exhibit_10g.htm


    Exhibit
10(g)

      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 ¶ 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, 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 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 Agreement (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.


      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 that 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 that 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 of 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 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 here of (“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.

      


      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
be executed and delivered by the Parties hereto on the date first written
above.

       

      
        	
                WISCONSIN
      PUBLIC SERCIVE

              	 
      	
                ALLETE,
      INC.

              
	
                CORPORATION

              	 
      	 
      	 
      
	
                By:

              	 /s/
      Larry L. Weyers	 
      	
                By:

              	 /s/
      Donald J. Shippar
	 
      	
                Name:
      Larry L. Weyers

              	 
      	 
      	
                Name:
      Donald J. Shippar

              
	 
      	
                Title:
      Chairman and Chief Executive Officer

              	 
      	 
      	
                Title:
      President & CEO

              
	 
      	 
      	 
      	 
      	 
      
	
                WPS
      INVESTMENTS, LLC

              	 
      	 
      	 
      
	
                By
      WPS Resources Corporation, its Manager

              	 
      	 
      	 
      
	
                By:

              	 /s/
      Larry L Weyers	 
      	 
      	 
      
	 
      	
                Name:
      Larry L Weyers

              	 
      	 
      	 
      
	 
      	
                Title:
      Chairman, President and Chief Executive Officer

              	 
      


      

       

      
        
           


        

        
           


          
            

          

        

        
           


        

      

      EXHIBIT
A

       

      ATCMI BOARD OF DIRECTORS’
APPROVAL

       

      UNANIMOUS
CONSENT TO ACTION BY THE DIRECTORS

      OF ATC
MANAGEMENT INC.

      


      ADMISSION
OF ALLETE, INC., OR ITS DESIGNATED SUBSIDIARY,

      AS A
MEMBER OF ATCLLC

      


      


      The undersigned, constituting all of
the members of the Board of Directors of ATC Management Inc. (“ATCMI”), a
Wisconsin corporation, pursuant to Section 3.5(c) of the Amended and Restated
Bylaws of ATCMI and the provisions of Wis. Stat. § 180.0821, hereby
adopt the following resolution by unanimous written consent as though adopted by
them at a duly constituted meeting of the Board of Directors:

       

      RESOLVED, that pursuant to the
authority granted to the Board of Directors in Section 3.1 of the Operating
Agreement of American Transmission Company LLC to admit new members to American
Transmission Company LLC (“ATCLLC”) upon such terms and conditions as the Board
deems appropriate, and pursuant to the authority granted in Section 3.1 of the
Amended and Restated Bylaws of ATCMI, ALLETE, Inc. or a subsidiary that it
designates (“ALLETE”) is hereby approved for membership in ATCLLC.

       

      ALLETE shall be allowed to purchase
membership units in ATCLLC and purchase shares of ATCMI Class A Common Stock at
a share price of Ten Dollars ($10.00) per share, in proportion to its total
membership interest in ATCLLC all as further described below.


      ALLETE will be allowed to purchase
ATCLLC membership units by funding a portion of ATCLLC’s Arrowhead-Weston
Project Capital Calls (“Project Capital Calls”) pursuant to sections 5.b., 5.c.
and 6 of the Agreement for Transfer of Primary Responsibility For
Arrowhead-Weston Transmission Project, as amended by the Fist and Second
Amendments (“Transfer Agreement”) attached as Exhibit A.

       

      To effectuate ALLETE’s and WPS’ intent
that ALLETE purchase $60 million of membership units in ATCLLC by the end of
2006 which would otherwise have been purchased by WPSI by participation in
Project Capital Calls, ALLETE is allowed to purchase membership units reflecting
72 percent of each monthly Project Capital Call commencing in min December 2005;
provided however:

      


      
        	
                -  

              	
                If
      ALLETE is not authorized to purchase ATCLLC membership units until after
      the December 2005 Project Capital Call has been funded, ALLETE shall be
      allowed to purchase membership units reflecting 78 percent of each Project
      Capital Call beginning with the first Project Capital Call following all
      conditions set forth in these resolutions being
  met.

              


      

      
        	
                -  

              	
                If
      ALLETE is not authorized to purchase ATCLLC membership units until after
      the January 2006 Project Capital Call
      has been funded, ALLETE’s percentage participation in Project Capital
      Calls for the remainder of 2006 will be adjusted upward, up to a maximum
      of 100 percent, to target a total purchase of $60 million in membership
      units via participation in Project Capital Calls by the end of 2006, and
      ALLETE shall be allowed to purchase membership units reflecting such
      increased percentage participation in Project Capital
      Calls.

              


      

      
      

      
        	
                
                  -
       

                

              	
                If
      following the May 2006 Project Capital Call, it is reasonably determined
      that ALLETE’s then-current percentage participation in Project Capital
      Calls will not result in its purchase of $60 million in membership units
      via participation in Project Capital Calls by the end of 2006, then, with
      the consent of WPSI, ALLETE’s percentage participation in the Project
      Capital Calls shall increase as necessary, up to a maximum of 100 percent,
      to target the purchase of $60 million in membership units by the end of
      2006, beginning with the June 2006 Project Capital Call, and ALLETE shall
      be allowed to purchase membership units reflecting such increased
      percentage participation in Project Capital
  Calls.

              


      

      


      Upon ALLETE’s purchase of $60 million
in membership units, ALLETE’s right to purchase membership units via the Project
Capital Calls shall automatically terminate.


      RESOLVED FURTHER, that ALLETE
shall have the right, but not the obligation, to participate in ATCLLC’s general
equity capital calls on a pro
rata basis in accordance with ALLETE’s percentage ownership of ATCLLC,
calculated as has been customary or, if changed, as applicable for all ATCLLC
members.

      


      RESOLVED FURTHER, that in
connection with the proceding Resolution, Management is hereby authorized and
directed to execute all documents, containing terms and conditions consistent
with this Resolution, necessary or convenient for the admission of ALLETE to
ATCLLC, receipt of cash, issuance to ALLETE of ATCLLC membership units and
issuance to ALLETE of share of Class A Common Stock of ATCMI, conditioned upon
receipt of all state and federal regulatory approvals, and other such
third-party approvals as necessary.

      


      Dated as
of the 12th day of December, 2005.

      


      
        	 
      	 
      	 
      
	
                José
      M. Delgado

              	 
      	
                J.
      Leroy Thilly

              
	 
      	 
      	 
      
	
                Anthony
      S. Earl

              	 
      	
                William
      C. Verrette

              
	 
      	 
      	 
      
	
                William
      D. Harvey

              	 
      	
                Larry
      L. Weyers

              


      

       

      
        	 
      	 
      	 
      
	
                Allen
      L. Leverett

              	 
      	
                Gary
      J. Wolter

              
	 
      	 
      	 
      
	
                Agustin
      A. Ramirez

              	 
      	
                Stephen
      J. Yanisch

              


      

       

      
        
           


        

        
           


          
            

          

        

        
           


        

      


      EXHIBIT
A

      


      SECOND
AMENDMENT TO

      AGREEMENT
FOR TRANSFER OF PRIMARY REPONSIBILITY

      FOR
ARROWHEAD-WESTON TRANSMISSION PROJECT

      


       

      The parties to the Agreement for
Transfer of Primary Responsibility for Arrowhead-Weston Transmission Project
hereby agree to amend the Agreement as follows:

      


      1.           Section
5.b. of the Agreement is amended to add the following two sentences at the
beginning thereof:

      


      “As used in this Section 5.b. and in
Section 6., “WPSI” shall mean WPSI or its designee, provided such designee has
been approved for membership in ATCLLC by the Board of Directors of ATCM in
their sole discretion and in accordance with such approval.”

      


      “As used in this Section 5.b. and in
Section 6., “WPSC” shall mean WPSC or its designee, provided such designee has
been approved by the Board of Directors of ATCM in their sole discretion to own
ATCM Class A common stock and in accordance with such approval.”

      


      2.           The
fifth sentence of Section 5.b. after the addition of the two sentences described
in “1” above is amended by adding the words “in total” after the word
“purchase.”


      3.           A
new section, Section 5.c. shall be added as follows: “5.c. If
a person designated by WPSI or WPSC pursuant to Section 5.b. does not purchase
membership units or Class A shares, WPSI and WPSC respectively shall purchase
such membership units or Class A shares.”

      


      4.           Paragraph
11 is deleted and the numbers of the subsequent sections shall not be
changed.

      


      Dated this ____ day of November,
2005.

      


      
        	
                Wisconsin
      Public Service Corporation

              	 
      	
                American
      Transmission Company LLC,

              
	 
      	 
      	 
      	
                by
      its corporate manager

              
	 
      	 
      	 
      	
                ATC
      Management Inc.

              
	 
      	 
      	 
      	 
      	 
      
	
                By:

              	 
      	 
      	
                By:

              	 
      
	 
      	
                Larry
      L. Weyers

              	 
      	 
      	
                Jose
      M. Delgado

              
	 
      	
                Chairman,
      President and Chief

              	 
      	 
      	
                President
      and Chief Executive

              
	 
      	
                Executive
      Officer

              	 
      	 
      	
                Officer

              
	 
      	 
      	 
      	 
      	 
      
	
                WPS
      Investments, LLC,

              	 
      	
                ATC
      Management Inc.

              
	
                by
      its corporate manager,

              	 
      	 
      	 
      
	
                WPS
      Resources Corporation

              	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                By:

              	 
      	 
      	
                By:

              	 
      
	 
      	
                Larry
      L. Weyers

              	 
      	 
      	
                Jose
      M. Delgado

              
	 
      	
                Chairman,
      President and Chief

              	 
      	 
      	
                President
      and Chief Executive

              
	 
      	
                Executive
      Officer

              	 
      	 
      	
                Officer