------------------------------

Commitment: $15,000,000               THE BANK OF TOKYO- MITSUBISHI, LTD.,
                                              CHICAGO BRANCH

                                      By:     /s/ Patrick McCue
                                            ------------------------------------
                                      Name:   Patrick McCue
                                      Title:  Vice President & Manager<PAGE>
                                                                  EXHIBIT 10(k)4

                                     ALLETE
                 EXECUTIVE LONG-TERM INCENTIVE COMPENSATION PLAN
                         NONQUALIFIED STOCK OPTION GRANT

<<First>> <<Last>>

SS# <<SSN>>

In accordance with the terms of ALLETE's Executive Long Term Incentive
Compensation Plan (the "Plan"), as determined by and through the Executive
Compensation Committee of ALLETE's Board of Directors, ALLETE hereby grants to
you (the "Participant"), subject to the terms and conditions set forth in this
Grant (including Annex A hereto and all documents incorporated herein by
reference) the rights and options (the "Options") to purchase from ALLETE,
shares of its common stock, without par value, as set forth below:

Number of Options Granted:               <<M_2004_Options_Granted>>
Number of Shares to which
   Options Pertain:                      <<M_2004_Options_Granted>>
Date of Grant:                           February 1, 2005
Option Price:                            $41.35
Vesting:                                 33% on February 1, 2006
                                         33% on February 1, 2007
                                         34% on February 1, 2008
Expiration Date:                         Close of business on February 1, 2015
Exercise Period:                         Date of Vesting through Expiration Date

Further terms and conditions of the Grant are set forth in Annex A hereto, which
is an integral part of this Grant. This Grant is made in accordance with the
Plan, which was approved by ALLETE's shareholders at the 1996 Annual Meeting.
All terms, provisions and conditions applicable to the Options set forth in the
Plan and not set forth herein are incorporated by reference. To the extent any
provision hereof is inconsistent with a provision of the Plan, the provisions of
the Plan will govern.

These Options are not intended to qualify as incentive stock options under
Section 422 of the Internal Revenue Code of 1986, as amended.

IN WITNESS WHEREOF, ALLETE has caused this Grant to be executed by its President
and Chief Executive Officer as of the date and year first above written.

                                        ALLETE

                                        By:  /s/ Don Shippar
                                           -------------------------------------
                                           President and Chief Executive Officer

Attachment: Annex A

<PAGE>

                                     ANNEX A
                                       TO
                 EXECUTIVE LONG-TERM INCENTIVE COMPENSATION PLAN
                         NONQUALIFIED STOCK OPTION GRANT

     1.     FURTHER TERMS AND CONDITIONS OF OPTIONS. The Grant of Options
evidenced by the Grant to which this is annexed is subject to the following
additional terms and conditions:

            (a)     EXERCISE OF OPTIONS. Except as otherwise provided in
subsection (b) hereof, upon a Change in Control as set forth in the Plan or as
the Executive Compensation Committee (the "Committee") may determine, the
Participant must be in the employ of ALLETE or a Subsidiary thereof at the time
the Options are exercised. Subject to the foregoing and to subsection (b)
hereof, after vesting, the Options may be exercised in whole or in part from
time to time by written notice of exercise delivered to Wells Fargo, Attention:
Stock Plan Administration, such notice to be received and effective not later
than the Expiration Date, specifying the number of Shares to be purchased. The
minimum number of Shares to be purchased in a partial exercise shall be the
lesser of 100 Shares or the number of Shares remaining unexercised under the
Grant. In the event that the Expiration Date shall fall on a day that is not a
regular business day at ALLETE's executive offices in Duluth, Minnesota, such
written notice must be delivered to Wells Fargo no later than the last regular
business day prior to the Expiration Date.

            (b)     EXERCISE UPON DEATH, RETIREMENT, OR DISABILITY; FORFEITURE
UPON TERMINATION OF EMPLOYMENT FOR CAUSE, DEMOTION, OR UNSATISFACTORY JOB
PERFORMANCE.

            (1) If the Participant retires pursuant to the terms of a
                tax-qualified retirement plan of ALLETE or a Subsidiary or upon
                such other retirement as may be approved by the Committee, the
                Options, to the extent not yet vested, shall vest in full and
                all Options covered by the Grant, to the extent not yet
                exercised, shall be exercisable by the Participant in full at
                any time during the three-year period immediately following his
                retirement, but in no event after the Expiration Date.

            (2) In the event of the death of the Participant while in the employ
                of ALLETE or a Subsidiary, the Options, to the extent not yet
                vested, shall vest in full and all Options covered by the Grant,
                to the extent not yet exercised, shall be exercisable by the
                executors, administrators, legatees or distributees of his
                estate, as the case may be, in full at any time during the
                one-year period following his death, but in no event after the
                Expiration Date.

            (3) In the event of the termination of the employment of the
                Participant due to Disability (as defined in Section 22(e)(3) of
                the Code), the Options, to the extent not yet vested, shall vest
                in full and all Options covered by the Grant, to the extent not
                yet exercised, shall be exercisable in full at any time during
                the one-year period following such termination of employment,
                but in no event after the Expiration Date.

<PAGE>

            (4) If the Participant's employment or service with the Company
                terminates for any reason other than for Cause (defined below).
                Participant shall have ninety (90) days from the date of
                termination of employment or service to exercise vested options
                and all unvested options will be forfeited as of the date of
                termination.

            (5) If the Participant's employment with the Company or any
                Subsidiary is terminated for Cause, all outstanding unvested and
                vested Options shall be forfeited as of the date of such
                termination of employment or service. Cause is defined as (a)
                any conduct by the Participant that causes or threatens a loss
                to the Company; (b) any violation of any Company policy; (c)
                Participant's refusal or neglect to substantially perform his or
                her obligations and services; (d) violation of the Company's
                code of business conduct and ethics; or (e) Participant's
                arrest, conviction or admission of any crime involving injury to
                persons, misappropriation of money, or damage to property.

            (6) If the Participant is demoted, or if ALLETE or a Business Unit
                determines in its sole discretion that the Participants job
                performance is unsatisfactory, ALLETE reserves the right to
                cancel any grants and unvested options.

            (7) Notwithstanding the foregoing, the Committee may, in its
                discretion and at any time, provide that the Options may be
                exercisable during a period of up to 5 years following
                termination of employment but in no event after the Expiration
                Date.

     2.     RATIFICATION OF ACTIONS. By receiving the Grant or other benefit
under the Plan, the Participant and each person claiming under or through him
shall be conclusively deemed to have indicated the Participant's acceptance and
ratification of, and consent to, any action taken under the Plan or the Grant by
ALLETE, the Board or the Committee.

     3.     NOTICES. Any notice hereunder to ALLETE shall be addressed to its
office, 30 West Superior Street, Duluth, Minnesota 55802, Attention: Manager -
Executive Compensation and Employee Benefits, Human Resources, and any notice
hereunder to the Participant shall be directed to the Participant's address as
indicated by ALLETE's records, subject to the right of either party to designate
at any time hereafter in writing some other address.

     4.     DEFINITIONS. Capitalized terms not otherwise defined herein shall
have the meanings given them in the Plan.

     5.     GOVERNING LAW AND SEVERABILITY. To the extent not preempted by
Federal law, the Grant will be governed by and construed in accordance with the
laws of the State of Minnesota, without regard to conflicts of law provisions.
In the event any provision of the Grant shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Grant, and the Grant shall be construed and enforced as if the illegal or
invalid provision had not been included.

                                       2

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