EXHIBIT 10
FINAL 11/30/05
AGREEMENT
THIS AGREEMENT (the "AGREEMENT") is made as of the 16th day of December,
2005, among ALLETE, Inc., a Minnesota corporation ("ALLETE"), Wisconsin Public
Service Corporation, a Wisconsin corporation ("WPSC") and WPS Investments, LLC,
a Wisconsin limited liability company ("WPSI"). WPSC and WPSI are sometimes
referred to herein collectively as "WPS." Each of ALLETE, WPSC and WPSI is
sometimes referred to herein as a "PARTY" or collectively as the "PARTIES."
WHEREAS, WPSC and ALLETE were originally joint applicants in connection
with the construction of a 345 kV transmission line, which is planned to run
from ALLETE's Arrowhead substation located near Duluth, Minnesota to American
Transmission Company LLC's ("ATCLLC") Weston substation, located near Wausau,
Wisconsin (the "PROJECT");
WHEREAS, in connection with the initial joint development of the Project,
WPSC and ALLETE agreed that ALLETE would have the right to purchase a portion of
the Project located in Wisconsin ("PROJECT RIGHT"); and
WHEREAS, the primary responsibility for the Project was transferred to
ATCLLC in 2003, pursuant to the November 8, 2002 agreement among ATCLLC, ATC
Management Inc. ("ATCMI") (ATCLLC and ATCMI may be collectively referred to
herein as "ATC"), WPSC and WPSI (WPSC and WPSI may be collectively referred to
herein as "WPS") ("TRANSFER AGREEMENT"), and as approved by the Public Service
Commission of Wisconsin ("PSCW") in Docket 05-AE-115 (Order dated April 17,
2003), and by the Federal Energy Regulatory Commission ("FERC") in AMERICAN
TRANSMISSION CO. LLC, ET AL., 102 FERC paragraph 62,172 (2003);
NOW, THEREFORE, in consideration of the promises and mutual agreements
herein contained, the Parties hereby agree as follows:
1. PURPOSE OF AGREEMENT. The Parties have determined it is preferable that,
rather than exercising its Project Right, ALLETE or ALLETE's designated
affiliate (collectively referred to herein as "ALLETE"), funds a portion of
ATC's monthly capital calls to WPS pursuant to the Transfer Agreement
("PROJECT CAPITAL CALLS"); and in exchange for ALLETE's funding of such
Project Capital Calls, ALLETE receives Member Units (as such term is
defined in the ATCLLC Operating Agreement dated as of January 1, 2001) in
ATCLLC, and Class A Common Stock (as such term is defined in the ATCMI
Shareholders Agreement dated as of January 1, 2001) in ATCMI.
ALLETE is willing to relinquish its Project Right in exchange for funding
$60 million in Project Capital Calls by the end of 2006.
2. ALLETE PARTICIPATION IN PROJECT CAPITAL CALLS. The Parties hereby
acknowledge and agree that:
i. PROJECT CAPITAL CALLS: Commencing with the first Project Capital
Call on or after the Effective Date (as defined in Section 5 below)
and subject to the terms of this Agreement, ALLETE shall fund 72%
of each Project Capital Call; provided however,
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if the Effective Date occurs after the December 2005 Project
Capital Call, but before the January 2006 Project Capital Call, is
funded, ALLETE shall fund 78% of each Project Capital Call
beginning with the January 2006 Project Capital Call. If the
Effective Date occurs after the January 2006 Project Capital Call
has been funded, the Parties shall cooperate in good faith to
modify ALLETE's percentage participation in Project Capital Calls
for the remainder of 2006 with the intent that the modified ALLETE
percentage participation will allow ALLETE to fund a total of $60
million in Project Capital Calls by the end of 2006. If, following
the May 2006 Project Capital Call, the Parties reasonably determine
that ALLETE's then-current percentage participation in Project
Capital Calls will not likely result in ALLETE being able to fund
$60 million in Project Capital Calls by the end of 2006, then the
Parties shall agree to a one-time increase to ALLETE's percentage
participation in Project Capital Calls, beginning with the June
2006 Project Capital Call. Such increased participation percentage
will not exceed 100% of such Project Capital Calls but will be
based on an intent to modify ALLETE's percentage participation to
allow ALLETE to fund a total of $60 million in Project Capital
Calls by the end of 2006.
ii. FUNDING OF PROJECT CAPITAL CALLS: In the event that WPS, under the
ATC-WPS Agreements (as such term is defined in Section 6(b) below),
has the right to refuse to participate in a Project Capital Call,
ALLETE shall also have the right, but not the obligation, to refuse
to participate in such Project Capital Call.
3. TERMINATION OF PROJECT RIGHT. Upon ALLETE's funding of a total of $60
million in Project Capital Calls by the end of 2006, or in the event of
WPS's termination of this Agreement in accordance with Section 7(i) below,
ALLETE's Project Right shall automatically terminate; provided, however, if
ALLETE is not offered the opportunity to fund a total of $60 million in
Project Capital Calls by the end of 2006, then the Parties shall negotiate
in good faith an amendment to this Agreement that preserves and reinstates,
to the maximum extent possible, each Party's benefits of the bargain as set
forth in this Agreement.
4. TRANSACTION DOCUMENTS. In order to effectuate the transaction contemplated
in this Agreement, the Parties acknowledge and agree that the following
agreements must be fully executed and delivered in addition to this
Agreement:
i. Transfer Agreement Amendment, as defined in Section 9 below, among
ATCLLC, ATCMI, WPSC and WPSI;
ii. Operating Agreement between ATCLLC and ALLETE; and
iii. Subscription Agreement among ATCLLC, ATCMI and ALLETE.
This Agreement and the agreements listed in subsections (i) through (iii)
above are collectively referred to herein as the "TRANSACTION DOCUMENTS."
5. TERM AND EFFECTIVE DATE. The term of this Agreement shall commence as of
the date first written above and shall expire when ALLETE has funded $60
million in Project Capital Calls, unless extended or earlier terminated as
provided herein ("TERM"). The "EFFECTIVE DATE" shall be the date on which
all Required Approvals, as set forth in Section 9 below, have been received
and all Transaction Documents have been fully executed and delivered.
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6. REPRESENTATIONS AND WARRANTIES.
a. Each of the Parties hereby represents and warrants to each of the other
Parties that, from and after the Effective Date:
i. This Agreement and the other Transaction Documents to which it is a
party constitute valid and binding obligations of such Party,
enforceable against it in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy,
insolvency, or similar laws or equitable remedies affecting
creditors' rights generally;
ii. There are no lawsuits, claims, complaints or investigations
pending, or to its knowledge threatened, against it, by any
governmental entity or third party that would reasonably be likely
to prohibit, or otherwise have a materially adverse consequence on,
the transactions contemplated by this Agreement and the other
Transaction Documents to which it is a party;
iii. It has obtained all consents, authorizations and approvals, and
taken all other actions, that are required for it to execute,
deliver and perform its obligations under this Agreement and the
other Transaction Documents to which it is a party; and
iv. The execution, delivery and performance by it of this Agreement and
the other Transaction Documents to which it is a party will not:
result in a material breach under any agreements to which it is a
party, or constitute a violation of any applicable federal, state
or local governmental law, regulation or order.
b. Each of WPSC and WPSI further represents and warrants to ALLETE that:
(i) all agreements between it and ATCLLC and/or ATCMI, which relate to
the Project and are reasonably necessary for WPSC and WPSI to cede to
ALLETE a percentage of their rights to participate in Project Capital
Calls as set forth herein (the "ATC-WPS AGREEMENTS"), are in full force
and effect; and (ii) neither it nor ATC is in violation or breach under
any of the ATC-WPS Agreements, and it has received no notice and has no
knowledge of any claim alleging a violation or breach under the ATC-WPS
Agreements, which would reasonably be likely to prohibit or otherwise
materially affect the transactions contemplated by this Agreement and
the other Transaction Documents to which it is a party. WPSC and WPSI
shall promptly notify ALLETE in writing of any party's termination,
violation or breach, or claim or notice therefor, under any of the
ATC-WPS Agreements. Any termination of the ATC-WPS Agreements, before
the termination of the Project Right under Section 3 above, shall have
no effect on the Project Right.
The Parties' representations and warranties set forth in this Section 6 shall
survive until the earlier of the expiration of the Term or termination of this
Agreement.
7. TERMINATION. This Agreement may be terminated upon prior, written notice:
i. by either WPS or ALLETE if any representation or warranty made by
the other Party under this Agreement or any of the other
Transaction Documents shall prove to have been materially false or
misleading when made or ceases to remain true during the
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Term or if the other Party breaches any of its obligations under
this Agreement, if such cessation or breach would reasonably be
expected to have a materially adverse consequence on the other
Party or the transactions contemplated in the Transaction
Documents, provided that, if cure of the underlying condition that
resulted in the untruth or cure of the breach would result in it
having no materially adverse consequence on the other Party or the
transactions contemplated in the Transaction Documents, such
condition or breach has not been cured within thirty (30) days
after receipt of written notice from the other Party;
ii. by ALLETE in the event of ATC's: (i) dissolution or liquidation;
(ii) assignment of any of its rights under the Transaction
Documents for the benefit of creditors; or (iii)voluntarily filing,
or having filed against it, a petition in bankruptcy or insolvency
or for reorganization or arrangement under United States bankruptcy
laws or the insolvency act of any State; or
iii. by ALLETE for all future Project Capital Calls in the event that
any of the agreements described in Section 4(i) - (iii) above
expires or is terminated; provided however, if ALLETE terminates
this Agreement under this subpart (iii), the Parties shall
negotiate in good faith an amendment to this Agreement that
preserves and reinstates, to the maximum extent possible, each
Party's benefits of the bargain as set forth in this Agreement.
8. ASSIGNMENT. The Parties' respective rights and obligations under this
Agreement may be assigned only with the written consents of the other
Parties hereto, which consents shall not be unreasonably withheld or unduly
delayed; PROVIDED HOWEVER, any Party may, without the other Parties'
consents, assign all or part of its rights and obligations hereunder to its
affiliated company including, without limitation, its successor in interest
by way of merger, consolidation or sale of all or substantially all of its
assets. This Agreement shall be binding upon and shall inure to the benefit
of the Parties, their respective successors and permitted assigns, but
shall not confer any rights or remedies upon any third party. Any purported
assignment of this Agreement without the written consent of the other
Parties, if required hereunder, shall be null and void.
9. REGULATORY AND OTHER REQUIRED APPROVALS. This Agreement is expressly
conditioned on: (i) the PSCW's approval of an amendment to the Transfer
Agreement, to facilitate ALLETE's participation in Project Capital Calls as
set forth in Sections 1 and 2 above ("TRANSFER AGREEMENT AMENDMENT"); (ii)
FERC 203 approval of ALLETE's acquisition of Member Units in ATCLLC and
Class A Common Stock in ATCMI; and (iii) the approval of the ATCMI Board of
Directors, which is attached as EXHIBIT A hereto and made a part hereof
("ATCMI BOARD OF DIRECTORS' APPROVAL"). (Collectively, subparts (i), (ii)
and (iii) are referred to herein as "REQUIRED APPROVALS.") The Parties
shall cooperate in good faith in seeking all Required Approvals necessary
to effectuate this Agreement and the other Transaction Documents. If a
Party receives notice, or otherwise becomes aware, that another regulatory
approval is required in order to effectuate this Agreement or the other
Transaction Documents, such Party shall notify the other Parties via
telephone as soon as practicable, and they shall cooperate in good faith to
obtain such additional regulatory approval as expeditiously as possible.
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10. SEVERABILITY. If: (i) any term of this Agreement is determined to be
invalid, illegal or unenforceable by any court or governmental authority
having jurisdiction; or (ii) one or more of the Required Approvals set
forth in Section 9 above is not obtained by May 15, 2006, or is denied or
conditioned in a manner that materially adversely affects a Party's
respective benefits and obligations hereunder, then the Parties shall
negotiate in good faith a new provision or new agreement that will be
legally enforceable, or gain such Required Approvals as applicable, and to
the maximum extent possible, restore each Party's benefits of the bargain
contained in this Agreement.
11. COUNTERPARTS. This Agreement may be executed in any number of separate
counterparts, each of which shall be deemed to be an original and all of
which together shall constitute one and the same agreement.
IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
Parties hereto on the date first written above.
WISCONSIN PUBLIC SERVICE ALLETE, INC.
CORPORATION
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------- -------------------------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxxx X. Xxxxxxx
Title: Chairman and Chief Executive ---------------------------------
Officer Title: President & CEO
--------------------------------
WPS INVESTMENTS, LLC
BY WPS RESOURCES CORPORATION, ITS MANAGER
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman, President and Chief
Executive Officer
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