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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,
1
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FINAL 11/30/05
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 her
