The threshold and maximum payment levels will be established each year by the Committee and shown on [Appendix B] of the Plan. The threshold and maximum shall apply individually to each metric. If the performance of an individual metric falls below the threshold, no bonus will be payable for that individual metric. Each metric will be individually compared to the target and if the performance is above target, the bonus will be calculated for each individual metric based on the assigned weighted percent of the total Bonus target. Fifty percent of the Bonus target will be payable at the threshold and 150% of the Bonus target will be payable at the maximum payment level for each individual metric. Payment for performance between threshold and maximum will be calculated with straight-line interpolation between such percentages for performance that is in between threshold and maximum. The Bonus paid to any Participant with respect to any Plan Year shall not exceed 150% of the Participant’s Bonus target (excluding any applicable Enhanced Bonus provided in [Appendix C]) with respect to the Plan Year.

The threshold level of achievement of the financial goal is at least 84.44%. If we achieve less than 84.44% of the financial goal, no participant in the 2018 Bonus Plan will receive any portion of the target incentive. If we achieve 84.44% of the financial goal, participants will receive 50% of the target incentive. For achievement of the financial goal between the threshold and target, the overall incentive payment scales linearly between 50% and 100%. For achievement of the financial goal between the target and 115.56% of the financial goal, the overall incentive payment scales linearly between 100% and 200%. The maximum level of achievement of the financial goal is 115.56%. If we fail to achieve a minimum target for billings or free cash flow, the maximum target incentive will be 50%, even if the overall level of achievement of the financial goal is greater than the threshold.

Buyout Threshold. The Buyout Threshold Condition shall have been satisfied.

Straight line extrapolation of the payout percentage attained will be calculated for results between Threshold and Target, and between Target and Maximum. Below Threshold, the payout percentage attained is 0%. For Maximum or above, the payout percentage attained is 200%. Notwithstanding the foregoing, the Compensation Committee retains discretion to adjust an award (increase or reduce) under this Agreement based on its assessment of the Company’s performance with respect to strategic initiatives.

Straight-line interpolation shall be used to determine the “Percentage of Target Shares” in the table above if the Performance Achievement Percentage is between “Threshold” and “Target” and between “Target” and “Maximum.” For example, a 50% Performance Achievement Percentage will result in delivery of 50% of the Target Shares. Any partial Share shall be rounded up to the nearest whole Share.

A multiplier is applied for performance between the Corporate Threshold and Target to determine the percentage of the bonus pool that is funded, as well as performance that is above Target. The Corporate Bonus Pool can be up to 200% of target based on the achievement of above plan performance objectives.

For the avoidance of doubt, in no event shall a performance goal be deemed satisfied unless actual performance equals or exceeds the threshold level provided in the applicable Scorecard. To the extent that the actual performance is between the threshold and target levels or between the target and maximum levels described in the Scorecard, the vesting shall be determined as set forth in the Scorecard; provided that the Performance Condition shall not be satisfied and there shall be no vesting, if the actual performance is less than the threshold level of performance for all performance goals; and provided, further, that the maximum number of PSUs that vests shall not exceed the Maximum Shares.

Adjustments Based on EPS Goals. The Target Amount of units will initially be adjusted based upon performance against the average of the yearly EPS goals, as certified by the Committee (the “Adjusted EPS Units”). Fiscal year 2022 and fiscal year 2023 EPS goals will result in the following adjustment: 0% if performance is below the threshold level, 50% if performance is at the threshold level, 100% if performance is at target level, 200% if performance is above target, and 300% if performance is at or above the maximum level. Fiscal year 2024 EPS goals will result in the following adjustment: 0% if performance is below the threshold level, 25% if performance is at the threshold level, 50% if performance is at the below target level, 100% if performance is at the target level, 200% if performance is at the above target level, and 300% if performance is at or above the maximum level. For performance that falls among any of the attainment levels between the threshold level and the maximum level, a proportionate percentage will be applied based on straight-line interpolation between the attainment levels. At the end of the Performance Period each individual year’s EPS performance will be added together and then divided by three to determine the average EPS performance for the Performance Period, which will then be applied to the Target Amount of units to determine the EPS payout.

If ALLETE’s TSR ranking is at the 85th percentile or higher among the peer group (superior performance), 200% of the Performance Share Grant will be earned. If ALLETE’s TSR ranking is at the 50th percentile among the peer group (target performance), 100% of the Performance Share Grant will be earned. If ALLETE’s TSR ranking is at the 30th percentile (threshold performance), 50% of the Performance Share Grant will be earned. If TSR ranking is below threshold, no Performance Shares will be earned. Straight-line interpolation will be used to determine earned awards based on the TSR ranking between threshold, target and superior.

If the Free Cash Flow Threshold Target is not achieved, no percentage of Free Cash Flow Target RSUs will become vested or earned and such portion of the Performance RSUs shall be immediately forfeited without consideration. If the Free Cash Flow Threshold Target is met, the number of Earned Free Cash Flow Performance RSUs shall be determined as follows: