Document:

exhibit_10a.htm

    Exhibit
10(a)

       

       

       

       

       

       

       

       

      ALLETE

       

       

      AMENDED
AND RESTATED

       

       

      NON-EMPLOYEE
DIRECTOR COMPENSATION DEFERRAL PLAN II

       

       

      Effective
May 1, 2009

       

       

       

       

       

       

       

       

       

       

       

       

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      TABLE OF
CONTENTS

       

      

       

      
        
          	
                  SECTION

                	
                  HEADING

                	
                  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

                
	 
      	 
      	
                  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

                	
                  8

                
	 
      	 
      	 
      	 
      
	
                  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

                

        

      

      

      
        
           

        

        
          
          

          
            

          

        

        
           

        

      

      

      ALLETE

      AMENDED
AND RESTATED

      NON-EMPLOYEE
DIRECTOR COMPENSATION DEFERRAL PLAN II

      

       

      Effective
May 1, 2009

       

      ARTICLE
1

       

      Establishment and
Purpose

       

      This
document includes the terms of the ALLETE 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 further amends and
restates the Plan to expand the types of compensation that Directors may
defer.  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.

              

      

       

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      
        	
                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 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.

              

      

       

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      
        	
                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.

              

      

       

      
        	
                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 who has not had a Separation from Service 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 prior to Separation from
  Service.

              

      

       

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      
        	
                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 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.

              

      

       

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      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.

              

      

       

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      
        	
                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

          
            

          

        

        
          
          

        

      

       

      
        	
                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.  During the distribution period, the Director’s Cash
      Account will be credited with interest compounded monthly at a rate of
      7.5% per year, and 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

          
            

          

        

        
          
          

        

      

       

      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

          
            

          

        

        
          
          

        

      

       

      
        	
                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

          
            

          

        

        
          
          

        

      

       

      ARTICLE
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.

              

      

       

       

      
        
          
          

        

        
          10

          
            

          

        

        
          
          

        

      

       

      
        	
                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 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

          
            

          

        

        
          
          

        

      

       

      
        	
                11.11  

              	
                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.

              

      

       

       

      
        
          
          

        

        
          12

          
            

          

        

        
          
          

        

      

       

      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.

       

       

      
        
          
          

        

        
          13

          
            

          

        

        
          
          

        

      

       

      “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 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.

       

       

      
        
          
          

        

        
          14

          
            

          

        

        
          
          

        

      

       

      “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.

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

      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 May 1, 2009.

       

      ALLETE,
Inc.:

       

      Donald J. Shippar

       

      Donald J.
Shippar

       

      Chairman
and Chief Executive Officer

       

      ATTEST:

       

      

       

      Deborah
A. Amberg

       

      Deborah
A. Amberg

       

      Senior
Vice President, General Counsel and Secretary

       

      

      

      
        
          
             

          

           

        

        
          16exhibit_10b.htm

    Exhibit
10(b)

    

AMENDMENT
TO THE

    ALLETE
DIRECTOR STOCK PLAN

    

    

    The
ALLETE Director Stock Plan (the “Plan”), dated May 9, 1995, as amended, is
amended as follows, effective May 1, 2009:

    

    1.           Section
II is amended to add the following additional definition:

    

    “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.

    

    2.           Section
V is amended by deleting section B. in its entirety and replacing it with the
following:

    

    B.  Each
Director shall receive a Stock Payment for services rendered during the Service
Period equal in value to $60,000 on the first business day of June or as soon as
practicable following that date.  The number of shares shall be
calculated by dividing the amount of the Stock Payment by the fair market value
of a share of Common Stock, which for this purpose means the average New York
Stock Exchange closing price for the last 5 days up to and including the date
that is 10 calendar days prior to June 1 of the Service Period (or on the first
business day thereafter if June 1 is not a business day).  To the
extent the Director has not elected to defer some or all of the Stock Payment
pursuant to the ALLETE Amended and Restated Non-Employee Director Compensation
Deferral Plan II, the Company shall either issue shares or cause the appropriate
number of shares of Common Stock to be purchased in the market and delivered to
the Director or, at the Company’s election, to the Director’s Invest Direct
account or to the Director’s account in such successor dividend reinvestment
plan as the Company may establish.  Fractional shares may be paid in
cash.  Directors joining the Board during a Service Period after the
first business day in June will receive their Stock Payment, valued using the
same general methodology described above, as soon as practicable after the first
business day following the effective date of their election or appointment to
the Board.

    

    3.           Section
V is amended by adding the following new subsections E. and F.

    

    E.  The
cash portion of the Annual Retainer for such Plan Year shall be paid to
Directors at such times and in such manner as may be determined by the Board of
Directors, unless the Director has elected to defer some or all of the cash
portion of the Annual Retainer pursuant to the ALLETE Amended and Restated
Non-Employee Director Compensation Deferral Plan II.

    

    F.  Any
portion of the Annual Retainer that a Director elects to defer pursuant to the
ALLETE Amended and Restated Non-Employee Director Compensation Deferral Plan II
shall be considered a deferral under that plan and not this Plan.

    

    4.           Section
VI is amended by deleting the sentence that provides that “Cash in lieu of any
fractional share shall be paid to the Participant” and replacing it with “Cash
in lieu of any fractional share may be paid to the Participant.”

    

    5.           In
all respects not amended, the Plan is hereby ratified and
confirmed.

    

    IN WITNESS WHEREOF, this
amendment is effective as of May 1, 2009 and has been executed on the dates
written below.

    

     

    ALLETE,
Inc.

    

     

    By:  Donald J. Shippar

    Donald J. Shippar

    Chairman and Chief Executive
Officer

    

    

    ATTEST:

    

     

    By:  Deborah A. Amberg

    Deborah A. Amberg

    Senior Vice President, General
Counsel & Secretary

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00161-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00161-of-00352.parquet"}]]