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Exhibit 1
DISTRIBUTION AGREEMENT
February
19, 2008
KCCI
Inc.
80
Maiden Lane
Suite
2201
New
York, New York 10038
Attention: Mark
Nauman
Ladies
and Gentlemen:
ALLETE,
Inc., a Minnesota corporation (the “ Company ”),
confirms its agreement with KCCI Inc., as agent (“
you
” or “ KCCI ”),
with respect to the issuance and sale from time to time by the
Company, in the manner and subject to the terms and conditions
described below, of up to an aggregate of 2,500,000 shares
(the “ Maximum Number of
Shares ”) of common stock, without par value (the
“ Common Stock
”), including the preferred share purchase rights
attached thereto (“ Rights ”),
of the Company. Such 2,500,000 shares, including
the attached Rights, are hereinafter collectively referred to
as the “ Shares .”
The Shares are described in the Prospectus referred to
below.
The
Company has filed with the Securities and Exchange Commission
(the “ Commission
”) a registration statement on Form S-3 (No. 333-147965)
(the “ registration
statement ”) for the registration of an
unspecified amount of securities, including Common Stock and
Rights, under the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder
(collectively, the “ Act
”). Except where the context otherwise
requires, “ Registration
Statement ,” as used herein, means the
registration statement, as amended at the time of such
registration statement’s effectiveness for purposes of
Section 11 of the Act, as such section applies to KCCI,
including (1) all documents incorporated or deemed to be
incorporated by reference therein and (2) any information
contained or incorporated by reference in a prospectus filed
with the Commission pursuant to Rule 424(b) under the Act, to
the extent such information is deemed, pursuant to Rule 430B
under the Act, to be part of the registration statement at the
effective time. Except where the context otherwise
requires, “ Basic Prospectus
,” as used herein, means the prospectus filed as part of
the Registration Statement, together with any amendments or
supplements thereto as of the date of this
Agreement. Except where the context otherwise
requires, “ Prospectus
Supplement ,” as used herein, means the
prospectus supplement, dated February 19, 2008, relating to
the Shares, filed by the Company with the Commission pursuant
to Rule 424(b) under the Act on or before the second business
day after the date hereof (or such earlier time as may be
required under the Act), in the form furnished by the Company
to KCCI in connection with the offering of the
Shares. Except where the context otherwise
requires, “ Prospectus
,” as used herein, means the Prospectus Supplement
together with the Basic Prospectus attached to or used with
the Prospectus Supplement. “ Permitted Free Writing
Prospectuses ,” as used herein, means any other
documents that the parties hereto shall hereafter expressly
agree in writing to distribute in connection with the offering
of the Shares. Any reference herein to the
registration statement, the Registration Statement, any Basic
Prospectus, the Prospectus Supplement, the Prospectus or any
Permitted Free Writing Prospectus shall be deemed to refer to
and include the documents, if any, incorporated by reference,
or deemed to be incorporated by reference, therein (the
“ Incorporated
Documents ”). Any reference herein to
the terms “ amend ,”
“ amendment ”
or “ supplement ”
with respect to the Registration Statement, any Basic
Prospectus, the Prospectus Supplement, the Prospectus or any
Permitted Free Writing Prospectus shall be deemed to refer to
and include any document filed with the Commission under the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (collectively, the “ Exchange Act
”) on or after the initial effective date of the
Registration Statement, or the date of such Basic Prospectus,
the Prospectus Supplement, the Prospectus or such Permitted
Free Writing Prospectus, as the case may be, and deemed to be
incorporated therein by reference.
The
Company and KCCI agree as follows:
1.
Issuance and
Sale.
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(a)
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Upon
the basis of the representations and warranties and subject to the
terms and conditions set forth herein, on any Exchange Business Day
(as defined below) selected by the Company, the Company and KCCI
shall enter into an agreement in accordance with Section 2 hereof
regarding the number of Shares to be placed by KCCI and the manner
in which and other terms upon which such placement is to occur
(each such transaction being referred to as a “ Transaction
”). As used in this Agreement, (i) the “
Term
” shall be the period commencing on the date hereof and
ending on the earliest of (x) June 30, 2009, (y) the date on which
the Maximum Number of Shares have been issued and sold pursuant to
this Agreement, or (z) the termination of this Agreement pursuant
to Section 8 or 9 (the “ Termination Date
”), (ii) an “ Exchange Business Day
” means any day during the Term that is a trading day for the
Exchange other than a day on which trading on the Exchange is
scheduled to close prior to its regular weekday closing time, and
(iii) “ Exchange ” means
The New York Stock Exchange, Inc.
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(b)
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Subject
to the terms and conditions set forth below, the Company appoints
KCCI as agent in connection with the offer and sale of Shares in
any Transaction entered into hereunder. KCCI will use
its commercially reasonable efforts to sell such Shares in
accordance with the terms and conditions hereof and of the
applicable Transaction Notice (as defined
below). Neither the Company nor KCCI shall have any
obligation to enter into a Transaction. The Company
shall be obligated to issue and sell through KCCI, and KCCI shall
be obligated to use its commercially reasonable efforts, as
provided herein and in the applicable Transaction Notice, to place
Shares issued by the Company only if and when a Transaction Notice
related to such Transaction has been delivered by the Company and
accepted by KCCI as provided in Section 2 below.
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(c)
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The
Company and KCCI agree that the Shares to be sold in a Transaction
shall be sold in a manner constituting an “at-the-market
offering” as defined in Rule 415 promulgated under the
Act. In such case, KCCI will confirm in writing to the
Company the number of Shares sold on any Exchange Business Day and
the related Gross Sales Price and Net Sales Price (as each of such
terms is defined in Section 2(b) below) no later than the opening
of trading on the immediately following Exchange Business
Day.
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(d)
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KCCI
hereby covenants and agrees not to make any sales of the Shares on
behalf of the Company, pursuant to this Agreement, other than (A)
by means of ordinary brokers’ transactions between members of
the Exchange that qualify for delivery of a Prospectus to the
Exchange in accordance with Rule 153 under the Act (such
transactions are hereinafter referred to as “ At-the-Market Offerings
”) and (B) such other sales of the Shares on behalf of
the Company in its capacity as agent of the Company as shall be
agreed by the Company and KCCI.
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(e)
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KCCI
hereby covenants and agrees, unless it has or shall have obtained,
as the case may be, the prior written consent of the Company, not
to make any offer relating to the Shares that would constitute any
“ issuer
free writing prospectus ” (as defined in Rule 433)
relating to the Shares or that would otherwise constitute a “
free writing
prospectus ” (as defined in Rule 405) required to be
filed by the Company with the Commission or retained by the Company
under Rule 433.
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2.
Transaction
Notices .
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(a)
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The
Company may, from time to time during the Term, propose to KCCI
that they enter into a Transaction to be executed on a specified
Exchange Business Day. If KCCI agrees to the terms of
such proposed Transaction or if the Company and KCCI mutually agree
to modified terms for such proposed Transaction, then the Company
shall promptly send to KCCI a notice, substantially in the form of
Exhibit
A hereto (each a “ Transaction Notice
”), confirming the agreed terms of such proposed Transaction.
The time at which the Company issues a Transaction Notice shall be
the “ Notice
Time ” for that Transaction. If
KCCI wishes such proposed Transaction to become a binding agreement
between it and the Company, KCCI shall promptly indicate its
acceptance thereof by countersigning and returning such Transaction
Notice to the Company or sending a written notice to the Company
(by any means permissible under Section 11 hereof) indicating its
acceptance. The terms reflected in a Transaction Notice
shall become binding on KCCI and the Company only if accepted by
KCCI no later than the times specified in Section 2(b)
below. Each Transaction Notice shall specify, among
other things:
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(i) the
Exchange Business Day on which the Shares subject to such
Transaction are to be sold (the “ Purchase Date
”);
(ii) the
number of Shares that the Company agrees to sell (the “
Specified
Number of Shares ”) on such Purchase Date, which
shall be no more than twenty percent (20%) of the average
daily trading volume in the Common Stock on the Exchange for
the ninety (90) Exchange Business Days preceding the date of
delivery of the Transaction Notice; and
(iii) the
lowest price (if any) at which the Company shall be obligated
to sell Shares in such Transaction (a “ Floor Price
”).
A
Transaction Notice shall not set forth a Specified Number of
Shares that, when added to the aggregate number of Shares
previously purchased and to be purchased pursuant to pending
Transaction Notices (if any) hereunder, results in a total
that exceeds the Maximum Number of Shares. The
Company shall have responsibility for maintaining records with
respect to the aggregate dollar amount of Shares sold, or for
otherwise monitoring the availability of Shares for sale under
the Registration Statement. A Transaction Notice
conforming to the foregoing requirements, once accepted by
KCCI, shall be irrevocable, and the Company shall be obligated
to sell the Specified Number of Shares and KCCI shall be
obligated, subject to the terms of, and satisfaction of, the
conditions set forth in this Agreement and such Transaction
Notice, including, but not limited to, Section 1(e) above and
Section 2(e) below, to use its commercially reasonable efforts
to obtain performance from each Purchaser providing offers for
the Shares. Notwithstanding the foregoing, if the
terms of any Transaction contemplate that Shares shall be sold
on more than one Purchase Date, then the Company and KCCI
shall mutually agree to such additional terms and conditions
as they deem necessary in respect of such multiple Purchase
Dates, and such additional terms and conditions shall be set
forth in the relevant Transaction Notice and be binding to the
same extent as any other terms contained therein.
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(b)
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The
Purchase Date in respect of the Shares deliverable pursuant to any
Transaction Notice shall occur on the Exchange Business Day next
following the date on which such Transaction Notice is accepted if
such acceptance occurs by 4:30 P.M. (New York time) on such
acceptance date; provided that if a Transaction Notice is accepted
prior to 8:30 A.M. (New York time) on an Exchange Business Day (or
by such later time as the Company may agree in its sole
discretion), the Purchase Date in respect of such Shares shall be
on such date of acceptance. For Transactions,
KCCI’s commission shall be $0.03 per Share sold (the “
Gross Sales
Price ”) (the Gross Sale Price less KCCI’s
commission is referred to herein as the “ Net Sales Price
”).
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(c)
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Payment
of the Net Sales Price for Shares sold by the Company on any
Purchase Date pursuant to a Transaction Notice shall be made to the
Company by federal funds wire transfer to an account designated by
the Company in writing, against delivery of such Shares to the
accounts specified in writing by KCCI. Such payment and
delivery shall be made at or about 10:00 A.M., local time in New
York, New York, on the third Exchange Business Day (or such other
day as may, from time to time, become standard industry practice
for settlement of such a securities issuance) following each
Purchase Date (the “ Closing Date
”). If the Company fails for any reason to make
timely delivery of such Shares, the Company shall indemnify KCCI
and its successors and assigns and hold them harmless from and
against any loss, damage, expense, liability or claim that KCCI may
incur as a result of such failure.
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(d)
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If,
as provided in the related Transaction Notice, a Floor Price has
been agreed to by the parties with respect to a Transaction, and
the Gross Sales Price for such Transaction would not be at least
equal to such Floor Price, then the Company shall not be obligated
to issue and sell through KCCI, and KCCI shall not be obligated to
place, the Specified Number of Shares for such
Transaction.
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(e)
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If
either party is aware that the Company is selling shares of Common
Stock (other than the Shares offered pursuant to this Agreement)
during the Term and the exemptive provisions set forth in Rule
101(c)(1) of Regulation M under the Exchange Act are not satisfied
with respect to the sale of such other shares of Common Stock, it
shall promptly notify the other party and sales of the Shares under
this Agreement and any Transaction Notice shall be suspended until
that or other exemptive provisions have been satisfied in the
judgment of each party.
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3.
Representations
and Warranties of the Company.
The
Company represents and warrants to KCCI, on and as of (i) the
date hereof, (ii) each Notice Time, and (iii) each Closing
Date that:
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(a)
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The
Company meets the requirements for use of Form S-3 under the Act
for the registration of the Transactions; the Registration
Statement has become effective under the Act and no stop order
suspending the effectiveness of the Registration Statement has been
issued under the Act and no proceedings for that purpose have been
instituted or are pending or, to the Company’s knowledge, are
threatened by the Commission; at the respective times that the
Registration Statement and any post-effective amendment thereto
became effective, the Registration Statement and any post-effective
amendment thereto complied, in all material respects, with the
requirements of the Act; and the Basic Prospectus and the
Prospectus Supplement, and any supplement or amendment thereto,
each when filed with the Commission and on each Closing Date,
complied or will comply in all material respects with the
provisions of the Act; each Incorporated Document, when filed with
the Commission, fully complied or will fully comply, in all
material respects, with the requirements of the Exchange Act; the
Registration Statement meets, and the offering and sale of the
Shares as contemplated hereby complies with, the requirements of
Rule 415 under the Act; the Registration Statement did not, as of
the time of its effectiveness, contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; as of each Notice Time and each Closing Date, the
Prospectus, as then amended or supplemented, together with all of
the then issued Permitted Free Writing Prospectuses, if any, will
not contain an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no
representation or warranty with respect to any statement in or
omission from the Registration Statement, any Basic Prospectus, the
Prospectus or any Permitted Free Writing Prospectus made in
reliance upon and in conformity with information relating to KCCI
furnished in writing by or on behalf of KCCI expressly for use in
the Registration Statement, such Basic Prospectus, the Prospectus
or such Permitted Free Writing Prospectus.
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(b)
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Prior
to the execution of this Agreement, the Company has not, directly
or indirectly, offered or sold any Shares by means of any
“prospectus” (within the meaning of the Act) or used
any “prospectus” (within the meaning of the Act) in
connection with the offer and sale of the Shares, in each case
other than the Prospectus; the Company has not, directly or
indirectly, prepared, used or referred to any Permitted Free
Writing Prospectus except in compliance with Rules 164 and 433
under the Act in connection with the offer and sale of the Shares;
the Company is not an “ ineligible issuer
” (as defined in Rule 405 under the Act) as of the
eligibility determination date for purposes of Rules 164 and 433
under the Act with respect to the offering of the Shares
contemplated by the Registration Statement.
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(c)
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The
Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation,
and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is
required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. “ Material Adverse Effect
,” as used herein, means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or
properties of the Company and its Subsidiaries, taken as a whole,
or (b) the ability of the Company to perform its obligations under
this Agreement, or (c) the validity or enforceability of this
Agreement. “ Subsidiary ,”
as
used herein, means, as to any Person, any other Person in which
such first Person or one or more of its Subsidiaries or such first
Person and one or more of its Subsidiaries owns sufficient equity
or voting interests to enable it or them (as a group) ordinarily,
in the absence of contingencies, to elect a majority of the
directors (or Persons performing similar functions) of such second
Person, and any partnership or joint venture if more than a 50%
interest in the profits or capital thereof is owned by such first
Person or one or more of its Subsidiaries or such first Person and
one or more of its Subsidiaries (unless such partnership or joint
venture can and does ordinarily take major business actions without
the prior approval of such Person or one or more of its
Subsidiaries). “ Person ,”
as
used herein, means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization,
or business entity. The Company has the corporate power
and authority to own or hold under lease the properties it purports
to own or hold under lease, to transact the business it transacts
and proposes to transact, to execute and deliver this Agreement and
to perform the provisions hereof and thereof.
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(d)
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No
consent, approval or authorization of, or registration, filing or
declaration with, any federal, state or local governmental or
regulatory commission, board, body, authority or agency is required
in connection with the execution, delivery or performance by the
Company of this Agreement and the issuance of the Shares, except
(1) such as have been, or will have been prior to the Closing Date,
obtained under the Act, (2) for an existing order of the Minnesota
Public Utilities Commission (the “MPUC”) dated February
4, 2008 and amended February 5, 2008 approving the capital
structure of the Company including the issuance and sale of the
Shares (which order is, to the best knowledge of the Company, still
in full force and effect), and future orders of the MPUC, which
will be obtained as required, to permit the issuance and sale of
the Shares hereunder, (3) for such consents, approvals,
authorizations, orders, registrations or qualifications as may be
required under state securities or blue sky laws, as the case may
be, and except in any case where the failure to obtain such
consent, approval, authorization, order, registration or
qualification would not have a Material Adverse Effect and (4) such
as may be required in connection with the exercise of the
Rights.
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(e)
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Except
as disclosed in the Registration Statement, any Basic Prospectus,
the Prospectus or any Permitted Free Writing Prospectus, all of the
outstanding equity interests of each of the Significant
Subsidiaries have been duly authorized and validly issued, are
fully paid and non-assessable and are owned by the Company,
directly or indirectly, subject to no security interest, mortgage,
pledge, lien, encumbrance, claim or other equity or adverse claim
except such as do not materially affect the value thereof
(collectively, “ Encumbrance
”). “ Significant Subsidiary
,” as used herein, has the meaning set forth in Item 1.02(w)
of Regulation S-X under the Act.
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(f)
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This
Agreement has been duly authorized by all necessary corporate
action on the part of the Company, and this Agreement constitutes a
legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such
enforceability may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and
(ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
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(g)
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The
Shares have been duly authorized and, when issued, delivered and
paid for as provided in this Agreement, will be validly issued,
fully paid and non-assessable. The Shares will conform
in all material respects to the description thereof contained in
any Permitted Free Writing Prospectus and the Prospectus as amended
or supplemented.
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(h)
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The
form of certificates evidencing the Shares (to the extent such
Shares are certificated) complies with all applicable legal
requirements and, in all material respects, with all applicable
requirements of the Amended and Restated Articles of Incorporation
, as amended, and Bylaws, as amended, of the Company and the
requirements of the Exchange (if any).
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(i)
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PricewaterhouseCoopers
LLP, who has audited the audited financial statements of the
Company, is an independent registered public accounting firm with
respect to the Company within the applicable rules and regulations
adopted by the Commission and the Public Accounting Oversight Board
(United States) and as required by the Act.
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(j)
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Each
of the Company and its Subsidiaries has all necessary licenses,
authorizations, consents and approvals and has made all necessary
filings required under any federal, state, local or foreign law,
regulation or rule, and has obtained all necessary authorizations,
consents and approvals from other persons, in order to conduct its
respective business as described in the Registration Statement, any
Basic Prospectus, the Prospectus or any Permitted Free Writing
Prospectus, unless the failure to possess such licenses,
authorizations, consents and other governmental or regulatory
authorizations and approvals or make such necessary filing,
individually or in the aggregate, would not have, or reasonably be
expected to have, a Material Adverse Effect; and except as
described in the Registration Statement, any Basic Prospectus, the
Prospectus or any Permitted Free Writing Prospectus, neither the
Company nor any of its Subsidiaries is in violation of, in default
under or has received any notice regarding a possible violation,
default or revocation of any such license, authorization, consent
or approval or any federal, state, local or foreign law, regulation
or rule or any decree, order or judgment applicable to the Company
or any of its Subsidiaries the effect of which would have, or would
reasonably be expected to have, a Material Adverse
Effect.
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(k)
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Except
as disclosed in the Registration Statement, any Basic Prospectus,
the Prospectus or any Permitted Free Writing Prospectus, there are
no actions, suits, investigations or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the
Company or any of its Subsidiaries or any property of the Company
or any of its Subsidiaries in any court or before any arbitrator of
any kind or before or by any Governmental Authority which is
reasonably likely to be determined adversely and, if determined
adversely, might reasonably be expected to have a Material Adverse
Effect.
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(l)
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The
financial statements included or incorporated in the Registration
Statement, any Basic Prospectus, the Prospectus or any Permitted
Free Writing Prospectus fairly present in all material respects the
consolidated financial position of the Company and its Subsidiaries
as of the respective dates specified in such financial statements
and the consolidated results of their operations and cash flows for
the respective periods so specified and have been prepared in
accordance with generally accepted accounting principles as applied
in the United States consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the
case of any interim financial statements, to normal year-end
adjustments).
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(m)
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Subsequent
to the respective dates as of which information is given in the
Registration Statement, any Basic Prospectus, the Prospectus or any
Permitted Free Writing Prospectus, there has not been (i) any
change in the business, properties or assets described or referred
to in the Registration Statement, or the results of operations,
condition (financial or otherwise), business or operations of the
Company and its Subsidiaries, taken as a whole, that would have, or
reasonably be expected to have, a Material Adverse Effect, or (ii)
except as otherwise expressly disclosed in the Registration
Statement, the Basic Prospectus and the Prospectus, (A) any
transaction which is material to the Company or its Subsidiaries,
taken as a whole, planned or entered into by the Company or any of
its Subsidiaries, (B) any obligation, direct or contingent, which
is material to the Company and its Subsidiaries, taken as a whole,
incurred by the Company or its Subsidiaries, except obligations
incurred in the ordinary course of business, (C) any dividend
or distribution of any kind declared, paid or made on the capital
stock of the Company (other than the Company’s regular
quarterly cash dividends) or (D) any other material information
required to be publicly disclosed prior to the issuance of any
Shares in accordance with the Act or the rules and regulations
promulgated thereunder.
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(n)
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The
Company has filed in a timely manner all reports required to be
filed pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
Exchange Act during the preceding twelve calendar months and if
during such period the Company has relied on Rule 12b-25(b) under
the Exchange Act (“Rule 12b-25(b)”) with respect to a
report or a portion of a report, that report or portion of a report
has actually been filed within the time period prescribed by Rule
12b-25(b).
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(o)
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The
Company is not subject to regulation under the Investment Company
Act of 1940, as amended.
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(p)
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None
of the Company, its Subsidiaries, or any of their respective
officers, directors and controlling persons has taken
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