ALLETE NON-EMPLOYEE DIRECTOR COMPENSATION DEFERRAL PLAN II

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.

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.

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.

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.

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 Compensation, the Directors, the date and circumstances of a Director’s Separation from Service, and other pertinent information as the Administrator may reasonably require.

For each Plan Year, a Director may elect:  (i) to defer some or all of the Director’s Compensation and (ii) to the extent permitted by this Plan, the time and form of distribution of Deferrals.  Elections are effective on a calendar-year basis and become irrevocable no later than the date specified by the Administrator, but in any event before the beginning of the Plan Year to which the elections relate.  A 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 the Administrator, 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 amounts for the following Plan Year.

If a Director experiences an Unforeseeable Emergency during a Plan Year, the Director may submit to the Administrator a written request to cancel Deferrals for the Plan Year to satisfy the Unforeseeable Emergency.  If the Administrator either approves the Director’s request to cancel Deferrals for the Plan Year, 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 Plan Year.  A Director whose Deferrals are canceled during a Plan Year in accordance with this section may elect Deferrals for the following Plan Year.

The Company will establish notional accounts for each Director as the Administrator deems necessary or advisable from time to time to be consistent with 2.1 and 5.4 below.  The Company will establish a Director’s Account no later than the date on which the Director first elects to defer any amounts into the Account.  Each Account shall be credited as appropriate for Deferrals and earnings with respect to Deferrals and debited for distributions from the Account.

The Administrator shall credit a Director’s Deferrals to the Director’s Account not later than the end of the calendar year during which the Company would otherwise have paid the amounts to the Director but for the Director’s deferral election.

All Director Accounts are fully vested at all times.

The Administrator may select investment funds to use for measuring notional gains and losses.  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 Account prior to Separation from Service.

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

ARTICLE 6

Distributions