<DOCUMENT>
<TYPE>EX-10
<SEQUENCE>6
<FILENAME>rexhibit10s.txt
<DESCRIPTION>EX-10(S) THIRD AMENDED AND RESTATED LASALLE COMMITTED FACILITY LETTER 12-23-03
<TEXT>
<PAGE>
                                                                   EXHIBIT 10(s)

              THIRD AMENDED AND RESTATED COMMITTED FACILITY LETTER

                                December 23, 2003

ALLETE, Inc.
30 West Superior Street
Duluth, Minnesota 55802
Attn: Corporate Treasurer

Ladies and Gentlemen:

             Reference  is  hereby  made  to that  certain  Second  Amended  and
Restated Committed Facility Letter among the banks party thereto,  ABN AMRO Bank
N.V., as agent for such banks and  yourselves  dated as of December 24, 2002, as
amended from time to time (together with all exhibits,  schedules,  attachments,
appendices and amendments  thereof,  the "EXISTING  COMMITTED FACILITY LETTER").
The parties to the Existing  Committed  Facility Letter desire that the Existing
Committed  Facility  Letter be amended  and  restated in its  entirety,  without
constituting  a  novation,  all on the terms and  conditions  contained  herein.
Accordingly, in consideration of the premises and the agreements, provisions and
covenants  contained herein,  the Existing  Committed  Facility Letter is hereby
amended and restated in its entirety to be and to read as follows:

             LaSalle  Bank  National   Association  (the  "Agent"  and,  in  its
individual  capacity,  a "Bank")  and the other  Banks (as  defined  below)  are
pleased to advise ALLETE,  Inc. (the  "Company")  that the Banks (defined below)
have severally  approved,  subject to the conditions  outlined in this letter, a
committed  credit  facility (the  "Facility").  The amount  available  under the
Facility  shall not  exceed  at any time the  aggregate  sum of the  Commitments
(defined  below).  This  Facility  shall  terminate  on  December  21, 2004 (the
"TERMINATION  DATE").  The Facility shall be available under the following terms
and conditions  (certain  capitalized terms being used and not otherwise defined
as set forth in SECTION 8):

      1.     LOANS.

             The  Company  may from time to time  before  the  Termination  Date
borrow  Eurodollar  Loans,  or if one or more  conditions  exist as set forth in
Section 3(b) or Section 3(c) hereof, Prime Rate Loans. The aggregate outstanding
amount  of the Loans  shall  not at any time  exceed  the  aggregate  sum of the
Commitments.  The Company may borrow,  repay and reborrow in accordance with the
terms hereof.

             a.   BORROWING PROCEDURES

                  i.  PRIME RATE  LOANS.  Each Prime Rate Loan shall be on prior
             telephonic   notice  (promptly   confirmed  in  writing)  from  any
             Authorized  Officer received by the Agent not later than 11:00 a.m.
             (Chicago,  Illinois time), on the day such Loan is to be made. Each
             such Notice of  Borrowing  shall  specify (i) the

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ALLETE
December 23, 2003
Page 2

             borrowing  date, which shall be a Banking Day, and (ii) the  amount
             of the Loan.  Each  Prime  Rate Loan  shall  be  in  the  amount of
             $5,000,000 or a higher  integral  multiple of  $1,000,000.  A Prime
             Rate Loan shall only be  available  if the Agent has given  written
             notice  to the  Company  that one or more  conditions  exist as set
             forth in Section 3(b) or Section 3(c) hereof.

                  ii.  EURODOLLAR LOANS. Each Eurodollar Loan shall be made upon
             at least three Banking  Days' prior  written or  telephonic  notice
             from any  Authorized  Officer  received by the Agent not later than
             3:00 p.m.  (Chicago,  Illinois time). Each such Notice of Borrowing
             shall specify (i) the borrowing date, which shall be a Banking Day,
             (ii) the amount of such  Loan,  and (iii) the  Interest  Period for
             such  Loan.  Each  Eurodollar  Loan  shall  be  in  the  amount  of
             $5,000,000 or a higher integral multiple of $1,000,000.

                  iii. The Agent shall give prompt telephonic or telecopy notice
             to each Bank of the  contents  of each Notice of  Borrowing  and of
             such Bank's share of such Loan.

                  iv.  Not later than  11:00  a.m. (Chicago  time) (or 1:00 p.m.
             (Chicago  time) in the case of any Prime  Rate Loan) on the date of
             each borrowing,  each Bank  participating  therein shall (except as
             provided in  subsection  (v) of this  Section)  make  available its
             share of such Loan, in Federal or other funds immediately available
             in  Chicago,  to the Agent at its  address  set  forth  next to its
             signature  below.  Unless the Agent is  notified by a Bank that any
             applicable condition specified in Section 4 has not been satisfied,
             the Agent will make the funds so received from the Banks  available
             to the Company by depositing such funds in the manner  specified in
             the related Notice of Borrowing.

                  v.   Unless the Agent shall have  received  notice from a Bank
             prior to the date of any  borrowing  that  such  Bank will not make
             available  to the Agent such Bank's  share of such Loan,  the Agent
             may  assume  that such Bank has made such  share  available  to the
             Agent on the date of such borrowing in accordance  with  subsection
             (iv) of this Section 1(a), and the Agent may, in reliance upon such
             assumption  (but shall not be obligated  to), make available to the
             Company on such date a corresponding  amount.  If and to the extent
             that such Bank shall not have so made such share  available  to the
             Agent,  such Bank and the Company  severally  agree to repay to the
             Agent forthwith on demand such  corresponding  amount together with
             interest  thereon,  for each day from the date such  amount is made
             available  to the  Company  until the date such amount is repaid to
             the  Agent,  at (i) in the case of the  Company,  a rate per  annum
             equal to the higher of (x) the Prime Rate and (y) the interest rate
             applicable  thereto pursuant to Section  1(b)(ii),  and (ii) in the
             case of such Bank,  the Prime Rate. If such Bank shall repay to the


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ALLETE
December 23, 2003
Page 3

             Agent  such  corresponding  amount,  such  amount so  repaid  shall
             constitute  such Bank's Loan  included in such Loan for purposes of
             this Agreement.

             b.   INTEREST

                  i.   PRIME RATE LOANS. The unpaid   principal  of  each  Prime
             Rate Loan shall bear interest prior to maturity at a rate per annum
             equal  to the  Prime  Rate in  effect  from  time to time  plus the
             Applicable  Margin.  Accrued  interest on Prime Rate Loans shall be
             payable quarterly on the 30th day of each December, March, June and
             September and at maturity.

                  ii.  EURODOLLAR  LOANS.  The unpaid  principal  amount of each
             Eurodollar Loan shall bear interest prior to maturity at a rate per
             annum equal to LIBOR in effect for the Interest Period with respect
             to  such  Eurodollar  Loan  plus  the  Applicable  Margin.  Accrued
             interest on each  Eurodollar  Loan shall be payable on the last day
             of the  Interest  Period  applicable  to  such  Loan  and,  if such
             Interest Period shall exceed three months, at three month intervals
             after the date of the Eurodollar Loan.

                  iii. INTEREST AFTER MATURITY.  Any principal of any Loan which
             is not  paid  when  due,  whether  at  the  stated  maturity,  upon
             acceleration  or otherwise,  shall bear interest from and including
             the  date  such  principal  shall  have  become  due  to  (but  not
             including) the date of payment  thereof in full at a rate per annum
             equal  to the  Prime  Rate  from  time to time in  effect  plus the
             Applicable  Margin  plus 2% per  annum  (but  until  the end of any
             Interest  Period for a Eurodollar  Rate Loan,  not less than 2 % in
             excess  of the rate  otherwise  applicable  for such  Loan).  After
             maturity, accrued interest shall be payable on demand.

                  iv.  MAXIMUM  RATE.  In  no  event  shall  the  interest  rate
             applicable to any amount  outstanding  hereunder exceed the maximum
             rate of interest allowed by applicable law, as amended from time to
             time.  Any  payment of  interest  or in the nature of  interest  in
             excess  of such  limitation  shall  be  credited  as a  payment  of
             principal  unless  the  Company  shall  request  the return of such
             amount.

                  v.   METHOD OF CALCULATING INTEREST AND FEES. Interest on each
             Loan shall be  computed  on the basis of a year  consisting  of (i)
             365/366,  as  applicable,  days for Prime Rate Loans,  and (ii) 360
             days for Eurodollar  Loans, and paid for actual days elapsed.  Fees
             shall be computed on the basis of a year consisting of 360 days and
             paid for actual days elapsed.

             c.   DISBURSEMENTS AND PAYMENTS

             The  Agent shall transfer the proceeds of  each  Loan  as  directed
by an Authorized  Officer.  Each Eurodollar Loan shall be payable on the earlier
of the last day of the Interest  Period


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ALLETE
December 23, 2003
Page 4


applicable  thereto  or the  Termination  Date.  Each  Prime  Rate Loan shall be
payable on the Termination  Date. All payments to the Banks shall be made to the
Agent at LaSalle  Bank  National  Association  ABA No. 071 000 505,  Account No.
1378018,  reference ALLETE not later than 2:00 p.m., Chicago,  Illinois time, on
the date  when due and  shall be made in lawful  money of the  United  States of
America (in freely  transferable  U.S.  dollars)  and in  immediately  available
funds. Any payment that shall be due on a day, which is not a Banking Day, shall
be payable on the next  Banking  Day,  subject to the  definition  of  "Interest
Period".

             d.   PREPAYMENT; COMMITMENT REDUCTIONS

             The Company may  prepay  any  Loan  in  whole  or in part from time
to time (but,  if in part,  in an amount not less than  $1,000,000  and integral
multiples of $1,000,000 in excess thereof)  without premium or penalty  (subject
to the following paragraph) upon (i) 3 Business Days prior written notice to the
Agent  with  respect  to any  Eurodollar  Loan and  (ii)  prior  written  notice
delivered to the Agent prior to 10:00 a.m. (Chicago,  Illinois time) on the date
of such prepayment with respect to any Prime Rate Loan.

             If the Company shall prepay any Loan, it shall pay to the  Agent at
the time of each prepayment,  or at such later time designated by the Agent, any
and all costs described in Section 3(g) hereof.

             The Company  may reduce the amount of Commitments from time to time
in amounts not less than  $1,000,000  and integral  multiples of  $1,000,000  in
excess thereof without premium or penalty upon (i) 3 Business Days prior written
notice to the Agent, provided that the aggregate amount of Commitments shall not
exceed  the  aggregate  principal  amount of Loans  then  outstanding.  Any such
reduction  shall be applied  ratably to the Commitments of the Banks and may not
be reinstated.

             e.   NOTE

             The Company's  obligations  with  respect  to  the Loans  shall  be
evidenced  by a note for each Bank in the form  attached  as EXHIBIT A (each,  a
"Note" and,  collectively,  the "Notes").  The amount,  the rate of interest for
each Loan and the  Interest  Period (if  applicable)  shall be  endorsed  by the
respective  Bank on the schedule  attached to its Note, or at any Bank's option,
in its records,  which schedule or records shall be conclusive,  absent manifest
error,  PROVIDED,  HOWEVER,  that the  failure  of any Bank to record any of the
foregoing or any error in any such record  shall not limit or  otherwise  affect
the  obligation of the Company to repay all Loans made to it hereunder  together
with accrued interest thereon.

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December 23, 2003
Page 5


      2.     FEES.

             a.   CERTAIN FEES

             The Company  shall  pay,  or cause to be paid, to the Agent certain
fees set  forth in  the  Fee Letter  at the time specified in the Fee Letter for
payment of such amounts.

             b.   FACILITY FEE

             The  Company  agrees  to pay to the Banks a facility fee at the Fee
Rate on the amount of the  Facility  (whether or not used).  Such  facility  fee
shall be  payable by the  Company  quarterly  on the 30th day of each  December,
March,  June and September after the date hereof and on the Termination  Date as
set forth in Section 1(c) hereof.

             c.   UTILIZATION FEE

             For each day the  aggregate amount of Loans outstanding exceeds 33%
of the  Commitments  as in effect on such day, the Company  agrees to pay to the
Banks, in addition to any other amounts payable hereunder,  a utilization fee on
the aggregate outstanding amount of Loans on such date at a rate per annum equal
to the  Utilization  Fee Rate.  Such  utilization  fee shall be  payable  by the
Company  on the date  when the next  interest  payment  on such  Loans is due in
accordance with Section 1(b) hereof and on the Termination  Date as set forth in
Section 1(c) hereof.

      3.     ADDITIONAL PROVISIONS RELATING TO LOANS.

             a.   INCREASED COST

             The Company  agrees to reimburse  each Bank for any increase in the
cost to such Bank of, or any  reduction in the amount of any sum  receivable  by
such Bank in respect of, making or maintaining any Eurodollar  Loans  (including
the imposition,  modification or deemed applicability of any reserves,  deposits
or similar requirements).  The additional amount required to compensate any Bank
for such  increased  cost or reduced  amount  shall be payable by the Company to
such Bank within five days of the Company's  receipt of written notice from such
Bank specifying such increased cost or reduced amount and the amount required to
compensate  such Bank therefor,  which notice shall,  in the absence of manifest
error, be conclusive and binding on the Company.  In determining such additional
amount, a Bank may use reasonable averaging, attribution and allocation methods.

             b.   DEPOSITS   UNAVAILABLE  OR   INTEREST  RATE   UNASCERTAINABLE;
                  IMPRACTICABILITY

             If the Company has notified the Agent of its  intention to borrow a
Eurodollar  Loan for an  Interest  Period  and the Agent or any Bank  determines
(which determination shall be conclusive and binding on the Company) that:

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December 23, 2003
Page 6

                     (1) deposits of  the  necessary amount  for  such  Interest
                  Period are not available to such Bank in the London  interbank
                  market or, by reason of circumstances affecting  such  market,
                  adequate and reasonable means do not  exist  for  ascertaining
                  the Eurodollar Rate for such Interest Period; or

                     (2) LIBOR will not adequately and fairly reflect  the  cost
                  to the Bank of making or funding a Eurodollar  Loan  for  such
                  Interest Period; or

                     (3) the making or funding of Eurodollar  Loans  has  become
                  impracticable as  a result of any event  occurring  after  the
                  date of this Agreement which,  in  the opinion  of  the  Bank,
                  materially and adversely  affects  such Loans or the interbank
                  eurodollar market;

then any notice of a Eurodollar Loan previously given by the Company and not yet
borrowed shall be deemed to be a notice to make a Prime Rate Loan.

             c.   CHANGES IN LAW RENDERING EURODOLLAR LOANS UNLAWFUL

             If at any time due to the adoption of, or change in, any law, rule,
regulation,  treaty or  directive  or in the  interpretation  or  administration
thereof by any court,  central  bank,  governmental  authority  or  governmental
agency charged with the  interpretation  or administration  thereof,  or for any
other reason arising  subsequent to the date hereof, it shall become (or, in the
good faith judgment of any Bank,  raise a substantial  question as to whether it
is) unlawful for such Bank to make or fund any Eurodollar Loan, Eurodollar Loans
shall not be made  hereunder  for the duration of such  illegality.  If any such
event  shall make it  unlawful  for any Bank to continue  any  Eurodollar  Loans
previously made by it hereunder, the Company shall, after being notified by such
Bank of the occurrence of such event, on such date as shall be specified in such
notice,  either convert such  Eurodollar  Loan to a Prime Rate Loan or prepay in
full such Eurodollar Loan,  together with accrued interest thereon,  without any
premium or penalty (except as provided in Section 3(g)).

             d.   DISCRETION OF THE BANKS AS TO MANNER OF FUNDING

             Each Bank shall be entitled to fund and maintain its funding of all
or any part of the  Loans  in any  manner  it sees  fit;  it  being  understood,
however,  that for purposes of this Note, all determinations  hereunder shall be
made as if such Bank had actually  funded and maintained  each  Eurodollar  Loan
during the  Interest  Period for such  Eurodollar  Loan  through the purchase of
deposits  having a term  corresponding  to such  Interest  Period and bearing an
interest rate equal to LIBOR for such Interest Period.

             e.   TAXES

             All payments by the Company of principal of, and  interest on,  the
Loans and all other amounts  payable  hereunder  shall be made free and clear of
and  without  deduction  for any  present  or future  income,  excise,  stamp or
franchise taxes and other taxes, fees, duties,

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December 23, 2003
Page 7

withholdings  or other  charges of any nature  whatsoever  imposed by any taxing
authority,  but  excluding  franchise  taxes and taxes imposed on or measured by
each  respective  Bank's net income or receipts (such  non-excluded  items being
called "Taxes").  If any withholding or deduction from any payment to be made by
the  Company  hereunder  is  required  in respect of any Taxes  pursuant  to any
applicable law, rule or regulation, then the Company will

                  i.   pay  directly  to  the relevant authority the full amount
             required to be so withheld or deducted;

                  ii.  promptly  forward  to  each  Bank  an official receipt or
             other documentation  satisfactory  to  such  Bank  evidencing  such
             payment to such authority; and

                  iii.  pay to each Bank such additional amount or amounts as is
             necessary  to  ensure that the net amount actually received by such
             Bank will equal the full amount such Bank would have  received  had
             no such withholding or deduction been required.

Moreover,  if any Taxes are directly asserted against any Bank or on any payment
received  by such Bank  hereunder,  such Bank may pay such Taxes and the Company
will promptly pay such  additional  amount  (including any penalty,  interest or
expense)  as is  necessary  in order that the net amount  received  by such Bank
after the payment of such Taxes (including any Taxes on such additional  amount)
shall  equal the amount  such Bank would  have  received  had no such Taxes been
asserted.

             If  the Company fails to  pay any Taxes when due to the appropriate
taxing  authority or fails to remit to any Bank the  required  receipts or other
required  documentary  evidence,  the Company shall  indemnify such Bank for any
incremental  Tax,  interest,  penalty or expense that may become payable by such
Bank as a result of any such failure.

             f.   INCREASED CAPITAL COSTS

             If any change  in, or the  introduction,  adoption,  effectiveness,
interpretation,   reinterpretation  or  phase-in  of,  any  law  or  regulation,
directive,  guideline,  decision or request  (whether or not having the force of
law) of any court,  central  bank,  regulator  or other  governmental  authority
affects  or would  affect  the  amount of capital  required  or  expected  to be
maintained  by any Bank or any  entity  controlling  any  Bank,  and  such  Bank
determines (in its sole and absolute  discretion) that the rate of return on its
or such controlling  entity's capital as a consequence of the Loans made by such
Bank or the  commitment  hereunder  is reduced to a level  below that which such
Bank or such  controlling  entity could have achieved but for the  occurrence of
any such circumstance,  then, in any such case, upon notice from time to time by
any Bank to the Company, the Company shall immediately pay directly to such Bank
additional amounts sufficient to compensate such Bank or such controlling entity
for such reduction in rate

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December 23, 2003
Page 8


of return.  A statement of any Bank as to any such additional  amount or amounts
(including  calculations  thereof in reasonable detail) shall, in the absence of
manifest  error, be conclusive and binding on the Company.  In determining  such
amount,  each Bank may use  reasonable  averaging,  attribution  and  allocation
methods.

             g.   FUNDING LOSSES

             The Company will  indemnify the Banks upon demand  against any loss
or expense which any Bank may sustain or incur (including,  without  limitation,
any loss or expense sustained or incurred in obtaining, liquidating or employing
deposits or other  funds  acquired  to effect,  fund or maintain  any Loan) as a
consequence  of (i) any failure of the  Company to make any payment  when due of
any amount due hereunder,  (ii) any failure of the Company to borrow a Loan on a
date specified therefor in a notice thereof, or (iii) any payment (including any
payment  upon  any  Bank's  acceleration  of the  Loans)  or  prepayment  of any
Eurodollar  Loan on a date  other than the last day of the  Interest  Period for
such Loan.

      4.     CONDITIONS PRECEDENT.

             a.   INITIAL LOAN

             The  obligation  of each  Bank to make the  initial  Loan  shall be
subject  to the  prior  or  concurrent  satisfaction  of each  of the  following
conditions precedent:

                  i.   The  Company  shall   have  delivered  to  the   Agent  a
             certificate  dated the date of the initial Loan of its Secretary or
             Assistant Secretary as to (i) resolutions of its Board of Directors
             then in full force and effect  authorizing the execution,  delivery
             and performance of this Agreement, the Notes, and each of the other
             Loan Documents;  and (ii) the incumbency and signatures of those of
             its officers authorized to act with respect to this Agreement,  the
             Note and each of the Loan  Documents  executed  by it,  upon  which
             certificate  the Banks may  conclusively  rely  until it shall have
             received  a  further  certificate  of the  Secretary  or  Assistant
             Secretary  of  the  Company   canceling  or  amending   such  prior
             certificate.

                  ii.  Each Bank shall have received its  respective  Note  duly
             executed and delivered by the Company.

                  iii. The Agent shall have received  an  opinion dated the date
             of  the  initial   Loan  from   counsel  to  the  Company  in  form
             satisfactory to the Agent.

                  iv.  The Company shall have paid to the Agent, for the account
             of the Banks,  a renewal fee equal to 0.20% of the  Commitments  in
             effect on the date hereof,  such fee to be distributed to the Banks
             based upon their share of the Commitments on the date hereof.

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December 23, 2003
Page 9

             b.   EACH LOAN

             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.

             Each  request  for a Loan shall be deemed a  representation  by the
Company, as to the matters set forth in this Section.

      5.     REPRESENTATIONS.

             The Company represents and warrants to the Banks that:

             a.   ORGANIZATION

             It is a corporation duly organized and in good  standing  under the
laws of its state of  organization  and duly  qualified  to do  business in each
jurisdiction where such qualification is necessary.

             b.   AUTHORIZATION

             The  execution  and  delivery of this  Agreement,  the Note and the
other Loan  Documents  and the  performance  by the  Company of its  obligations
hereunder  and  thereunder  are within the  Company's  powers and have been duly
authorized by all necessary  action on the Company's  part,  and do not and will
not  contravene  or conflict  with the  Company's  organizational  documents  or
violate or constitute a default under any law, rule or regulation  any presently
existing  requirement  or  restriction  imposed by  judicial,  arbitral or other
governmental instrumentality or any agreement,  instrument or indenture by which
the Company is bound.

             c.   ENFORCEABILITY

             This   Agreement  is  the  Company's   legal,   valid  and  binding
obligation, enforceable in accordance with its terms.

             d.   FINANCIAL STATEMENTS

             The audited financial  statements of the Company as at December 31,
2002 and the interim  financial  statements  of the Company as at September  30,
2003,  copies of which have been  furnished to the Agent,  have been prepared in
accordance with generally accepted accounting  principles  consistently applied,
and present fairly the financial condition of the

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December 23, 2003
Page 10

Company at the date  thereof  and the results of its  operations  for the period
then ended. Since the date of such interim financial statements,  there has been
no Material Adverse Change.

             e.   USE OF PROCEEDS

             The Company  agrees that  proceeds of any Loan shall be used solely
for the purpose of providing  liquidity support with respect to commercial paper
borrowings of the Company or for other valid general corporate purposes.

      6.     COVENANTS.

             From   the  date  of  this  Agreement  and  thereafter  until   the
termination  of the Facility  and until the  Obligations  are paid in full,  the
Company agrees that it will:

             a.   FINANCIAL INFORMATION. Furnish to the Agent:

                  i.   As soon as available and in  any  event  within  60  days
             after the end of each of the first  three  fiscal  quarters of each
             fiscal  year of the  Company,  consolidated  balance  sheets of the
             Company,  and internally prepared unaudited  consolidating  balance
             sheets of the Company and its  subsidiaries,  each as at the end of
             such fiscal  quarter,  and  statements of earnings and cash flow of
             the  Company,  and  internally  prepared  unaudited   consolidating
             statements  of earnings of the Company and its  subsidiaries,  each
             for such quarter and for the period  commencing at the beginning of
             such fiscal year and ending with the end of such quarter, certified
             by the chief financial officer of the Company;

                  ii.  as soon  as  available  and  in any event within 120 days
             after the end of each  fiscal  year of the  Company,  a copy of the
             annual audit report for such fiscal year for the Company, including
             balance sheets of the Company as of the end of such fiscal year and
             statements  of earnings and cash flow for such fiscal year, in each
             case  certified in a manner  acceptable to the Agent by independent
             public  accountants  acceptable  to the  Agent  together  with  the
             internally  prepared unaudited (a) consolidating  balance sheets as
             of the end of such fiscal year,  and (b) statements of earnings for
             the period  commencing  at the  beginning  of such  fiscal year and
             ending  with the end of such  fiscal  year,  of the Company and its
             subsidiaries;

                  iii. upon the occurrence of a Unmatured  Event  of  Default or
             Event of  Default,  notice of such  Unmatured  Event of  Default or
             Event of Default; and

                  iv.  such other information with respect  to  the condition or
             operations,  financial or otherwise, of the Company as any Bank may
             from time to time reasonably request.

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December 23, 2003
Page 11

             b.   FURTHER RESTRICTIONS ON USE OF PROCEEDS

             Not, and not permit  any  Subsidiary  or  affiliate  of the Company
to, use the proceeds of any Loan, directly or indirectly, for the purpose of (i)
purchasing  any  securities   underwritten  or  privately  placed  by  ABN  AMRO
Incorporated  ("AAI"),  an affiliate of the Agent,  (ii) purchasing from AAI any
securities in which AAI makes a market or (iii)  refinancing or making  payments
of principal,  interest or dividends on any securities issued by the Company, or
any Subsidiary or affiliate of the Company,  and underwritten,  privately placed
or dealt in by AAI.

             c.   PROHIBITION OF FUNDAMENTAL CHANGES. The Company shall not:

                  i.   Enter into any transaction of merger of  consolidation or
             amalgamation,  or liquidate,  wind up or dissolve itself (or suffer
             any liquidation or dissolution); or

                  ii.  Convey, sell, lease, transfer or otherwise dispose of, in
             one transaction or a series of  transactions,  all or a substantial
             portion of its  business  or  property  without  the prior  written
             consent  of  the  Required  Banks,   which  consent  shall  not  be
             unreasonably withheld.

Notwithstanding the foregoing provisions of this subsection (c), the Company may
(x) merge or  consolidate  with any other Person if the Company is the surviving
corporation or the surviving  corporation assumes the liabilities of the Company
by  operation  of law or  otherwise,  and (y) so long as no  Unmatured  Event of
Default or Event of Default has  occurred  and is  continuing,  or would  result
therefrom,  the Company may spin-off its  automotive  services  division  into a
publicly traded company.

             d.   MAXIMUM RATIO OF FUNDED DEBT TO TOTAL CAPITAL

             The Company shall  at  all  times,   measured as of the end of each
fiscal  quarter  of the  Company  and  immediately  after  the  spin-off  of its
automotive  division,,  maintain a maximum ratio of Funded Debt to Total Capital
of .60 to 1.0.

             e.   INTEREST COVERAGE RATIO

             The Company shall  maintain at all times an Interest Coverage Ratio
of not less than 3.00 to 1.00, as  determined at the end of each fiscal  quarter
of the Company.

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ALLETE
December 23, 2003
Page 12

      7.     EVENTS OF DEFAULT.

             a.   EVENTS. Each  of  the  following  shall constitute an Event of
Default:

                  i.   The Company fails to pay when due any  principal  of,  or
             interest  on, any Loan or any other  amount  payable  hereunder  or
             under any Note;

                  ii.  Any material representation or warranty  of  the  Company
             made or  deemed  made  hereunder  or under  any  other  writing  or
             certificate  furnished  by or on behalf of the Company to the Agent
             for the  purposes of or in  connection  with this  Agreement  shall
             prove to have been false or misleading in any material respect when
             made or deemed made;

                  iii. The Company defaults in the due performance or observance
             of Section  6(b)  hereof or the Company  defaults  in any  material
             respect in the due performance or observance of any other agreement
             contained  herein or in any other Loan  Document  and such  default
             shall  continue  for 30 days after notice  thereof  shall have been
             given to the Company from the Agent;

                  iv.  The maturity of any indebtedness of the Company under any
             agreement or obligation in an aggregate  principal amount exceeding
             $5,000,000  shall be accelerated,  or any default shall occur under
             one or more agreements or instruments under which such indebtedness
             may be issued or created  and such  default  shall  continue  for a
             period of time  sufficient to permit the holder or  beneficiary  of
             such  indebtedness or a trustee  therefor to cause the acceleration
             of the maturity of such  indebtedness or any mandatory  unscheduled
             prepayment, purchase or funding thereof;

                  v.   Judgments or orders for the payment of money in excess of
             $5,000,000 shall be rendered against the Company and such judgments
             or orders shall continue  unsatisfied  and unstayed for a period of
             30 days:

                  vi.  The Company or any Subsidiary shall

                       (1) become insolvent or generally fail  to  pay, or admit
                  in writing its inability or  unwillingness  to  pay, debts  as
                  they become due;

                       (2) apply for, consent to or acquiesce in the appointment
                  of a trustee,  receiver,  sequestrator  or other custodian for
                  the Company or any Subsidiary or any property thereof, or make
                  a general assignment for the benefit of creditors;

                       (3) in  the  absence  of  such  application,  consent  or
                  acquiescence,  permit or suffer to exist the  appointment of a
                  trustee,  receiver,  sequestrator  or other  custodian for the
                  Company or any  Subsidiary  or for a  substantial

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ALLETE
December 23, 2003
Page 13

                  part of the  property  thereof,  and such  trustee,  receiver,
                  sequestrator or other custodian shall not be discharged within
                  30 days;

                       (4) permit  or  suffer  to  exist the commencement of any
                  bankruptcy,  reorganization, debt arrangement or other case or
                  proceeding  under any  bankruptcy  or  insolvency  law, or any
                  dissolution,  winding up or liquidation proceeding, in respect
                  of the  Company  or any  Subsidiary  and,  if any such case or
                  proceeding is not commenced by the Company or such Subsidiary,
                  such case or proceeding shall be consented to or acquiesced in
                  by the Company or such Subsidiary or shall result in the entry
                  of  an  order  for   relief  or  shall   remain  for  60  days
                  undismissed; or

                       (5) take any action authorizing, or  in  furtherance  of,
                  any of the foregoing; or

                  vii. any Material Adverse Change shall have occurred.

             b.   REMEDIES

             Upon the occurrence of an Event of Default under Section  7(a)(vi),
the  commitment of the Banks to make Loans shall be terminated and the Notes and
all other  obligations  hereunder  shall become  immediately  due and payable in
full; and upon the  occurrence of any other Event of Default,  the commitment of
the Banks to make  Loans  may be  terminated  by the  Banks  and the Agent  tray
declare the Notes and the  principal of and accrued  interest on each Loan,  and
all other amounts payable hereunder, to be forthwith due and payable in full.

      8.     DEFINITIONS.

             As used in this Agreement:

             "AGENT" means LaSalle Bank National Association, in its capacity as
Agent for the Banks hereunder, and its successors in such capacity.

             "APPLICABLE MARGIN" means (i) with respect to Eurodollar Loans, (a)
0.525% per annum for any day Level I Status exists; (b) 0.750% per annum for any
day Level II Status  exists;  (c)  0.850% per annum for any day Level III Status
exists;  (d) 1.300% per annum for any day Level IV Status exists; and (e) 2.000%
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 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.

             "AUTHORIZED  OFFICER" means each officer or employee of the Company
who is authorized to request  Loans,  to confirm in writing any such request and
to agree to  rates of

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ALLETE
December 23, 2003
Page 14

interest,  as set forth on the schedule of  Authorized  Officers  most  recently
delivered by the Company to the Agent.

             "BANK"  means each bank listed on the  signature  page  hereof,  or
which  subsequently  becomes a party hereto by execution of a Joinder Agreement,
and its successors and assigns.

             "BANKING DAY" means any day other than a Saturday,  Sunday or other
day on which the Banks are required or  permitted to close in Chicago and,  with
respect to Eurodollar  Loans on which  dealings in Dollars are carried on in the
London interbank market.

             "COMMITMENT" means, with respect to each Bank, the amount set forth
opposite the name of such Bank on the signature  pages  hereof,  or on a Joinder
Agreement, as applicable.

             "CONSOLIDATED  EBITDA" means,  for any period,  for the Company and
its  subsidiaries  (which for  purposes  of this  definition  shall  include any
subsidiary  consolidated into the financial statements of the Company other than
ALLETE Water Services,  Inc. and any other subsidiary of the Company as to which
the  Company  has  announced  on or  prior to  December  15,  2002  that it will
discontinue the operations of such subsidiary) on a consolidated  basis, (A) the
sum of the amounts for such period of (i) Consolidated  Net Income,  (ii) to the
extent deducted in arriving at Consolidated Net Income,  net federal,  state and
local income taxes in respect of such  period,  (iii) to the extent  deducted in
arriving at Consolidated Net Income,  Consolidated Interest Expense, (iv) to the
extent deducted in arriving at Consolidated  Net Income,  the amount charged for
the amortization of intangible assets, (v) to the extent deducted in arriving at
Consolidated Net Income,  the amount charged for the depreciation of assets, and
(vi)  to  the  extent   deducted  in  arriving  at   Consolidated   Net  Income,
extraordinary  losses,  less (B) the  amount  for such  period of, to the extent
added in  arriving  at  Consolidated  Net Income,  extraordinary  gains,  all as
determined on a consolidated basis in accordance with GAAP.

             "CONSOLIDATED INTEREST EXPENSE" means, with reference to any period
of the Company and its subsidiaries (which for purposes of this definition shall
include any subsidiary consolidated into the financial statements of the Company
other than ALLETE Water Services,  Inc. and any other  subsidiary of the Company
as to which the Company has  announced  on or prior to December 15, 2002 that it
will discontinue the operations of such subsidiary), the sum of (i) all interest
charges (including  capitalized interest,  imputed interest charges with respect
to  capitalized  leases and all  amortization  of debt  discount and expense and
other  deferred  financing  charges) of the Company  and its  subsidiaries  on a
consolidated  basis, and (ii) all commitment or other fees payable in respect of
the  issuance of standby  letters of credit or other credit  facilities  for the
account of the Company or its subsidiaries,  all as determined on a consolidated
basis in accordance with GAAP.

             "CONSOLIDATED  NET INCOME" means, for any period of the Company and
its  subsidiaries  (which for  purposes  of this  definition  shall  include any
subsidiary  consolidated into

<PAGE>
ALLETE
December 23, 2003
Page 15

the financial  statements of the Company other than ALLETE Water Services,  Inc.
and any other subsidiary of the Company as to which the Company has announced on
or prior to December 15, 2002 that it will  discontinue  the  operations of such
subsidiary), the amount for such period of consolidated net income (or net loss)
of the Company and its  subsidiaries,  as determined on a consolidated  basis in
accordance with GAAP.

             "EURODOLLAR  LOAN"  means any Loan which  bears  interest at a rate
determined with reference to LIBOR (plus the Applicable Margin).

             "EVENT OF DEFAULT" means an event described in Section 7(a).

             "FACILITY"  has the meaning set forth in the initial  paragraph  of
this Agreement.

             "FEDERAL FUNDS RATE" means,  the per annum rate at which  overnight
federal  funds  are from  time to time  offered  to the Agent by any bank in the
interbank market, as stated by the Agent.

             "FEE  LETTER"  means that certain  letter  between the Borrower and
LaSalle Bank National Association and its affiliates relating to certain fees to
be paid by the Borrower to, and solely for the account of, LaSalle Bank National
Association and its affiliates, as such letter may from time to time be amended.

             "FEE RATE" means a rate per annum equal to (i) 0.100% per annum for
any day Level I Status exists; (ii) 0.125% per annum for any day Level II Status
exists;  (iii) 0.150% per annum for any day Level III Status exists; (iv) 0.200%
per annum for any day Level IV Status  exists;  and (v) 0.500% per annum for any
day Level V Status exists.

             "FUNDED  DEBT"  means,  for  any  entity  on a  consolidated  basis
(without  duplication):  (i) all indebtedness of such entity for borrowed money;
(ii) the deferred and unpaid  balance of the purchase price owing by such entity
on account of any assets or services  purchased  (other than trade  payables and
other accrued  liabilities  incurred in the ordinary course of business that are
not overdue by more than 180 days unless being  contested in good faith) if such
purchase  price is (A) due more than nine months from the date of  incurrence of
the  obligation  in  respect  thereof  or (B)  evidenced  by a note or a similar
written   instrument;   (iii)  all  capitalized  lease  obligations;   (iv)  all
indebtedness secured by a Lien on any property owned by such entity,  whether or
not such  indebtedness has been assumed by such entity or is nonrecourse to such
entity; (v) notes payable and drafts accepted representing  extensions of credit
whether or not  representing  obligations  for  borrowed  money (other than such
notes or drafts from the  deferred  purchase  price of assets or services to the
extent  such  purchase   price  is  excluded  from  clause  (ii)  above);   (vi)
indebtedness evidenced by bonds, notes or similar written instrument;  (vii) the
face amount of all  letters of credit and  bankers'  acceptances  issued for the
account of such entity,  and without  duplication,  all drafts drawn  thereunder
(other  than such  letters of credit,  bankers'  acceptances  and drafts for the
deferred  purchase price of assets or services to the extent

<PAGE>
ALLETE
December 23, 2003
Page 16

such purchase price is under interest rate  agreements or currency  agreements);
(viii)  guaranty  obligations  of such entity with respect to  indebtedness  for
borrowed money of another entity (including affiliates) in excess of $25,000,000
in the aggregate;  provided,  however, that in no event shall any calculation of
Funded Debt include (a) deferred taxes, (b) securitized trade  receivables,  (c)
deferred  credits  including  regulatory  assets  and  contributions  in  aid of
construction,  (d) the lease  obligations for Lake Superior Paper, Inc. relating
to paper mill  equipment as provided for under an operating  lease  extending to
2012 or (e) 75% of the indebtedness associated with Square Butte.

             "GAAP" means generally accepted accounting  principles as in effect
in the  United  States  from  time  to  time,  applied  by the  Company  and any
subsidiary on a basis consistent with the preparation of the Company's financial
statements furnished to the Agent.

             "INTEREST COVERAGE RATIO" means, for any period of four consecutive
fiscal  quarters of the Company  ending with the most  recently  completed  such
fiscal  quarter,  the  ratio  of (A)  Consolidated  EBITDA  to (B)  Consolidated
Interest Expense for such period.

             "INTEREST  PERIOD" means for any Eurodollar  Loan, a period of one,
two, three or six months, as designated by the Company,  in each case commencing
on the date of such Loan. Each Interest Period that would otherwise end on a day
which is not a Banking Day shall end on the next  succeeding  Banking Day unless
such next Banking Day would be the first Banking Day in the next calendar month,
in which case such Interest  Period shall end on the preceding  Banking Day. Any
Interest  Period for a Eurodollar Loan which begins on the last Banking Day of a
calendar month (or on a day for which there is no numerically  corresponding day
in the calendar month at the end of such Interest  Period) shall end on the last
Banking  Day of the  calendar  month  at the end of  such  Interest  Period.  No
Interest Period shall extend beyond the Termination  Date, and in such case, the
Termination Date shall be deemed the end of the Interest Period.

             "JOINDER  AGREEMENT" means a joinder agreement in the form attached
hereto as Exhibit "B."

             "LEVEL I STATUS"  means,  subject to Section 9(r)  hereof,  the S&P
Rating is A- or higher and the Moody's Rating is A3 or higher.

             "LEVEL II STATUS"  means,  subject to Section 9(r) hereof,  Level I
Status  does not exist,  but the S&P  Rating is BBB+ or higher  and the  Moody's
Rating is Baa1 or higher.

             "LEVEL III STATUS" means,  subject to Section 9(r) hereof,  neither
Level I Status nor Level II Status  exists,  but the S&P Rating is BBB or higher
and the Moody's rating is Baa2 or higher.

<PAGE>
ALLETE
December 23, 2003
Page 17


             "LEVEL IV STATUS"  means,  subject to Section 9(r) hereof,  none of
Level I Status,  Level II Status nor Level III Status exists, but the S&P Rating
is BBB- or higher and the Moody's Rating is Baa3 or higher.

             "LEVEL V STATUS"  means,  subject to Section 9(r)  hereof,  none of
Level I Status, Level II Status, Level III Status nor Level IV Status exists.

             "LIBOR"  means a rate of  interest  equal to the per annum  rate of
interest at which United States dollar  deposits in an amount  comparable to the
principal balance of the Eurodollar Loan to be made by the Agent in its capacity
as a Bank and for a period equal to the relevant  Interest Period are offered in
the London Interbank  Eurodollar market at 11:00 a.m. (London time) two Business
Days prior to the  commencement  of each  Interest  Period,  as displayed in the
Bloomberg  Financial Markets system, or other  authoritative  source selected by
the  Agent in its  reasonable  discretion,  divided  by a number  determined  by
subtracting from 1.00 the maximum reserve percentage for determining reserves to
be maintained  by member banks of the Federal  Reserve  System for  Eurocurrency
liabilities,  such rate to remain fixed for such  Interest  Period.  The Agent's
determination of LIBOR shall be conclusive, absent manifest error

             "LOAN" means a loan made pursuant to Section 1.

             "LOAN  DOCUMENTS"  means this  Agreement,  the Notes and each other
agreement, document or instrument delivered in connection with this Agreement.

             "MATERIAL  ADVERSE  CHANGE"  means  any  change  in  the  business,
organization,  assets,  properties  or  condition  (financial  or  other) of the
Company which could  materially  and adversely  affect the Company's  ability to
perform hereunder including,  without limitation,  representations,  warranties,
covenants  and  payment  of  Obligations,  it being  agreed  that the  Company's
spin-off its  automotive  services  division into a publicly  traded  company in
accordance  with  Sections  6(c) and (d) hereof shall not  constitute a Material
Adverse Change.

             "MOODY'S  RATING"  means the rating  assigned by Moody's  Investors
Service,  Inc. and any successor thereto that is a nationally  recognized rating
agency  to  the  outstanding  senior  unsecured  non-credit  enhanced  long-term
indebtedness of the Company (or if neither Moody's Investors  Service,  Inc. nor
any such successor shall be in the business of rating long-term indebtedness,  a
nationally  recognized  rating agency in the U.S. as mutually agreed between the
Agent and the Company).  Any reference in this Agreement to any specific  rating
is a reference to such rating as currently defined by Moody's Investors Service,
Inc. (or such a successor) and shall be deemed to refer to the equivalent rating
if such rating system changes.

             "NOTE" has the meaning set forth in SECTION 1.5.

             "NOTICE OF BORROWING"  means a notice from the Company to the Agent
requesting  the  making of a Loan and which is  delivered  pursuant  to  Section
1(a)(i) or Section 1(a)(ii) hereof.

<PAGE>
ALLETE
December 23, 2003
Page 18


             "OBLIGATIONS" means all obligations  (monetary or otherwise) of the
Company arising under or in connection  with this Agreement,  the Notes and each
of the other Loan Documents.

             "PRIME RATE" means a floating rate of interest  equal to the higher
(redetermined  daily) of (i) the per annum  rate of  interest  announced  by the
Agent from time to time at its principal office in Chicago as its prime rate for
Dollar loans or (ii) the Federal Funds Rate plus 0.5%.  (The "prime rate" is set
by the Agent based upon  various  factors  and is used as a reference  point for
pricing some loans. It is not necessarily the best rate available to the Agent's
customers at any point in time.)

             "PRIME  RATE LOAN"  means any Loan which  bears  interest at a rate
determined by reference to the Prime Rate.

             "REQUIRED  BANKS" means, at any time, Banks having at least 66-2/3%
of the aggregate amount of the Commitments.

             "S&P RATING" means the rating assigned by Standard & Poor's Ratings
Group, a division of The McGraw-Hill  Companies,  Inc. and any successor thereto
that  is a  nationally  recognized  rating  agency  to  the  outstanding  senior
unsecured  non-credit  enhanced  long-term  indebtedness  of the Company (or, if
neither  such  division  nor any  successor  shall be in the  business of rating
long-term  indebtedness,  a nationally  recognized  rating agency in the U.S. as
mutually  agreed  between  the Agent and the  Company).  Any  reference  in this
Agreement  to any  specific  rating is a reference  to such rating as  currently
defined by  Standard & Poor's  Ratings  Group,  a  division  of The  McGraw-Hill
Companies,  Inc.  (or such a  successor)  and  shall be  deemed  to refer to the
equivalent rating if such rating system changes.

             "SUBSIDIARY" means ALLETE Automotive Services, Inc.

             "TAXES" has the meaning set forth in Section 3(e).

             "TOTAL CAPITAL" means the sum of retained  earnings,  stockholders'
equity (including preferred stock and QUIPs), all determined with respect to the
Company and its  subsidiaries  on a consolidated  basis in accordance  with GAAP
consistently applied, and Funded Debt.

             "UNMATURED EVENT OF DEFAULT" means an event which with notice,  the
lapse of time or both would constitute an Event of Default.

             "UTILIZATION  FEE RATE"  means a rate equal to (i) 0.125% per annum
for any day Level I Status  exists;  (ii)  0.125% per annum for any day Level II
Status exists;  (iii) 0.125% per annum for any day Level III Status exists; (iv)
0.250%  per annum for any day Level IV Status  exists;  and (v) 0.500% per annum
for any day Level V Status exists.

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ALLETE
December 23, 2003
Page 19


      9.     GENERAL.

             a.   INSTRUCTIONS

             The Company hereby  authorizes the Agent and each Bank to rely upon
telephonic,  written or facsimile instructions of any person identifying himself
or herself as an Authorized  Officer and upon any  signature  which the Agent or
such Bank believes to be genuine,  and the Company shall be bound thereby in the
same manner as if such person were  authorized or such  signature  were genuine.
The  Company  agrees to  indemnify  the Agent and each Bank from and against all
losses and expenses  arising out of the Agent's or such Bank's  reliance on said
instructions or signatures.

             b.   PAYMENTS

             Payments  hereunder and under the Note shall be made in immediately
available funds in Dollars without off-set, counter-claim or other deduction.

             c.   COSTS

             The  Company  shall pay all costs of the Agent with  respect to the
negotiation, preparation, execution and delivery of this Agreement and the other
Loan Documents, any amendments,  waivers, consents or modifications with respect
thereto  and all  costs of the Agent  and each  Bank in  connection  with the of
enforcement  or  collection  of every  kind,  including  but not  limited to all
reasonable  attorneys' fees,  court costs and expenses  incurred by the Agent or
any Bank in connection  with  collection or  protection  or  enforcement  of any
rights hereunder whether or not any lawsuit is ever filed.

             d.   INDEMNIFICATION

             In consideration of the execution and delivery of this Agreement by
the Agent and each Bank and the  extension  of  credit  hereunder,  the  Company
hereby indemnifies, exonerates and holds the Agent and each Bank and each of its
respective  officers,  directors,   employees  and  agents  (collectively,   the
"Indemnified  Parties")  free and harmless from and against any and all actions,
causes of action,  suits, losses,  costs,  liabilities and damages, and expenses
incurred in connection therewith (irrespective of whether such Indemnified Party
is a party  to the  action  for  which  indemnification  hereunder  is  sought),
including  reasonable  attorneys'  fees  and  disbursements  (collectively,  the
"Indemnified  Liabilities"),  incurred by the Indemnified Parties or any of them
as a result of, or arising out of, or relating to any transaction financed or to
be financed in whole or in part,  directly or  indirectly,  with the proceeds of
any  Loan  or  any  investigation,  litigation  or  proceeding  related  to  any
environmental  cleanup,  audit,  compliance  or  other  matter  relating  to the
protection  of the  environment  or the release by the Company of any  hazardous
material, except for any such Indemnified Liabilities arising for the account of
a particular  Indemnified  Party by reason of the relevant  Indemnified  Party's
gross negligence or willful misconduct.  If and to the extent that the foregoing
undertaking may be  unenforceable  for

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ALLETE
December 23, 2003
Page 20

any reason,  the Company hereby agrees to make the maximum  contribution  to the
payment  in  satisfaction  of  each  of the  Indemnified  Liabilities  which  is
permissible under applicable law.

             e.   NOTICES

             All notices and other  communications  provided to any party hereto
under  this  Agreement  or any other  Loan  Document  shall be in  writing or by
facsimile and  addressed,  delivered or transmitted to such party at its address
or  facsimile  number  set forth  below its  signature  hereto or at such  other
address or facsimile  number as may be  designated  by such party in a notice to
the other  parties.  Any notice,  if mailed and properly  addressed with postage
prepaid shall be deemed given five days after mailed. Any notice sent by courier
service  shall be deemed given when  received.  Any notice,  if  transmitted  by
facsimile, shall be deemed given when transmitted.

             f.   SURVIVAL

             The  Obligations of the Company under Sections  2(b),  3(a),  3(e),
3(f),  3(g),  9(c),  9(d) and 10(g)  hereof  shall  survive  any  payment of the
principal of and interest on the Loans and the termination of this Agreement.

             g.   COUNTERPARTS

             This   Agreement   may  be  executed  in  any  number  of  separate
counterparts, each of which when so executed and delivered shall be an original,
and all such counterparts shall together constitute one and the same instrument.
Delivery of an executed  counterpart  via  facsimile or other method shall be as
effective as delivery of an original executed counterpart.

             h.   AMENDMENT AND WAIVER

             Any  provision of this  Agreement or any other Loan Document may be
amended or waived if, but only if, such amendment or waiver is in writing and is
signed by the Company and the  Required  Banks (and,  if the rights or duties of
the Agent are affected thereby, by the Agent);  PROVIDED that no such amendment,
waiver or  modification  shall,  unless signed by all the Banks,  (i) change the
Commitment of any Bank (except for a ratable  decrease in the Commitments of all
Banks)  or  subject  any Bank to any  additional  obligation,  (ii)  reduce  the
principal  of or rate of  interest  on any  Loan or any  fees  hereunder,  (iii)
postpone  the date fixed for any payment of principal of or interest on any Loan
or any fees hereunder or (iv) change the percentage of the Commitments or of the
aggregate unpaid  principal  amount of the Notes, or the number of Banks,  which
shall be  required  for the Banks or any of them to take any  action  under this
Section or any other provision of this Agreement. Any waiver by the Agent or any
Bank of any  rights  hereunder  or under  any  other  Loan  Document  shall  not
constitute  a waiver of any other rights of the Agent and the Banks from time to
time.

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ALLETE
December 23, 2003
Page 21

             i.   JURISDICTION

             ANY  LITIGATION  BASED  HEREON,  OR ARISING  OUT OF,  UNDER,  OR IN
CONNECTION  WITH,  THIS  AGREEMENT OR THE NOTE OR ANY OTHER LOAN DOCUMENT OR ANY
COURSE OF CONDUCT, COURSE OF DEALING,  STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF THE AGENT,  ANY BANK OR THE COMPANY  SHALL BE BROUGHT AND  MAINTAINED
EXCLUSIVELY  IN THE  COURTS OF THE STATE OF  ILLINOIS  OR IN THE  UNITED  STATES
DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS;  PROVIDED,  HOWEVER,  THAT
ANY SUIT SEEKING  ENFORCEMENT  AGAINST ANY  COLLATERAL OR OTHER  PROPERTY MAY BE
BROUGHT,  AT THE AGENT'S OPTION,  IN THE COURTS OF ANY  JURISDICTION  WHERE SUCH
COLLATERAL  OR OTHER  PROPERTY MAY BE FOUND.  THE COMPANY  HEREBY  EXPRESSLY AND
IRREVOCABLY  SUBMITS TO THE  JURISDICTION OF THE COURTS OF THE STATE OF ILLINOIS
AND OF THE UNITED STATES  DISTRICT  COURT FOR THE NORTHERN  DISTRICT OF ILLINOIS
FOR THE  PURPOSE  OF ANY SUCH  LITIGATION  AS SET FORTH  ABOVE  AND  IRREVOCABLY
CONSENTS  TO  PERSONAL  SERVICE  WITHIN OR WITHOUT  THE STATE OF  ILLINOIS.  THE
COMPANY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED
BY LAW, ANY  OBJECTION  WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF
VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE
EXTENT  THAT  THE  COMPANY  HAS OR  HEREAFTER  MAY  ACQUIRE  ANY  IMMUNITY  FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS  (WHETHER THROUGH SERVICE OR
NOTICE,  ATTACHMENT  PRIOR  TO  JUDGMENT,  ATTACHMENT  IN  AID OF  EXECUTION  OR
OTHERWISE)  WITH  RESPECT  TO  ITSELF  OR  ITS  PROPERTY,   THE  COMPANY  HEREBY
IRREVOCABLY  WAIVES  SUCH  IMMUNITY  IN  RESPECT OF ITS  OBLIGATIONS  UNDER THIS
AGREEMENT, THE NOTE AND EACH OTHER LOAN DOCUMENT.

             j.   WAIVER OF JURY TRIAL

             THE COMPANY,  THE AGENT AND THE BANKS WAIVE ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION OR  PROCEEDING  TO  ENFORCE  OR DEFEND ANY RIGHTS  UNDER THIS
AGREEMENT,  THE NOTE OR ANY OTHER LOAN DOCUMENT,  AND THE COMPANY, THE AGENT AND
THE BANKS AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT
AND NOT A JURY.

             k.   CONFIDENTIALITY

             The Company,  the Agent and the Banks hereby agree and  acknowledge
that all  information  relating to the Company or any  subsidiary,  which is (i)
furnished  by the  Company to the Agent and the Banks  pursuant  hereto and (ii)
non-public, confidential or proprietary in

<PAGE>
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December 23, 2003
Page 22


nature, shall be kept confidential by the Agent and the Banks in accordance with
applicable law, PROVIDED that such information and other information relating to
the Company and its  subsidiaries  may be distributed by the Agent and each Bank
to  the  Agent  and  such  Bank's  respective  directors,  officers,  employees,
attorneys, affiliates, auditors and regulators (and, upon the order of any court
or other governmental  agency having jurisdiction over the Agent or any Bank, to
any other person or entity).  The  provisions of this Section 9(k) shall survive
the termination of this Agreement.

             Notwithstanding  anything  herein  to  the  contrary,  confidential
"information" shall not include, and the Agent and each Bank may disclose to any
and all persons, without limitation of any kind, any information with respect to
the U.S.  federal income tax treatment and U.S.  federal income tax structure of
the  transactions  contemplated  hereby and all materials of any kind (including
opinions  or other tax  analyses)  that are  provided  to the Agent or such Bank
relating to such tax treatment and tax structure.

             l.   APPLICABLE LAW

             This  Agreement,  the Notes and each other Loan  Document  shall be
governed by the internal  laws of the State of Illinois  applicable to contracts
made and to be performed entirely within such State.

             m.   SHARING OF SET-OFFS

             Each Bank  agrees  that if it  shall,  by  exercising  any right of
set-off or  counterclaim  or otherwise,  receive  payment of a proportion of the
aggregate  amount of principal and interest due with respect to any Note held by
it which is greater than the proportion received by any other Bank in respect of
the aggregate amount of principal and interest due with respect to any Note held
by such other Bank,  the Bank  receiving such  proportionately  greater  payment
shall  purchase such  participations  in the Notes held by the other Banks,  and
such  other  adjustments  shall be  made,  as may be  required  so that all such
payments of principal  and interest  with respect to the Notes held by the Banks
shall be shared by the Banks pro rata;  PROVIDED  that  nothing in this  Section
shall  impair  the  right of any  Bank to  exercise  any  right  of  set-off  or
counterclaim it may have and to apply the amount subject to such exercise to the
payment of  indebtedness  of the Company other than its  indebtedness  under the
Notes. The Company agrees,  to the fullest extent it may effectively do so under
applicable  law,  that each Bank and any  holder of a  participation  in a Note,
whether or not acquired  pursuant to the  foregoing  arrangements,  may exercise
rights of set-off or  counterclaim  and other rights under  applicable  law, and
with respect to such holder of such a  participation  as fully as if such holder
of a  participation  were a direct creditor of the Company in the amount of such
participation.

<PAGE>
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December 23, 2003
Page 23


             n.   PARTICIPATIONS

             Any  Bank  may  at  any  time  grant  to one or more banks or other
institutions (each a "PARTICIPANT") participating interests in its Commitment or
any or all of  its  Loans.  In the  event  of  any  such  grant  by a Bank  of a
participating  interest  to a  Participant,  whether  or not upon  notice to the
Company  and the  Agent,  such Bank  shall  remain  solely  responsible  for the
performance of its  obligations  hereunder,  and the Company and the Agent shall
continue  to deal solely and  directly  with such Bank in  connection  with such
Bank's rights and obligations  under this Agreement.  Any agreement  pursuant to
which any Bank may grant such a  participating  interest shall provide that such
Bank shall retain the sole right and  responsibility  to enforce the obligations
of the Company hereunder including, without limitation, the right to approve any
amendment,  modification  or  waiver of any  provision  of this  Agreement.  The
Company  agrees  that each  Participant  shall,  to the extent  provided  in its
participation  agreement,  be entitled to the benefits of Section 3 with respect
to its participating interest.

             o.   ASSIGNMENTS

             Any Bank  may at  any  time  assign  to  one or more banks or other
financial institutions (each an "ASSIGNEE") all, or a proportionate part of all,
of its  rights and  obligations  under this  Agreement  and the Notes,  and such
Assignee  shall  assume  such  rights  and  obligations,  pursuant  to a Joinder
Agreement  in  substantially  the  form of  Exhibit  B hereto  executed  by such
Assignee and such transferor Bank, with (and subject to) the subscribed  consent
of the Company,  which shall not be unreasonably  withheld, and the Agent, which
shall not be unreasonably withheld; PROVIDED that if an Assignee is an affiliate
of such transferor Bank or was a Bank immediately  prior to such assignment,  no
such consent of the Company  shall be required;  and PROVIDED  FURTHER  that, if
such assignment is in respect of a proportionate  part of the transferor  Bank's
rights and obligations  hereunder and under the Notes, the amount of such Bank's
Commitment  (together with the Commitment of any affiliate of such Bank),  after
taking into account such assignment,  is at least an amount equal to $5,000,000.
Upon  execution and delivery of such  instrument and payment by such Assignee to
such  transferor  Bank of an amount equal to the purchase  price agreed  between
such transferor  Bank and such Assignee,  such Assignee shall be a Bank party to
this  Agreement and shall have all the rights and  obligations  of a Bank with a
Commitment as set forth in such  instrument of  assumption,  and the  transferor
Bank shall be released from its obligations hereunder to a corresponding extent,
and no  further  consent  or  action by any party  shall be  required.  Upon the
consummation of any assignment  pursuant to this Subsection 9(o), the transferor
Bank, the Agent and the Company shall make appropriate  arrangements so that, if
required,  a new Note is issued to the  Assignee.  In  connection  with any such
assignment, the transferor Bank shall pay to the Agent an administrative fee for
processing such assignment in the amount of $3,500.

<PAGE>
ALLETE
December 23, 2003
Page 24

             p.   FEDERAL RESERVE BANKS

             Any  Bank  may  at any time assign all or any portion of its rights
under this  Agreement  and its Note to one or more of the Federal  Reserve Banks
which comprise the Federal Reserve System.  No such assignment shall release the
transferor Bank from its obligations hereunder.

             q.   IDENTITY OF HOLDERS

             The  Agent   and   the  Company  may,  for  all  purposes  of  this
Agreement,  treat  any Bank as the  holder of any Note  drawn to its order  (and
owner of the Loans  evidenced  thereby)  until  written  notice  of  assignment,
participation or other transfer shall have been received by them.

             r.   SPLIT-RATINGS

             In  the  event  the  Company's S&P Rating and Moody's Rating do not
fall within the same Level Status, then (1) if the S&P Rating's Level Status and
the Moody's  Rating's Level Status are in consecutive  Level Status  categories,
the lower Level Status  shall be deemed to apply for purposes of this  Agreement
or (2) if the S&P Rating's  Level Status and the Moody's  Rating's  Level Status
are  not  in  consecutive  Level  Status  categories,   then  the  Level  Status
immediately  above the lower of the S&P  Rating's  Level  Status and the Moody's
Rating's  Level Status shall be deemed to apply for purposes of this  Agreement.
For purposes of this  Agreement,  Level I Status shall be deemed the highest and
Level V Status shall be deemed the lowest.

             s.   CONTINUED EFFECT; NO NOVATION

             Notwithstanding  anything  contained  herein, this Agreement is not
intended to and does not serve to effect a novation of the Obligations. Instead,
it is the express  intention of the parties hereto to reaffirm the  indebtedness
which is outstanding as of the date hereof created under the Existing  Committed
Facility Letter which is evidenced by the notes provided for therein.

             t.   ADDITIONAL LENDERS

             The Company may, upon the approval  of  the  Agent, add  additional
lenders as Banks hereto (each a "NEW BANK"), PROVIDED that if as a result of the
addition  of any New Bank the  aggregate  amount of  Commitments  then in effect
would exceed  $200,000,000,  the  approval of the  Required  Banks shall also be
required  prior to adding  any such New  Bank.  Costs  incurred  by the Agent in
connection with adding any New Bank shall be paid by the Company,  and the legal
documentation  pursuant  to which  any New  Bank is  added  shall be in form and
substance reasonably satisfactory to the Agent.

             u.   RESIGNATION OF ABN AMRO

<PAGE>
ALLETE
December 23, 2003
Page 25

             The parties acknowledge that effective as of the  date  hereof  ABN
AMRO Bank N.V. is no longer the Agent under the Facility and its  Commitment has
terminated.

      10.    THE AGENT.

             a.   APPOINTMENT AND AUTHORIZATION

             Each Bank  irrevocably  appoints  and  authorizes the Agent to take
such  action as agent on its  behalf  and to  exercise  such  powers  under this
Agreement  and the Notes as are  delegated  to the Agent by the terms  hereof or
thereof, together with all such powers as are reasonably incidental thereto.

             b.   AGENTS FEE

             The  Company shall pay to the Agent for its own account fees in the
amounts  and at the times  previously  agreed  upon  between the Company and the
Agent.

             c.   AGENT AND AFFILIATES

             LaSalle Bank  National  Association  shall have the same rights and
powers  under this  Agreement as any other Bank and may exercise or refrain from
exercising  the same as though it were not the Agent,  and LaSalle Bank National
Association  and its  affiliates may accept  deposits  from,  lend money to, and
generally  engage in any kind of business  with the Company or  affiliate of the
Company as if it were not the Agent hereunder.

             d.   ACTION BY AGENT

             The obligations of the Agent hereunder are only those expressly set
forth herein. Without limiting the generality of the foregoing,  the Agent shall
not be required to take any action with respect to any Event of Default,  except
as expressly  provided in Section 7(b). The Agent's  duties  hereunder and under
the other Loan  Documents are only those  expressly set forth herein and therein
and  nothing  herein  or  therein  shall be  deemed  to  impose on the Agent any
fiduciary obligation to any Bank or the Company.

             e.   CONSULTATION WITH EXPERTS

             The Agent may consult  with legal  counsel  (who may be counsel for
the Company),  independent  public  accountants and other experts selected by it
and shall not be liable  for any  action  taken or  omitted to be taken by it in
good  faith in  accordance  with the  advice  of such  counsel,  accountants  or
experts.

<PAGE>
ALLETE
December 23, 2003
Page 26

             f.   LIABILITY OF AGENT

             Neither the Agent nor any of its directors,  officers,  agents,  or
employees shall be liable to any Bank for any action taken or not taken by it in
connection herewith (i) with the consent or at the request of the Required Banks
or (ii) in the  absence  of its own  gross  negligence  or  willful  misconduct.
Neither the Agent nor any of its directors,  officers, agents or employees shall
be  responsible  to any Bank  for or have  any  duty to any  Bank to  ascertain,
inquire into or verify (i) any  statement,  warranty or  representation  made in
connection with this Agreement or any borrowing hereunder;  (ii) the performance
or observance  of any of the  covenants or agreements of the Company;  (iii) the
satisfaction of any condition  specified in Article III, except receipt of items
required to be delivered to the Agent;  (iv) the existence or  continuance of an
Event of Default;  or (iv) the validity,  effectiveness  or  genuineness of this
Agreement,  the  Notes,  the other Loan  Documents  or any other  instrument  or
writing  furnished  in  connection  herewith.  The  Agent  shall  not  incur any
liability  by  acting  in  reliance  upon  any  notice,  consent,   certificate,
statement, or other writing (which may be a bank wire, telex or similar writing)
believed  by it in good faith to be genuine or to be signed by the proper  party
or parties.

             g.   INDEMNIFICATION

             Each  Bank  shall,  ratably  in  accordance  with  its  Commitment,
indemnify the Agent (to the extent not  reimbursed  by the Company)  against any
cost, expense (including counsel fees and disbursements), claim, demand, action,
loss or liability  (except such as result from the Agent's  gross  negligence or
willful  misconduct)  that the Agent may suffer or incur in connection with this
Agreement or any action taken or omitted by the Agent hereunder.

             h.   CREDIT DECISION

             Each  Bank  acknowledges  that it has,  independently  and  without
reliance  upon the Agent or any other  Bank,  and  based on such  documents  and
information  as it has  deemed  appropriate,  made its own credit  analysis  and
decision to enter into this Agreement. Each Bank also acknowledges that it will,
independently  and without  reliance upon the Agent or any other Bank, and based
on such  documents and  information  as it shall deem  appropriate  at the time,
continue  to make its own  credit  decisions  in taking or not taking any action
under this Agreement.

             i.   SUCCESSOR AGENT

             The Agent may resign at any time by giving  written  notice thereof
to the Banks and the Company.  Upon any such  resignation,  the  Required  Banks
shall have the right to appoint a successor  Agent,  which successor Agent shall
be  satisfactory  to the  Company.  If no  successor  Agent  shall  have been so
appointed by the  Required  Banks,  and shall have  accepted  such  appointment,
within 30 days after the retiring  Agent gives notice of  resignation,  then the
retiring  Agent may, on behalf of the Banks,  appoint a successor  Agent,  which
shall be a commercial

<PAGE>
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December 23, 2003
Page 27

bank  organized or licensed under the laws of the United States of America or of
any  State  thereof  and  having a  combined  capital  and  surplus  of at least
$100,000,000 and shall otherwise be subject to the consent of the Company, which
consent  shall  not  be  unreasonably  withheld.  Upon  the  acceptance  of  its
appointment as Agent hereunder by a successor Agent,  such successor Agent shall
thereupon  succeed  to and become  vested  with all the rights and duties of the
retiring  Agent,  and the retiring Agent shall be discharged from its duties and
obligations  hereunder.  After any  retiring  Agent's  resignation  hereunder as
Agent,  the  provisions  of this  Article  shall  inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent.


<PAGE>

                  Please  acknowledge your agreement to the foregoing by signing
and returning a copy of this letter.


Commitment:  $35,000,000                  LASALLE BANK NATIONAL
                                          ASSOCIATION, individually as a
                                          Bank and as Agent.

                                          By: /s/ Denis J. Campbell
                                             -----------------------------------
                                              Denis J. Campbell

                                          Title: Senior Vice President
                                                --------------------------------


                                          By: /s/ Matthew D. Rodgers
                                             -----------------------------------
                                              Matthew D. Rodgers

                                          Title: Loan Officer
                                                --------------------------------


                             Address:     LaSalle Bank National Association
                                          Syndications Unit
                                          135 South LaSalle Street, Suite 1425
                                          Chicago, Illinois 60603
                                          Attention: Damatria Gilbert
                                          Facsimile: (312) 904-4448
                                          Telephone: (312) 904-8277

                                          With copies to:

                                          LaSalle Bank National Association
                                          135 South LaSalle Street
                                          Chicago, Illinois 60603
                                          Attention: Chip Campbell
                                          Facsimile: (312) 904-1994
                                          Telephone: (312) 904-4497





<PAGE>



Commitment:  $25,000,000                  U.S. BANK NATIONAL ASSOCIATION




                                          By: /s/ Andrew Gaspard
                                             -----------------------------------
                                          Name:  Andrew Gaspard
                                               ---------------------------------
                                          Title: Assistant Vice President
                                                --------------------------------


<PAGE>



Commitment:  $25,000,000                  WELLS FARGO BANK,
                                          NATIONAL ASSOCIATION



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

                                          By: /s/ Douglas A. Lindstrom
                                             -----------------------------------
                                          Name: Douglas A. Lindstrom
                                               ---------------------------------
                                          Title: Vice President
                                                --------------------------------
                                                 Wells Fargo Bank, National
                                                 Association


<PAGE>


Commitment:  $35,000,000                  SUNTRUST BANK


                                          By:       /s/ Mary B. Smith
                                             -----------------------------------
                                          Name:       MARY B. SMITH
                                               ---------------------------------
                                          Title:         DIRECTOR
                                                --------------------------------
<PAGE>




Commitment:  $35,000,000                  BANK ONE



                                          By: /s/ Jane Bek Keil
                                             -----------------------------------
                                          Name: Jane Bek Keil
                                               ---------------------------------
                                          Title: Director
                                                --------------------------------

<PAGE>




Commitment:  $20,000,000                  THE BANK OF TOKYO - MITSUBISHI, LTD.,
                                               CHICAGO BRANCH




                                          By:       /s/ Patrick McCue
                                             -----------------------------------
                                          Name:  Patrick McCue
                                          Title: Vice President & Manager




<PAGE>



Agreed to this 23rd day of December, 2003



ALLETE, INC.

By:  /s/ James K. Vizanko
   --------------------------------------

Title:
      -----------------------------------


Address:  30 West Superior Street
          Duluth, Minnesota 55802
          Attention: Corporate Treasurer

Facsimile No.: (218) 723-3912



</TEXT>
</DOCUMENT>
