As filed with the Securities and Exchange Commission on June 4, 2001
Registration No. [333- ]
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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AVISTA CORPORATION
(Exact name of registrant as specified in its charter)
WASHINGTON 91-0462470
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1411 EAST MISSION AVENUE
SPOKANE, WASHINGTON
(509) 489-0500
(Address, including zip code, and telephone number, including area
code, of registrant's principal executive offices)
David J. Meyer, Esq. J. Anthony Terrell, Esq.
Avista Corporation Thelen Reid & Priest LLP
1411 East Mission Avenue 40 West 57th Street
Spokane, Washington New York, New York 10019
(509) 489-4316 (212) 603-2108
(Names and addresses, including zip codes, and telephone numbers,
including area codes, of agents for service)
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Approximate date of commencement of proposed sale of the securities
to the public:
AS SOON AS PRACTICABLE AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.
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If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE BE PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT (1) PRICE (1) FEE
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9.75% Senior Notes due $400,000,000 100% $400,000,000 $100,000
June 1, 2008
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(1) Determined solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(2) promulgated under the Securities Act.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act, or until the Registration Statement shall become effective
on such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
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Subject to completion, dated June 4, 2001
PROSPECTUS
AVISTA CORPORATION
EXCHANGE OFFER
AVISTA CORP. IS OFFERING TO ISSUE ITS
9.75% SENIOR NOTES DUE JUNE 1, 2008
(REGISTERED)
IN EXCHANGE FOR ITS
9.75% SENIOR NOTES DUE JUNE 1, 2008
(UNREGISTERED)
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.
NEW YORK CITY TIME, , 2001 UNLESS EXTENDED
o The new notes will
o bear interest at 9.75% per annum,
o mature on June 1, 2008, and
o be redeemable, at the option of Avista Corp., as described in this
prospectus.
These terms are the same as the terms of the old notes. The new notes will
not be subject to any restrictions on transfer, except in certain
circumstances relating to broker-dealers described in this prospectus.
o Avista Corp. will accept all notes that noteholders properly tender and do
not withdraw before the expiration of the exchange offer.
o You will not recognize any income, gain or loss for U.S. federal income tax
purposes as a result of the exchange.
o Like the old notes, the new notes will be unsecured.
o The exchange offer is not conditioned on the tender of any minimum
principal amount of old notes.
o There will likely be no public market for the new notes.
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SEE "RISK FACTORS" BEGINNING ON PAGE 10 TO READ ABOUT CERTAIN FACTORS YOU SHOULD
CONSIDER BEFORE MAKING ANY DECISION CONCERNING THIS EXCHANGE OFFER.
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The Securities and Exchange Commission and state securities regulators have not
approved or disapproved of these securities, or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal offense.
, 2001
The information in this Prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This Prospectus is not an offer
to exchange these securities and it is not soliciting an offer to exchange these
securities in any jurisdiction in which the offer or exchange is not permitted.
THIS PROSPECTUS INCORPORATES BY REFERENCE IMPORTANT BUSINESS AND FINANCIAL
INFORMATION ABOUT AVISTA CORP. THAT IS NOT INCLUDED IN OR DELIVERED WITH THIS
PROSPECTUS. SEE "WHERE YOU CAN FIND MORE INFORMATION". YOU MAY OBTAIN COPIES OF
DOCUMENTS CONTAINING SUCH INFORMATION FROM US, WITHOUT CHARGE, BY EITHER CALLING
OR WRITING TO US AT:
AVISTA CORPORATION
1411 EAST MISSION AVENUE
SPOKANE, WASHINGTON 99202-2600
ATTENTION: TREASURER
TELEPHONE: (509) 489-0500
IN ORDER TO OBTAIN TIMELY DELIVERY, YOU MUST REQUEST DOCUMENTS FROM US NO LATER
THAN ___, 2001, WHICH IS FIVE DAYS BEFORE THE EXPIRATION DATE OF THE EXCHANGE
OFFER ON ______, 2001.
TABLE OF CONTENTS
PAGE
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Summary..............................................................3
Risk Factors.........................................................9
Avista Corporation..................................................11
Capitalization......................................................14
Use of Proceeds.....................................................14
The Exchange Offer..................................................15
Description of the New Notes........................................23
Certain U.S. Federal Income Tax Considerations......................60
Plan of distribution................................................64
Where you can find more information.................................65
Legal Matters.......................................................65
Experts.............................................................65
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS OR IN THE LETTER OF TRANSMITTAL IN CONNECTION WITH
THE EXCHANGE OFFER.
WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OTHER THAN THIS
PROSPECTUS. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED OR INCORPORATED
IN THIS PROSPECTUS IS ACCURATE AS OF ANY DATE AFTER THE DATE OF THIS PROSPECTUS.
THIS PROSPECTUS IS NOT AN OFFER TO EXCHANGE THE NEW NOTES AND IT IS NOT
SOLICITING AN OFFER TO EXCHANGE THE NEW NOTES IN ANY JURISDICTION IN WHICH THE
EXCHANGE OFFER IS NOT PERMITTED.
2
SUMMARY
This summary, which is presented solely to furnish limited introductory
information regarding Avista Corporation (Avista Corp. or the Company), the
exchange offer and the new notes, has been selected from the detailed
information contained elsewhere in this prospectus (including the documents
incorporated by reference). This summary does not contain all of the information
that you should consider before making any investment decision. The terms "we",
"us" and "our" refer to Avista Corp. and, when applicable, its subsidiaries. You
should read the entire prospectus carefully.
AVISTA CORPORATION
Avista Corp., which was incorporated in the State of Washington in 1889, is
an electric and gas utility company having operations located in the Pacific
Northwest. We also have subsidiaries involved in energy, information and
technology businesses. As of March 31, 2001, our employees included
approximately 1,460 people in our utility operations and approximately 800
people in our subsidiary businesses. Our corporate headquarters are in Spokane,
Washington, which serves as the Inland Northwest's center for manufacturing,
transportation, health care, education, communication, agricultural and service
businesses.
Our operations are organized into four lines of business--Avista Utilities,
Energy Trading and Marketing, Information and Technology, and Avista Ventures.
Avista Utilities, which is an operating division of Avista Corp. and not a
separate entity, represents the regulated utility operations. Avista Capital, a
wholly-owned subsidiary of Avista Corp., owns all of the subsidiary companies
engaged in the other lines of business.
THE EXCHANGE OFFER
GENERAL Avista Corp. is offering to exchange $1,000 in
principal amount of new notes for each $1,000 in
principal amount of old notes that noteholders
properly tender and do not withdraw before the
expiration date. Avista Corp. will issue the new
notes on or promptly after the expiration date.
There is $400,000,000 in aggregate principal
amount of old notes outstanding. See THE EXCHANGE
OFFER.
EXPIRATION DATE The exchange offer will expire at 5:00 p.m., New
York City time, on , 2001 unless extended. If
extended, the term "expiration date" will mean the
latest date and time to which the exchange offer
is extended. Avista Corp. will accept for exchange
any and all old notes which are properly tendered
in the exchange offer and not withdrawn before
5:00 p.m., New York City time, on the expiration
date.
RESALE OF NEW NOTES Based on interpretive letters written by the staff
of the Securities and Exchange Commission to
companies other than Avista Corp., Avista Corp.
believes that, subject to certain exceptions, the
new notes may generally be offered for resale,
resold and otherwise transferred by any holder
thereof, without compliance with the registration
and prospectus delivery provisions of the
Securities Act of 1933. However, any holder who is
an "affiliate" of Avista Corp. within the meaning
of Rule 405 under the Securities Act would have to
comply with these provisions unless an exemption
was available.
If Avista Corp.'s belief is inaccurate, holders of
new notes who offer, resell or otherwise transfer
new notes in violation of the Securities Act may
incur liability under that Act. Avista Corp. will
not assume or indemnify holders against this
liability.
3
CONDITIONS TO THE Avista Corp. may terminate the exchange offer
EXCHANGE OFFER before the expiration date if it determines that
its ability to proceed with the exchange offer
could be materially impaired due to
o any legal or governmental action,
o any new law, statute, rule or regulation, or
o any interpretation by the staff of the SEC
of any existing law, statute, rule or
regulation.
TENDER PROCEDURES - If you wish to tender old notes that are
BENEFICIAL OWNERS registered in the name of a broker, dealer,
commercial bank, trust company or other nominee,
you should contact the registered holder promptly
and instruct the registered holder to tender on
your behalf.
IF YOU ARE A BENEFICIAL HOLDER, YOU SHOULD FOLLOW
THE INSTRUCTIONS RECEIVED FROM YOUR BROKER OR
NOMINEE WITH RESPECT TO TENDERING PROCEDURES AND
CONTACT YOUR BROKER OR NOMINEE DIRECTLY.
TENDER PROCEDURES - If you are a registered holder of old notes and
REGISTERED HOLDERS AND you wish to participate in the exchange offer, you
DTC PARTICIPANTS must complete, sign and date the letter of
transmittal delivered with this prospectus, or a
facsimile thereof. If you are a participant in The
Depository Trust Company and you wish to
participate in the exchange offer, you must
instruct DTC to transmit to the exchange agent a
message indicating that you agree to be bound by
the terms of the letter of transmittal. You should
mail or otherwise transmit the letter of
transmittal or facsimile (or DTC message),
together with your old notes (in book-entry form
if you are a participant in DTC) and any other
required documentation to Chase Manhattan Bank and
Trust Company, National Association, as exchange
agent.
GUARANTEED DELIVERY If you are a registered holder of old notes and
PROCEDURES you wish to tender them, but they are not
immediately available or you cannot deliver them
or the letter of transmittal to the exchange agent
prior to the expiration date, you must tender your
old notes according to special guaranteed delivery
procedures. See THE EXCHANGE OFFER - "Procedures
for Tendering - Registered Holders and DTC
Participants - Registered Holders" on page 18.
WITHDRAWAL RIGHTS You may withdraw tenders of old notes at any time
before 5:00 p.m., New York City time, on the
expiration date.
CERTAIN FEDERAL INCOME The exchange of new notes for old notes will not
TAX CONSIDERATIONS be a taxable event for U.S. federal income tax
purposes. As a result, you will not recognize any
income, gain or loss with respect to the exchange.
EXCHANGE AGENT Chase Manhattan Bank and Trust Company, National
Association is the exchange agent. Its telephone
number is (800) 275-2048. Its address is 2001
Bryan Street, 9th Floor, Dallas, Texas 75201.
THE NEW NOTES
OFFERED SECURITIES $400,000,000 principal amount of 9.75% Senior
Notes due June 1, 2008
MATURITY DATE June 1, 2008
INTEREST PAYMENT DATES June 1 and December 1 of each year, beginning
December 1, 2001
4
RANKING The new notes are unsecured notes of Avista Corp.
They rank pari passu with all of Avista Corp.'s
current and future unsecured senior indebtedness
and senior in right of payment to all current and
future subordinated indebtedness. As of March 31,
2001, Avista Corp. had outstanding $203.5 million
of first mortgage bonds, which is secured by a
lien on substantially all of Avista Corp.'s
utility plant assets. Avista Corp. also has a
credit agreement which is secured by a pledge of
the capital stock of Avista Capital. By reason,
and to the extent, of this mortgage and this
pledge, the first mortgage bonds and the
borrowings under this credit agreement will rank
prior to the new notes.
OPTIONAL REDEMPTION Each of the new notes will be redeemable in whole
or in part at our option at any time, at a
redemption price equal to the greater of (i) 100%
of the principal amount of the new notes being
redeemed or (ii) the sum of the present values of
the remaining scheduled payments of the principal
of and interest on the new notes being redeemed
discounted to the date of redemption on a
semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the
Treasury Yield (as defined herein) plus 50 basis
points; plus, in either case, whichever is
applicable, accrued interest on the new notes
being redeemed to the date of redemption. See
DESCRIPTION OF THE NEW NOTES--"Optional
Redemption."
REPURCHASE AT OPTION OF
HOLDERS UPON A CHANGE You have the option, subject to certain
OF CONTROL conditions, to require us to repurchase any new
notes held by you in the event of a "Change in
Control", as described in this offering circular,
at a price equal to 101% of the aggregate
principal amount of new notes repurchased plus
accrued and unpaid interest, if any, thereon, to
the date of purchase. See DESCRIPTION OF THE NEW
NOTES --"Repurchase at the Option of
Holders--Change of Control."
REPURCHASE AT OPTION OF You also may have the option, subject to certain
HOLDERS UPON CERTAIN conditions, to require us to repurchase any new
ASSET SALES notes held by you in the event of certain Asset
Sales. See DESCRIPTION OF THE NEW
NOTES--"Repurchase at the Option of Holders--Asset
Sales."
BASIC COVENANTS OF We will issue the new notes under an indenture
INDENTURE with Chase Manhattan Bank and Trust Company,
National Association. The indenture, among other
things, restricts our ability and the ability of
our subsidiaries to:
o sell assets;
o pay dividends on stock or repurchase stock;
o pay subordinated debt;
o make investments;
o incur debt or issue preferred stock;
o use assets as security in other transactions;
o restrict the ability of subsidiaries to
pay dividends or make other payments to
Avista Corp.;
o merge with or into other companies;
o engage in certain transactions with
affiliates; and
o enter into sale and leaseback transactions.
5
These covenants are subject to significant
exceptions. For more details, see DESCRIPTION OF
THE NEW NOTES--"Certain Other Covenants."
USE OF PROCEEDS The proceeds from the issuance and sale of the old
notes are being used: (a) to pay short-term debt
and maturing long-term debt of Avista Corp. issued
to fund a portion of its construction, improvement
and maintenance programs, (b) to reimburse Avista
Corp.'s treasury for funds previously expended for
any of these purposes and (c) for other corporate
purposes.
RISK FACTORS
You should read DESCRIPTION OF THE NEW NOTES section, beginning on page 9 of
this prospectus, so that you understand the risks associated with an investment
in securities of Avista Corp.
6
SUMMARY CONSOLIDATED FINANCIAL DATA
We have selected the historical financial data shown below for the fiscal
years 1996-2000 from the audited consolidated financial statements of Avista
Corp. You should read this information along with the consolidated financial
statements of Avista Corp. and the notes to those financial statements.
YEARS ENDED DECEMBER 31,
----------------------------------------------
1996 1997 1998 1999 2000
----------- ----------- ----------- ----------- -----------
(THOUSANDS OF DOLLARS EXCEPT RATIOS)
INCOME STATEMENT DATA:
Operating Revenues:
Avista Utilities................................. $ 798,994 $ 891,665 $ 1,049,212 $ 1,115,647 $ 1,512,101
Energy Trading and Marketing..................... -- 247,028 2,408,734 6,695,671 6,531,551
Information and Technology....................... 813 1,030 1,995 4,851 11,645
Avista Ventures.................................. 145,150 163,598 231,483 122,303 32,937
Intersegment eliminations........................ -- (1,149) (7,440) (33,488) (176,744)
----------- ----------- ----------- ----------- -----------
Total............................................ $ 944,957 $ 1,302,172 $ 3,683,984 $ 7,904,984 $ 7,911,490
Operating Income/(Loss) (pre-tax):
Avista Utilities................................. $ 173,658 $ 178,289 $ 143,153 $ 142,567 $ 3,177
Energy Trading and Marketing..................... (649) 6,577 22,826 (97,785) 250,196
Information and Technology....................... (1,443) (5,364) (5,192) (13,002) (40,084)
Avista Ventures.................................. 15,355 9,962 12,033 (423) (9,861)
----------- ----------- ----------- ----------- -----------
Total............................................ $ 186,921 $ 189,464 $ 172,820 $ 31,357 $ 203,428
Interest Expense .................................. $ 63,255 $ 66,275 $ 69,077 $ 65,076 $ 68,723
Income Before Income Taxes......................... 132,962 175,872 121,474 42,771 165,140
Net Income......................................... 83,453 114,797 78,139 26,031 91,679
Preferred Stock Dividend
Requirements..................................... $ 7,978 $ 5,392 $ 8,399(1) $ 21,392(1) $ 23,735(1)
Common Stock Dividend.............................. $ 69,390 $ 69,390 $ 56,898 $ 18,301 $ 22,616
BALANCE SHEET DATA:
Utility Plant in Service--Net...................... $ 1,951,664 $ 2,031,026 $ 2,095,301 $ 2,184,698 $ 2,205,230
Total Assets:
Avista Utilities................................. $ 1,921,429 $ 1,926,739 $ 2,004,935 $ 1,976,716 $ 2,129,614
Energy Trading and Marketing..................... 320 212,868 955,615 1,595,470 10,271,834
Information and Technology....................... 1,517 3,475 7,461 26,379 59,632
Avista Ventures.................................. 254,032 268,703 285,625 114,929 102,844
----------- ----------- ----------- ----------- -----------
Total............................................ $ 2,177,298 $ 2,411,785 $ 3,253,636 $ 3,713,494 $12,563,924
Total Debt......................................... $ 764,526 $ 762,185 $ 730,022 $ 714,904 $ 931,966
Company-Obligated Mandatorily Redeemable
Preferred Trust Securities....................... -- $ 110,000 $ 110,000 $ 110,000 $ 100,000
Preferred Stock Subject to Mandatory Redemption.... $ 65,000 $ 45,000 $ 35,000 $ 35,000 $ 35,000
Convertible Preferred Stock........................ -- -- $ 269,227(1) $ 263,309 --
Stockholders' Equity............................... $ 825,736 $ 793,812 $ 792,261 $ 691,808 $ 759,224
OTHER FINANCIAL DATA:
Earnings Before Interest, Taxes, Depreciation and
Amortization .................................... $ 268,314 $ 312,040 $ 261,098 $ 184,321 $ 309,804
Depreciation and Amortization...................... $ 72,097 $ 69,893 $ 70,547 $ 76,474 $ 75,941
Capital Expenditures............................... $ 99,182 $ 91,160 $ 106,270 $ 115,609 $ 201,433
Ratio of Earnings Before Interest, Taxes,
Depreciation and Amortization to
Fixed Charges (2)................................ 4.24 4.71 3.78 2.83 4.51
Ratio of Consolidated Earnings to
Fixed Charges (3)................................ 2.97 3.49 2.66 1.61 3.26
(1) In December 1998, we converted shares of common stock for Convertible
Preferred Stock, which was responsible for a number of changes in the data
in 2000, 1999 and 1998 from 1997.
(2) "Earnings Before Interest, Taxes, Depreciation and Amortization", or
EBITDA, represents net income before interest expense (including related
amortization), taxes based on income, depreciation and amortization, to
interest expense (including related amortization). EBITDA is commonly used
to analyze companies on the basis of operating performance, leverage and
liquidity. While EBITDA should not be construed as a substitute for
operating income or a better measure of liquidity than cash flow from
operating activities, which are determined in accordance with generally
accepted accounting principles, we have presented EBITDA to provide
additional information with respect to our ability to meet future debt
service, capital expenditure and working capital requirements. EBITDA is
not a measure determined under generally accepted accounting principles.
7
Also, as calculated above, EBITDA may not be comparable to similarly titled
measures reported by other companies. "Fixed Charges" include interest
(whether or not capitalized) and related amortization.
(3) "Earnings," as defined by Regulation S-K, represent the aggregate of (1)
net income before the cumulative effect of an accounting change, (2) taxes
based on income, (3) investment tax credit adjustments--net and (4) fixed
charges. "Fixed Charges" include interest (whether expensed or
capitalized), related amortization and estimated interest applicable to
rentals.
8
RISK FACTORS
You should carefully consider the following factors in addition to the
other information in this prospectus.
WE WILL NEED TO FINANCE OUR OPERATIONS AND CAPITAL EXPENDITURES. OUR LEVEL OF
INDEBTEDNESS COULD AFFECT OUR ABILITY TO DEDICATE SUFFICIENT CASH FLOW TO THESE
PURPOSES, WHICH WOULD ULTIMATELY AFFECT OUR ABILITY TO MEET OUR OBLIGATIONS ON
THE NEW NOTES.
We have incurred significant long-term indebtedness to support capital
expenditures and to maintain working capital. At April 30, 2001, after giving
effect to the issuance of the old notes, we had, total long-term debt of
approximately $1,079.5 million. In addition, we will need to finance capital
expenditures and obtain additional working capital from time to time. The cash
requirements to service the total amount of our indebtedness, both short-term
and long-term, could reduce the amount of cash flow available to fund working
capital, future acquisitions, the deferral accounts discussed below, other
corporate requirements and capital expenditures.
IF WE ARE UNABLE TO RECOVER DEFERRED PURCHASED POWER AND, TO A LESSER EXTENT,
NATURAL GAS COSTS EXCEEDING AMOUNTS INCLUDED IN CURRENT RETAIL RATES, WE MAY
EXPERIENCE AN ADVERSE IMPACT ON CASH FLOW AND EARNINGS.
Purchased power and natural gas costs incurred to serve our retail
customers are generally recovered or expected to be recovered in base rates.
However, there is a lag between the time we incur any increases in these costs
and the time we collect these increases from customers. As more fully described
in Note 1 of Notes to Financial Statements--"Power Cost Deferrals and Power and
Natural Gas Adjustment Provisions" in Avista Corp.'s Annual Report on Form 10-K
for the year 2000, costs in excess of those included in base rates are deferred
as an asset on our balance sheet and not shown as an expense until recovered
from our retail customers.
In 2000 the price of electric energy in western wholesale markets rose to
unprecedented levels, accompanied by increases in natural gas prices, in both
cases far above the levels included in base rates. These market conditions are
expected to continue in 2001.
We have mechanisms in place to recover (subject to certain limitations)
increases in gas costs in Washington, Idaho and Oregon, and we regularly make
filings to recover increased costs under these mechanisms. As of March 31, 2001,
we had balances of deferred gas costs totaling $79.3 million. We also have a
mechanism in place to recover (subject to certain limitations) increases in
purchased power costs in Idaho and had a balance of deferred purchased power
costs in Idaho of $5.2 million, a power cost rebate of $0.9 million which is
being flowed through to customers, and a surcharge deferral balance of $6.8
million, as of March 31, 2001. On March 23, 2001, we filed an application in
Washington to establish the prudency of the purchased power costs incurred as
well as for approval of a method to recover the cost increases. As of March 31,
2001, we had a balance of deferred purchased power costs of $56 million plus
accrued interest of $0.7 million in Washington. We will be able to recover these
balances of deferred costs only in the amounts, and at the times, authorized by
the respective state commissions. As discussed in "Recent Developments", on May
23, 2001, the Washington public utility commission approved a settlement
agreement reached among Avista Corp., the staff of that commission and other
parties.
RECENT CHANGES IN THE ENERGY MARKETS IN THE WESTERN UNITED STATES HAVE LED TO
SIGNIFICANT INCREASES IN WHOLESALE POWER PRICES. BECAUSE OF THESE HIGH PRICE
LEVELS, A DECREASE IN OUR POWER RESOURCE AVAILABILITY OR AN INCREASE IN CUSTOMER
DEMAND THAT REQUIRES US TO PURCHASE MORE POWER COULD HAVE AN ADVERSE IMPACT ON
OUR CASH FLOW AND EARNINGS.
Wholesale power prices rose dramatically starting in the second quarter of
2000 and remain significantly above historic levels in the Pacific Northwest,
including our service territory, and throughout the western United States.
Significant emerging factors include the gradual depletion of excess generating
capacity in the West, increasing instances of transmission congestion and
increased ownership of generating facilities by entities which are not
traditional "public utilities." Also, wholesale power markets have been affected
by the restructuring of electric utility regulation at both state and federal
levels.
9
Federal and state officials, including the Federal Energy Regulatory
Commission, the California Public Utility Commission and the Attorneys General
of California, Oregon and Washington, have commenced reviews to determine the
causes of the changes in the wholesale energy markets.
Under normal water conditions and customer demand, we would be able to
provide almost all of our forecasted native load energy requirements with our
own generation plants and long-term contracts until the end of 2003, with the
balance covered through short-term contracts. However, current forecasts show
streamflow conditions for hydroelectric generation for 2001 at no better than
60% of normal. In response to the reduced hydroelectric generation, we have made
additional fixed price purchases of energy to cover our retail and firm
wholesale load requirements for 2001 with additional purchases from the higher
cost short-term wholesale market. If hydroelectric conditions further
deteriorate, or our generating plants do not operate as planned, or weather
conditions cause retail loads to increase, we would incur additional costs from
increased purchases in the higher cost short-term wholesale energy market. This
would have an adverse impact on our cash flow and, if not ultimately recovered,
on our earnings.
WE ARE SUBJECT TO THE RISKS INHERENT IN THE UTILITY BUSINESS, INCLUDING NORMAL
OPERATING RISKS, SUCH AS THE COST OF FUEL AND THE POSSIBILITY OF PLANT OUTAGES,
AND, IN OUR CASE, THE SUFFICIENCY OF STREAMFLOWS. WE ARE ALSO SUBJECT TO
REGULATORY RISKS, SUCH AS INCREASED ENVIRONMENTAL REGULATION AND THE CHALLENGE
TO OBTAIN SATISFACTORY RATE RELIEF, AS WELL AS TO RISKS ASSOCIATED WITH
DEREGULATION OF ENERGY MARKETS.
The utility business involves many operating risks. For example, there may
be a breakdown or failure of electrical generating or other equipment, fuel
interruption or performance below expected levels of output or efficiency. Also,
some of our facilities use natural gas and coal in their generation of
electricity. The market prices and availability of natural gas and coal
fluctuate. Increasing prices for these commodities or a lack of availability
could impair our cash flow and, if not ultimately recovered, on our earnings. In
addition, our hydroelectric plants require continuous water flow for their
operation. A drought or other water flow impairment may limit our ability to
produce and market electricity from these facilities.
In addition, the utility business is subject to complex and stringent
energy, environmental, and other governmental laws and regulations. The
acquisition, ownership and operation of power generation facilities requires
numerous permits, approvals, and certificates from appropriate federal, state,
and local governmental agencies. If environmental regulations, such as emission
limits, are tightened, this could increase the amount we must invest to bring
our facilities into compliance. In general, the prices we are allowed to charge
for our electric and natural gas services are intended to provide, after
recovery of allowable operating expenses, an opportunity to earn a reasonable
rate of return. The regulatory commissions of the states in which we operate may
limit our ability to increase prices, and future changes in the regulatory
framework may also affect our ability to earn a reasonable rate of return.
More recently, wholesale power markets have been affected by the
restructuring of electric utility regulation at both federal and state levels.
In particular, deregulation in California, combined with increased demand and
limitations on supply, has affected wholesale power prices throughout the West.
In addition, although there is currently no legislative or regulatory movement
toward deregulation in Washington or Idaho, in a deregulated environment,
evolving technologies might provide alternate energy supplies at lower costs,
leading to lower adjusted market prices and reducing margins for traditional
utilities that use technologies and generating assets with capital and operating
costs higher than the lower adjusted market price.
WE ARE SUBJECT TO THE FINANCIAL, LIQUIDITY, CREDIT AND COMMODITY PRICE RISKS
ASSOCIATED WITH ENERGY TRADING AND MARKETING ACTIVITIES.
Our subsidiary, Avista Energy, trades electricity and natural gas, along
with derivative commodity instruments, including futures, options, swaps and
other contractual arrangements. Most transactions are conducted on a largely
unregulated "over-the-counter" basis, there being no central clearing mechanism
(except in the case of specific instruments traded on the commodity exchanges).
As a result of these trading activities, we are subject to various risks,
including market risk, liquidity risk, commodity risk and credit risk. Although
Avista Energy scaled back operations to focus primarily in the western United
States during 2000, its trading operations continue to be affected by, among
other things, volatility of prices within the electric energy and natural gas
10
markets, the demand for and availability of energy, lower unit margins on new
sales contracts and deregulation of the electric utility industry.
Avista Energy is renegotiating its credit agreement with its primary
lending banks which expired on May 31, 2001. Avista Energy anticipates receiving
an extension to June 30, 2001 of its existing credit agreement and anticipates
the completion of documentation and closing of a new credit agreement by the end
of June 2001. The existing agreement contains a variety of covenants and
restrictions, including restrictions on dividends.
In connection with matching loads and resources, Avista Utilities also
engages in wholesale sales and purchases of electric capacity and energy, and,
accordingly, is also subject to commodity price risk, credit risk and other
risks associated with these activities.
AVISTA CORPORATION
GENERAL
Avista Corp., which was incorporated in the State of Washington in 1889, is
an electric and gas utility company having operations located in the Pacific
Northwest. We also have subsidiaries involved in energy, information and
technology businesses. As of March 31, 2001, our employees included
approximately 1,460 people in our utility operations and approximately 800
people in our subsidiary businesses. Our corporate headquarters are in Spokane,
Washington, which serves as the Inland Northwest's center for manufacturing,
transportation, health care, education, communication, agricultural and service
businesses.
Our operations are organized into four lines of business--Avista Utilities,
Energy Trading and Marketing, Information and Technology, and Avista Ventures.
Avista Utilities, which is an operating division of Avista Corp. and not a
separate entity, represents the regulated utility operations. Avista Capital, a
wholly owned subsidiary of Avista Corp., owns all of the subsidiary companies
engaged in the other lines of business.
Avista Corp.'s lines of business, and the companies included within them,
are illustrated below:
------------------
AVISTA CORPORATION*
------------------
/
-----------------------------------------------
/ /
- ---------------- --------------
AVISTA UTILITIES** AVISTA CAPITAL*
- ---------------- --------------
/
-----------------------------------------------------------------
/ / /
----------------------- --------------- -----------------
ENERGY INFORMATION AND AVISTA VENTURES**
TRADING AND MARKETING** TECHNOLOGY** -----------------
----------------------- --------------- /
/ / /
------------- / ---------------- / --------------- /
AVISTA ENERGY* / AVISTA ADVANTAGE*/ AVISTA VENTURES* /
------------- / ---------------- / --------------- /
------------ / ----------- / ----- /
AVISTA POWER*/ AVISTA LABS* / OTHER*/
------------/ ----------- / -----
------------ / --------------------- /
AVISTA-STEAG*/ AVISTA COMMUNICATIONS*/
------------ ---------------------
* - denotes a business entity.
** - denotes an operating division or line of business
11
ENERGY BUSINESSES
Avista Utilities provides electricity and natural gas distribution and
transmission services in a 26,000 square mile area in eastern Washington and
northern Idaho with a population of approximately 835,000. It also provides
natural gas distribution service in a 4,000 square mile area in northeast and
southwest Oregon and in the South Lake Tahoe region of California, with the
population in these areas approximating 500,000. At the end of 2000, retail
electric service was supplied to approximately 313,000 customers in eastern
Washington and northern Idaho; retail natural gas service was supplied to
approximately 279,000 customers in parts of Washington, Idaho, Oregon and
California. Our retail customers include residential, commercial and industrial
classifications, with the residential classification accounting for the most
energy consumed and the greatest contribution to revenues. Avista Utilities also
engages in wholesale sales and purchases of electric capacity and energy.
In addition to providing electric transmission and distribution services,
Avista Utilities is responsible for electric generation and production. Avista
Utilities owns and operates eight hydroelectric projects, a wood-waste fueled
generating station and two natural gas-fired combustion turbine (CT) generating
units. It also owns a 15% share in a two-unit coal-fired generating facility and
leases and operates two additional natural gas-fired CT generating units. These
facilities have a total net capability of approximately 1,470 megawatts, of
which 65% is hydroelectric and 35% is thermal. In addition, Avista Utilities has
a number of long-term power purchase and exchange contracts that increase its
available resources.
Under normal water conditions and loads, Avista Utilities' own generation
plants and long-term contracts would be able to provide approximately 90% of its
forecasted native load energy requirements in 2001, and 100% thereof in 2002 and
2003. The balance would be covered through short-term contracts. Avista
Utilities has covered essentially all of its electric energy requirements in the
forward markets for 2001. For a discussion of current water conditions, see RISK
FACTORS.
Avista Utilities anticipates residential and commercial electric load
growth to average approximately 2.6% annually for the next five years primarily
due to expected increases in both population and the number of businesses in its
service territory. The number of electric customers is expected to increase and
the average annual usage by residential customers is expected to remain steady.
Avista Utilities expects natural gas load growth, including transportation
volumes, in its Washington and Idaho service area to average approximately 2.7%
annually for the next five years. The Oregon and South Lake Tahoe, California
service areas are anticipated to realize 3.4% growth annually during that same
period. The natural gas load growth is primarily due to expected conversions
from electric space and water heating to natural gas, and increases in both
population and the number of businesses in its service territories. These
electric and natural gas load growth projections are based on purchased economic
forecasts, publicly available studies, and internal analysis of company-specific
data, such as energy consumption patterns and internal business plans. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Future Outlook" in Avista Corp.'s Annual Report on Form 10-K for the
year ended December 31, 2000 and its Current Report on Form 10-Q for the quarter
ended March 31, 2001 for additional information.
Energy Trading and Marketing is comprised of Avista Energy, Inc., Avista
Power, Inc. and Avista STEAG, LLC. Avista Energy is an electricity and natural
gas trading and marketing business. Avista Power was formed to develop, purchase
and own electric generation assets. Avista STEAG is a joint venture between
Avista Capital and STEAG AG, a German independent power producer, to develop
electric generating assets. On April 27, 2001, Avista Capital gave notice to
STEAG AG, electing to terminate the Avista STEAG venture pursuant to its terms.
Avista Capital and STEAG AG are now preparing for an orderly winding up and
termination of Avista STEAG. Avista Energy, Avista Power and Avista STEAG all
operate primarily in the Western Systems Coordinating Council ("WSCC"), which is
comprised of the eleven Western states.
Avista Energy is in the business of buying and selling electricity and
natural gas. Avista Energy's customers include commercial and industrial
end-users, electric utilities, natural gas distribution companies and other
trading companies. Avista Energy also trades electricity and natural gas
derivative commodity instruments.
Avista Power has electric generation projects under development and
construction in strategic locations primarily in the WSCC. Avista Power and
Cogentrix Energy, Inc. have entered into an agreement to jointly build and/or
buy interests in natural gas-fired electric generation plants in the states of
Washington, Oregon and Idaho. A project under this agreement is the 270 megawatt
12
facility located in Rathdrum, Idaho, with 100% of its output contracted to
Avista Energy for 25 years. Non-recourse project financing was completed in
March 2000 and the facility is currently under construction, with commercial
operation expected to start in late 2001.
In December 2000, Avista Utilities selected the Coyote Springs 2 project, a
280-megawatt combined-cycle natural gas-fired plant near Boardman, Oregon to add
generation to its portfolio. Construction commenced in January 2001 under a
fixed price turnkey engineering, procurement and construction contract with
project completion anticipated in mid-2002. The process is underway to transfer
ownership from Avista Power to Avista Utilities. Avista Corp. is currently
negotiating bank financing for the construction of this project. A portion of
the proceeds of the notes may be used to finance construction costs.
OTHER BUSINESSES
Information and Technology is comprised of Avista Advantage, Inc., Avista
Laboratories, Inc. and Avista Communications, Inc.
o Avista Advantage is an e-commerce provider of facilities management
billing and information services to commercial customers throughout
the U.S. and Canada. Its primary product lines include consolidated
billing, resource accounting, energy analysis, load profiling and
maintenance and repair billing services.
o Avista Labs is in the process of developing both modular Proton
Exchange Membrane fuel cells for power generation at the site of the
consumer or industrial user and fuel cell components.
o Avista Communications is an Integrated Communications Provider
providing local dial tone, data transport, internet services, voice
messaging and other telecommunications services to under-served
communities primarily in ten Northwest markets. Avista Communications
is also involved in designing, building and managing metropolitan area
fiber optic networks.
Avista Ventures includes Avista Ventures, Inc. and several other minor
subsidiaries. Avista Ventures was formed to align Avista Corp.'s investment and
acquisition activities in the strategic growth areas of energy, information and
technology. In addition, Avista Ventures hold investments in real estate and
majority ownership of AM&D, a metals fabrication and manufacturing business.
BUSINESS STRATEGY
Avista Corp.'s general business strategy is to:
o maintain a strong, low-cost utility business focused on delivering
efficient, reliable and high quality service to its customers;
o reduce the size and risk associated with its energy trading
activities;
o pursue opportunities to develop new generation to support the growing
power requirements in the Northwest; and
o have access to electric and natural gas resources, both owned and
under long-term contract, in excess of projected requirements.
RECENT DEVELOPMENTS
On May 23, 2001, the Washington Utilities and Transportation Commission
(the "WUTC") approved a settlement agreement which had been reached among Avista
Corp., the staff of the WUTC and other parties with respect to deferred energy
costs. The agreement, among other things, provides for the extension of Avista
Corp.'s deferral accounting mechanism through February 2003. Due to the planned
addition of generating resources as well as the expiration of certain long-term
power sale agreements, Avista Utilities expects to be in a power surplus
13
position by July 2002. Avista Utilities further expects the profits from surplus
power sales to offset the power cost deferral balance, reducing the balance to
zero by the end of February 2003 without any price increase to retail customers.
These expectations are based on assumptions as to a number of variables
including, but not limited to, streamflow conditions, thermal plan performance,
level of retail loads, wholesale market prices and the amount of additional
generating resources. Avista Utilities has reserved the right to request an
immediate rate surcharge to recover the deferral balance if circumstances
change. See RISK FACTORS.
On May 31, 2001 the Company renewed its committed line of credit and repaid
all outstanding borrowings under that facility. The new $220 million credit
facility expires on May 29, 2002. As of May 31, 2001, there were no amounts
borrowed under this committed line of credit.
The Company is in the process of obtaining a construction loan to finance
$120 million of the construction costs for the Coyote Springs 2 project with a
term that matches the construction period. A term sheet has been signed with two
co-lenders to fully underwrite such construction loan. The Company currently
anticipates the completion of the documentation and closing by the end of June
2001.
CAPITALIZATION
The following table sets forth our consolidated capitalization as of March
31, 2001, as well as our consolidated cash balance and short-term debt
(including the current portion of long-term debt). The following data are
qualified in their entirety by our financial statements and other information
incorporated by reference into this prospectus. The "As Adjusted" column
reflects our receipt of proceeds of $388.3 million from the issuance and sale of
the Old Notes (after discounts and commissions and estimated offering and
exchange offering expenses) and the application of $278.4 million of the net
proceeds to the payment of short-term debt (including the current portion of
long-term debt).
AS OF
MARCH 31, 2001
-----------------------------
AS
ACTUAL ADJUSTED
------ --------
(UNAUDITED)
(THOUSANDS OF DOLLARS)
Cash and Cash Equivalents..................... $ 205,185 $ 315,140
Short-Term Debt (including current portion of
long-term debt)............................. $ 278,379 ---
Long-Term Debt................................ $ 679,479 $1,079,479
Company-Obligated Mandatorily Redeemable
Preferred Trust Securities.................. 100,000 100,000
Preferred Stock............................... 35,000 35,000
Total Common Equity........................... 750,344 750,344
---------- ----------
Total Capitalization................ $1,564,823 $1,964,823
USE OF PROCEEDS
The proceeds from the issuance and sale of the old notes are being used:
(a) to pay short-term debt and maturing long-term debt of Avista Corp. issued to
fund a portion of its construction, improvement and maintenance programs, (b) to
reimburse Avista Corp.'s treasury for funds previously expended for any of these
purposes and (c) for other corporate purposes.
14
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
Avista Corp. is offering to issue its 9.75% Senior Notes Due June 1, 2008,
which have been registered under the Securities Act (the "New Notes"), in
exchange for its 9.75% Senior Notes Due June 1, 2008, which have not been so
registered (the "Old Notes"), as described herein (the "Exchange Offer").
The Old Notes were sold by Goldman, Sachs & Co. (the "Initial Purchaser")
on April 3, 2001 to a limited number of institutional investors (the
"Purchasers"). In connection with the sale of the Old Notes, Avista Corp. and
the Initial Purchaser entered into an Exchange and Registration Rights
Agreement, dated April 3, 2001 (the "Registration Rights Agreement"), which
requires, among other things, Avista Corp.
(a) to file with the Securities and Exchange Commission (the "SEC") a
registration statement under the Securities Act of 1933, as amended (the
"Securities Act") with respect to New Notes identical in all material
respects to the Old Notes, to use commercially reasonable efforts to cause
such registration statement to be declared effective under the Securities
Act and to make an exchange offer for the Old Notes as discussed below, or
(b) to register the Old Notes under the Securities Act.
Avista Corp. is obligated, upon the effectiveness of the exchange offer
registration statement referred to in (a) above, to offer the holders of the Old
Notes the opportunity to exchange their Old Notes for a like principal amount of
New Notes which will be issued without a restrictive legend and may be reoffered
and resold by the holder without restrictions or limitations under the
Securities Act. A copy of the Registration Rights Agreement has been filed as an
exhibit to the Registration Statement of which this prospectus is a part. The
Exchange Offer is being made pursuant to the Registration Rights Agreement to
satisfy Avista Corp.'s obligations under that agreement. The term "Holder" with
respect to the Exchange Offer means any person in whose name Old Notes are
registered on Avista Corp.'s books, any other person who has obtained a properly
completed assignment from the registered holder or any DTC participant whose Old
Notes are held of record by DTC. At the date of this prospectus, the sole Holder
of Old Notes is DTC.
In participating in the Exchange Offer, a Holder is deemed to represent to
Avista Corp., among other things, that
(a) the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such
New Notes, whether or not such person is the Holder,
(b) neither the Holder nor any such other person receiving such new
notes is engaging in or intends to engage in a distribution of such New
Notes,
(c) neither the Holder nor any such other person receiving such new
notes has an arrangement or understanding with any person to participate in
the distribution of such New Notes, and
(d) neither the Holder nor any such other person receiving such new
notes is an "affiliate," as defined in Rule 405 under the Securities Act,
of Avista Corp.
Based on an interpretation by the staff of the SEC set forth in no-action
letters issued to third-parties, Avista Corp. believes that the New Notes issued
pursuant to the Exchange Offer may be offered for resale and resold or otherwise
transferred by any Holder of such New Notes (other than any such Holder which is
an "affiliate" of Avista Corp. within the meaning of Rule 405 under the
Securities Act and except as otherwise discussed below with respect to Holders
which are broker-dealers) without compliance with the registration and
prospectus delivery requirements of the Securities Act, so long as such New
Notes are acquired in the ordinary course of such Holder's business and such
Holder has no arrangement or understanding with any person to participate in the
distribution (within the meaning of the Securities Act) of such New Notes. Any
Holder who tenders in the Exchange Offer for the purpose of participating in a
15
distribution of the New Notes cannot rely on such interpretation by the staff of
the SEC and must comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a secondary resale
transaction. Under no circumstances may this prospectus be used for any offer to
resell or any resale or other transfer in connection with a distribution of the
New Notes. In the event that Avista Corp.'s belief is not correct, Holders of
the New Notes who transfer New Notes in violation of the prospectus delivery
provisions of the Securities Act and without an exemption from registration
thereunder may incur liability thereunder. Avista Corp. does not assume or
indemnify Holders against such liability.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes which were acquired by such broker-dealer as a result of
market-making activities or other trading activities must, and must agree to,
deliver a prospectus in connection with any resale of such New Notes. This
prospectus may be used for such purpose. Any such broker-dealer may be deemed to
be an "underwriter" within the meaning of the Securities Act. The foregoing
interpretation of the staff of the SEC does not apply to, and this prospectus
may not be used in connection with, the resale by any broker-dealer of any New
Notes received in exchange for an unsold allotment of Old Notes purchased
directly from Avista Corp.
Avista Corp. has not entered into any arrangement or understanding with any
person to distribute the New Notes to be received in the Exchange Offer.
The Exchange Offer is not being made to, nor will Avista Corp. accept
tenders for exchange from, Holders of Old Notes in any jurisdiction in which the
Exchange Offer or the acceptance thereof would not be in compliance with the
securities or blue sky laws of such jurisdiction.
See PLAN OF DISTRIBUTION.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this prospectus
and in the letter of transmittal, Avista Corp. will accept any and all Old Notes
properly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. Avista Corp. will issue $1,000 in principal amount of New
Notes in exchange for each $1,000 in principal amount of outstanding Old Notes
surrendered in the Exchange Offer. However, Old Notes may be tendered only in
integral multiples of $1,000.
The form and terms of the New Notes will be the same as the form and terms
of the Old Notes. The New Notes will evidence the same debt as the Old Notes.
The New Notes will be issued under and entitled to the benefits of the Indenture
pursuant to which the Old Notes were issued. The New Notes will be registered
under the Securities Act while the Old Notes were not.
As of the date of this prospectus, $400,000,000 in aggregate principal
amount of the Old Notes is outstanding. This prospectus, together with the
letter of transmittal, is being sent to all registered Holders of the Old Notes.
Avista Corp. will be deemed to have accepted validly tendered Old Notes
when, as and if Avista Corp. shall have given oral (promptly confirmed in
writing) or written notice thereof to the Exchange Agent. The Exchange Agent
will act as agent for the tendering Holders for the purpose of receiving the New
Notes from Avista Corp.
Old Notes that are not tendered for exchange in the Exchange Offer will
remain outstanding and will be entitled to the rights and benefits such Holders
have under the Indenture. If any tendered Old Notes are not accepted for
exchange because of an invalid tender, the occurrence of certain other events
set forth herein or otherwise, certificates for any such unaccepted Old Notes
will be returned, without expense, to the tendering Holder thereof as promptly
as practicable after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the letter
of transmittal, transfer taxes with respect to the exchange pursuant to the
16
Exchange Offer. Avista Corp. will pay all charges and expenses, other than
certain applicable taxes described below, in connection with the Exchange Offer.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS TO THE EXCHANGE OFFER
The term "Expiration Date," shall mean 5:00 p.m., New York City time on ,
2001, unless Avista Corp., in its sole discretion, extends the Exchange Offer,
in which case the term "Expiration Date" shall mean the latest date and time to
which the Exchange Offer is extended.
In order to extend the Exchange Offer, Avista Corp. will notify the
Exchange Agent of any extension by oral (promptly confirmed in writing) or
written notice and will mail to the registered Holders an announcement thereof,
prior to 9:00 a.m., New York City time, on the next business day after the then
Expiration Date.
Avista Corp. reserves the right, in its sole discretion,
(a) to delay accepting any Old Notes, to extend the Exchange Offer or
to terminate the Exchange Offer if any of the conditions set forth below
under "--Conditions to the Exchange Offer" shall not have been satisfied by
giving oral (promptly confirmed in writing) or written notice of such
delay, extension or termination to the Exchange Agent or
(b) to amend the terms of the Exchange Offer in any manner.
Any such delay in acceptances, extension, termination or amendment will be
followed as promptly as practicable by oral or written notice thereof to the
registered Holders. If the Exchange Offer is amended in a manner determined by
Avista Corp. to constitute a material change, Avista Corp. will promptly
disclose such amendment by means of a prospectus supplement that will be
distributed to the registered Holders of the Old Notes, and Avista Corp. will
extend the Exchange Offer for a period of five to ten business days, depending
upon the significance of the amendment and the manner of disclosure to the
registered Holders, if the Exchange Offer would otherwise expire during such
five to ten business day period.
Without limiting the manner in which Avista Corp. may choose to make a
public announcement of any delay, extension, amendment or termination of the
Exchange Offer, Avista Corp. will have no obligation to publish, advertise, or
otherwise communicate any such public announcement, other than by making a
timely release to an appropriate news agency.
Upon satisfaction or waiver of all the conditions to the Exchange Offer,
Avista Corp. will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Old Notes. See "--Conditions to the Exchange Offer." For purposes of the
Exchange Offer, Avista Corp. will be deemed to have accepted properly tendered
Old Notes for exchange when, as and if Avista Corp. shall have given oral
(promptly confirmed in writing) or written notice thereof to the Exchange Agent.
In all cases, issuance of the New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of a properly completed and duly executed letter of
transmittal (or facsimile thereof or an Agent's message in lieu thereof) and all
other required documents; provided, however, that Avista Corp. reserves the
absolute right to waive any defects or irregularities in the tender or
conditions of the Exchange Offer. If any tendered Old Notes are not accepted for
any reason set forth in the terms and conditions of the Exchange Offer or if Old
Notes are submitted for a greater principal amount or a greater principal
amount, respectively, than the Holder desires to exchange, then such unaccepted
or non-exchanged Old Notes evidencing the unaccepted portion, as appropriate,
will be returned without expense to the tendering Holder thereof as promptly as
practicable after the expiration or termination of the Exchange Offer.
17
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, Avista Corp. will not
be required to exchange any New Notes for any Old Notes and may terminate the
Exchange Offer before the acceptance of any Old Notes for exchange, if:
(a) any action or proceeding is instituted or threatened in any court
or by or before any governmental agency with respect to the Exchange Offer
which, in Avista Corp.'s reasonable judgment, might materially impair the
ability of Avista Corp. to proceed with the Exchange Offer; or
(b) any law, statute, rule or regulation is proposed, adopted or
enacted, or any existing law, statute, rule or regulation is interpreted by
the staff of the SEC, which, in Avista Corp.'s reasonable judgment, might
materially impair the ability of Avista Corp. to proceed with the Exchange
Offer.
If Avista Corp. determines in its sole discretion that any of these
conditions are not satisfied, Avista Corp. may
(c) refuse to accept any Old Notes and return all tendered Old Notes
to the tendering Holders,
(d) extend the Exchange Offer and retain all Old Notes tendered prior
to the expiration of the Exchange Offer, subject, however, to the rights of
Holders who tendered such Old Notes to withdraw their tendered Old Notes,
or
(e) waive such unsatisfied conditions with respect to the Exchange
Offer and accept all properly tendered Old Notes which have not been
withdrawn. If such waiver constitutes a material change to the Exchange
Offer, Avista Corp. will promptly disclose such waiver by means of a
prospectus supplement that will be distributed to the registered Holders,
and Avista Corp. will extend the Exchange Offer for a period of five to ten
business days, depending upon the significance of the waiver and the manner
of disclosure to the registered Holders, if the Exchange Offer would
otherwise expire during such five to ten business day period.
PROCEDURES FOR TENDERING--REGISTERED HOLDERS AND DTC PARTICIPANTS
REGISTERED HOLDERS OF OLD NOTES, AS WELL AS BENEFICIAL OWNERS WHO ARE
DIRECT PARTICIPANTS IN DTC, WHO DESIRE TO PARTICIPATE IN THE EXCHANGE OFFER
SHOULD FOLLOW THE DIRECTIONS SET FORTH BELOW AND IN THE LETTER OF TRANSMITTAL.
ALL OTHER BENEFICIAL OWNERS SHOULD FOLLOW THE INSTRUCTIONS RECEIVED FROM
THEIR BROKER OR NOMINEE AND SHOULD CONTACT THEIR BROKER OR NOMINEE DIRECTLY. THE
INSTRUCTIONS SET FORTH BELOW AND IN THE LETTER OF TRANSMITTAL DO NOT APPLY TO
SUCH BENEFICIAL OWNERS.
Registered Holders
To tender in the Exchange Offer, a Holder must complete, sign and date the
letter of transmittal, or facsimile thereof, have the signatures thereon
guaranteed if required by the letter of transmittal, and mail or otherwise
deliver such letter of transmittal or such facsimile to the Exchange Agent prior
to the Expiration Date. In addition, either
(a) certificates for such Old Notes must be received by the Exchange
Agent along with the letter of transmittal, or
(b) the Holder must comply with the guaranteed delivery procedures
described below.
18
To be tendered effectively, the letter of transmittal and other required
documents must be received by the Exchange Agent at the address set forth below
under "--Exchange Agent" prior to the Expiration Date.
The tender by a Holder which is not withdrawn prior to the Expiration Date
will constitute an agreement between such Holder and Avista Corp. in accordance
with the terms and subject to the conditions set forth herein and in the letter
of transmittal.
THE METHOD OF DELIVERY OF OLD NOTES, THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER, BUT THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED OR
CONFIRMED BY THE EXCHANGE AGENT. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED
THAT HOLDERS USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT
TIME SHOULD BE ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE
EXPIRATION DATE. NO LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO AVISTA
CORP. HOLDERS MAY REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS,
TRUST COMPANIES OR NOMINEES TO EFFECT THE ABOVE TRANSACTIONS FOR SUCH HOLDERS.
Signatures on a letter of transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless the Old Notes tendered pursuant thereto is tendered
(a) by a registered Holder who has not completed the box entitled
"Special Payment Instructions" or "Special Delivery Instructions" on the
letter of transmittal or
(b) for the account of an Eligible Institution (as defined below).
In the event that signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed, such guarantor
must be a member firm of a registered national securities exchange or of the
National Association of Securities Dealers, Inc., a commercial bank or trust
company having an office or correspondent in the United States or an "eligible
guarantor institution" within the meaning of Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (an "Eligible
Institution").
If the letter of transmittal is signed by a person other than the
registered Holder of any Old Notes listed therein, such Old Notes must be
endorsed or accompanied by a properly completed bond power signed by such
registered Holder as such registered Holder's name appears on such Old Notes.
If the letter of transmittal or any Old Notes or bond or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and unless waived by
Avista Corp., evidence satisfactory to Avista Corp. of their authority to so act
must be submitted with the letter of transmittal.
Holders who wish to tender their Old Notes and
(a) whose Old Notes are not immediately available,
(b) who cannot deliver their Old Notes, the letter of transmittal or
any other required documents to the Exchange Agent prior to the Expiration
Date, or
(c) who cannot complete the procedures for book-entry tender on a
timely basis
may effect a tender if:
(1) the tender is made through an Eligible Institution;
(2) prior to the Expiration Date, the Exchange Agent receives
from such Eligible Institution a properly completed and duly executed
Notice of Guaranteed Delivery (by facsimile transmission, mail or hand
delivery), setting forth the name and address of the Holder, the
certificate number(s) of such Old Notes (unless tender is to be made
19
by book-entry transfer) and the principal amount of Old Notes
tendered, stating that the tender is being made thereby and
guaranteeing that, within five New York Stock Exchange trading days
after the date of delivery of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Old Notes, in proper form for
transfer, or Book-Entry Confirmation (as defined in the letter of
transmittal), as the case may be, together with a properly completed
and duly executed letter of transmittal (or facsimile thereof or
Agent's Message in lieu thereof), with any required signature
guarantees and all other documents required by the letter of
transmittal, will be deposited by the Eligible Institution with the
Exchange Agent; and
(3) the certificates and/or other documents referred to in
clause (2) above must be received by the Exchange Agent within the
time specified above.
Upon request to the Exchange Agent a Notice of Guaranteed Delivery will be
sent to Holders who wish to tender their Old Notes according to the guaranteed
delivery procedures set forth above.
DTC Participants
Any financial institution that is a participant in DTC's systems may make
book-entry delivery of Old Notes by causing DTC to transfer such Old Notes into
the Exchange Agent's account at DTC in accordance with DTC's procedures for
transfer. Such delivery must be accompanied by either
(a) the letter of transmittal or facsimile thereof, with any required
signature guarantees or
(b) an Agent's Message (as hereinafter defined),
and any other required documents, and must, in any case, be transmitted to and
received by the Exchange Agent at the address set forth below under "--Exchange
Agent" prior to the Expiration Date or the guaranteed delivery procedures
described above must be complied with. The Exchange Agent will make a request to
establish an account with respect to the Old Notes at DTC for purposes of the
Exchange Offer within two business days after the date of this prospectus.
The term "Agent's Message" means a message, electronically transmitted by
DTC to and received by the Exchange Agent, and forming a part of the Book-Entry
Confirmation, which states that DTC has received an express acknowledgement from
a Holder of Old Notes stating that such Holder has received and agrees to be
bound by, and makes each of the representations and warranties contained in, the
Letter of Transmittal and, further, that such Holder agrees that the Company may
enforce the Letter of Transmittal against such Holder.
Miscellaneous
All questions as to the validity, form, eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by Avista Corp. in its sole discretion, which determination
will be final and binding. Avista Corp. reserves the absolute right to reject
any and all Old Notes not properly tendered or any Old Notes Avista Corp.'s
acceptance of which would, in the opinion of counsel for Avista Corp., be
unlawful. Avista Corp. also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Old Notes. Avista
Corp.'s interpretation of the terms and conditions of the Exchange Offer
(including the instructions in the letter of transmittal) will be final and
binding on all parties. Unless waived, any defects or irregularities in
connection with tenders of Old Notes must be cured within such time as Avista
Corp. shall determine. Although Avista Corp. intends to notify Holders of
defects or irregularities with respect to tenders of Old Notes, none of Avista
Corp., the Exchange Agent, or any other person shall incur any liability for
failure to give such notification. Tenders of Old Notes will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any Old Notes received by the Exchange Agent that are not properly tendered and
as to which the defects or irregularities have not been cured or waived will be
20
returned by the Exchange Agent to the tendering Holders, unless otherwise
provided in the letter of transmittal, as soon as practicable following the
Expiration Date.
By tendering, each Holder or the Person receiving the New Notes, as the
case may be will be deemed to represent to Avista Corp. that, among other
things,
o the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the Person receiving
such New Notes, whether or not such person is the Holder,
o neither the Holder nor any such other person is engaged or intends to
engage in, or has an arrangement or understanding with any person to
participate in, the distribution of such New Notes, and
o neither the Holder nor any such other Person is an "affiliate," as
defined in Rule 405 of the Securities Act, of Avista Corp.
In all cases, issuance of New Notes pursuant to the Exchange Offer will be
made only after timely receipt by the Exchange Agent of certificates for the Old
Notes tendered for exchange or a timely Book-Entry Confirmation of such Old
Notes into the Exchange Agent's account at DTC, a properly completed and duly
executed letter of transmittal (or facsimile thereof or Agent's Message in lieu
thereof) and all other required documents. If any tendered Old Notes are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Notes are submitted for a greater principal amount than the
Holder desires to exchange, such unaccepted or non-exchanged Old Notes will be
returned without expense to the tendering Holder thereof (or, in the case of Old
Notes tendered by book-entry transfer into the Exchange Agent's account at DTC
pursuant to the book-entry transfer procedures described below, such
non-exchanged Old Notes will be credited to an account maintained with DTC) as
promptly as practicable after the expiration or termination of the Exchange
Offer.
Avista Corp. reserves the right in its sole discretion to purchase or make
offers for any Old Notes that remain outstanding subsequent to the Expiration
Date or, as set forth above under "--Conditions to the Exchange Offer," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers could differ from the terms
of the Exchange Offer.
WITHDRAWAL OF TENDERS OF OLD NOTES
Except as otherwise provided herein, tenders of Old Notes may be withdrawn
at any time prior to 5:00 p.m., New York City time, on the Expiration Date.
To withdraw a tender of Old Notes in the Exchange Offer, a written or
facsimile transmission notice of withdrawal must be received by the Exchange
Agent at its address set forth herein prior to 5:00 p.m., New York City time, on
the Expiration Date. Any such notice of withdrawal must
(a) specify the name of the person having deposited the Old Notes to
be withdrawn (the "Depositor"),
(b) identify the Old Notes to be withdrawn (including the certificate
number (unless tendered by book-entry transfer),
(c) be signed by the Holder in the same manner as the original
signature on the letter of transmittal by which such Old Notes were
tendered (including any required signature guarantees) or be accompanied by
documents of transfer sufficient to have the Trustee with respect to the
Old Notes register the transfer of such Old Notes in the name of the person
withdrawing the tender, and
(d) specify the name in which any such Old Notes are to be
registered, if different from that of the Depositor. If Old Notes have been
tendered pursuant to book-entry transfer, any notice of withdrawal must
specify the name and number of the account at DTC to be credited with the
withdrawn Old Notes, in which case a notice of withdrawal will be effective
21
if delivered to the Exchange Agent by any method of delivery described in
this paragraph.
All questions as to the validity, form and eligibility (including time of
receipt) of such notices will be determined by Avista Corp., whose determination
shall be final and binding on all parties. Any Old Notes so withdrawn will be
deemed not to have been validly tendered for purposes of the Exchange Offer and
will be returned to the Holder thereof without cost to such Holder as soon as
practicable after withdrawal; and no New Notes will be issued with respect
thereto unless the Old Notes so withdrawn are validly retendered. Properly
withdrawn Old Notes may be retendered by following one of the procedures
described above under "-- Procedures for Tendering" at any time prior to the
Expiration Date.
EXCHANGE AGENT
Chase Manhattan Bank and Trust Company, National Association has been
appointed as Exchange Agent of the Exchange Offer. Requests for additional
copies of this prospectus or of the letter of transmittal and requests for
Notice of Guaranteed Delivery with respect to the exchange of the Old Notes
should be directed to the Exchange Agent addressed as follows:
Chase Manhattan Bank and Trust Company, National Association
101 California Street, Suite 2725
San Francisco, California 94111-5830
Attention: Karen Lei
By Telephone: (415) 954-9518
By Facsimile: (415) 693-8850
FEES AND EXPENSES
The expenses of soliciting tenders will be paid by Avista Corp. The
principal solicitation is being made by mail; however, additional solicitation
may be made by telecopier, telephone or in person by officers and regular
employees of Avista Corp. and its affiliates.
Avista Corp. has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers-dealers or others
soliciting acceptances of the Exchange Offer. Avista Corp., however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse it for its reasonable out-of-pocket expenses in connection therewith.
The cash expenses to be incurred in connection with the Exchange Offer will
be paid by Avista Corp. and are estimated in the aggregate to be approximately
$250,000. Such expenses include registration fees, fees and expenses of the
Exchange Agent, accounting and legal fees and printing costs, among others.
Avista Corp. will pay all transfer taxes, if any, applicable to the
exchange of the Old Notes pursuant to the Exchange Offer. If, however,
certificates representing New Notes for principal amounts not tendered or
accepted for exchange are to be delivered to, or are to be issued in the name
of, any person other than the registered Holder of Old Notes tendered, or if
tendered Old Notes are registered in the name of, any person other than the
person signing the letter of transmittal, or if a transfer tax is imposed for
any reason other than the exchange of the Old Notes pursuant to the Exchange
Offer, then the amount of any such transfer taxes (whether imposed on the
registered Holder or any other persons) will be payable by the tendering Holder.
If satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted with the letter of transmittal, the amount of such transfer taxes will
be billed directly to such tendering Holder.
22
DESCRIPTION OF THE NEW NOTES
You can find the definitions of certain terms used in this description
under the subheading "--Certain Definitions." In this description, the words
"Avista Corp." refer only to Avista Corporation and not to any of its
subsidiaries, except for purposes of financial data determined on a consolidated
basis. The Old Notes and the New Notes are sometimes collectively called the
"notes".
Avista Corp. issued the Old Notes under an indenture, dated as of April 3,
2001, between itself and Chase Manhattan Bank and Trust Company, National
Association, as trustee, in a private transaction that was not subject to the
registration requirements of the Securities Act. The terms of the notes include
those stated in the indenture and those made part of the indenture by reference
to the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act").
The following description is a summary of the material provisions of the
indenture relating to the Old Notes. It does not restate the indenture in its
entirety. We urge you to read the indenture because it, and not this
description, defines your rights as holders of the Old Notes. Some defined terms
used in this description but not defined below under "--Certain Definitions"
have the meanings assigned to them in the indenture.
The registered holder of a note will be treated as the owner of it for all
purposes. Only registered holders will have rights under the indenture.
RANKING OF THE NOTES
The notes:
o are general unsecured obligations of Avista Corp.;
o are pari passu in right of payment with all existing and future
unsecured senior Indebtedness of Avista Corp.; and
o are senior in right of payment to all current and future subordinated
Indebtedness of Avista Corp., if any.
As of April 30, 2001, Avista Corp. had outstanding $203.5 million principal
amount of first mortgage bonds, which are secured by a lien on substantially all
of Avista Corp.'s utility plant assets (currently owned or hereafter acquired),
and $120 million of secured short-term bank debt (secured by a pledge of the
stock of Avista Capital) under Credit Facilities with remaining available
commitments of $110 million. On May 31, 2001 Avista Corp. renewed its committed
line of credit and repaid all outstanding borrowings under that facility. By
reason, and to the extent, of these liens, the first mortgage bonds and secured
bank debt rank prior to the notes. As of April 30, 2001, Avista Corp. also had
outstanding $876 million of unsecured long-term debt and $75.4 million of
current portion of unsecured long-term debt. All of such unsecured indebtedness
is pari passu in right of payment with the notes. In addition, Avista Corp. had
subordinated debentures in a net principal amount outstanding of $103.4 million
which are held by the trusts which issued $100 million of outstanding preferred
trust securities. The notes are senior in right of payment to these debentures.
The amounts of indebtedness discussed in this paragraph relate to Avista Corp.
only and not to its subsidiaries.
As of the date of this prospectus, all of our subsidiaries are "Restricted
Subsidiaries." However, under the circumstances described below under the
subheading "--Certain Other Covenants--Designation of Restricted and
Unrestricted Subsidiaries", we will be permitted to designate certain of our
subsidiaries as "Unrestricted Subsidiaries." Our Unrestricted Subsidiaries will
not be subject to many of the restrictive covenants in the indenture.
Although its utility operations are conducted directly by Avista Corp., all
of the other operations of Avista Corp. are conducted through its subsidiaries.
The notes will be effectively subordinated in right of payment to all
Indebtedness and other liabilities and commitments (including trade payables and
lease obligations) of Avista Corp.'s subsidiaries. Any right of Avista Corp. to
receive assets of any of its subsidiaries upon the subsidiary's liquidation or
23
reorganization (and the consequent right of the holders of the notes to
participate in those assets) will be effectively subordinated to the claims of
that subsidiary's creditors, except to the extent that Avista Corp. is itself
recognized as a creditor of the subsidiary, in which case the claims of Avista
Corp. would still be subordinate in right of payment to any security in the
assets of the subsidiary and any indebtedness of the subsidiary senior to that
held by Avista Corp. In addition, Avista Corp.'s ability to access the cash flow
of its subsidiaries is subject to substantial restrictions. As of March 31,
2001, Avista Corp.'s subsidiaries had approximately $3.7 million of
Indebtedness, $639.4 million of payables and other liabilities, and $9.3 billion
of energy commodity liabilities (energy commodity liabilities are held in a
portfolio containing $9.5 billion of energy commodity assets) outstanding.
PRINCIPAL, MATURITY AND INTEREST
Avista Corp. has limited the aggregate principal amount of notes which can
be issued under the indenture to $600 million, of which Avista Corp. has issued
$400 million aggregate principal amount. Avista Corp. may issue additional notes
(the "Additional Notes") from time to time. Any offering of Additional Notes is
subject to the covenant described below under the caption "--Certain Other
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock." The
notes and any Additional Notes subsequently issued under the indenture would be
treated as a single class for all purposes under the indenture, including,
without limitation, waivers, amendments, redemptions and offers to purchase.
Avista Corp. will issue notes in denominations of $1,000 and integral multiples
of $1,000. The notes will mature on June 1, 2008.
Interest on the notes will accrue at the rate of 9.75% per annum and will
be payable semi-annually in arrears on June 1 and December 1, commencing on
December 1, 2001. Avista Corp. will make each interest payment to the holders of
record on the immediately preceding May 15 and November 15.
Interest on the notes will accrue from the date of original issuance or, if
interest has already been paid, from the date it was most recently paid.
Interest will be computed on the basis of a 360-day year comprised of twelve
30-day months.
METHODS OF RECEIVING PAYMENTS ON THE NOTES
If a holder has given wire transfer instructions to Avista Corp. at least
ten business days prior to the applicable payment date, Avista Corp. will pay
all principal, interest and premium, if any, on that holder's notes in
accordance with those instructions. All other payments on the notes will be made
at the office or agency of the paying agent and registrar for the notes within
the City and State of New York unless Avista Corp. elects to make interest
payments by check mailed to the holders at their addresses set forth in the
register of holders.
PAYING AGENT AND REGISTRAR FOR THE NOTES
The trustee will initially act as paying agent and registrar. Avista Corp.
may change the paying agent or registrar without prior notice to the holders,
and Avista Corp. or any of its Subsidiaries may act as paying agent or
registrar.
TRANSFER AND EXCHANGE
A holder may transfer or exchange notes in accordance with the indenture.
The registrar and the trustee may require a holder to furnish appropriate
endorsements and transfer documents in connection with a transfer of notes.
Holders will be required to pay all taxes due on transfer. Avista Corp. is not
required to transfer or exchange any note selected for redemption.
OPTIONAL REDEMPTION
The notes are redeemable in whole or in part, at the option of Avista Corp.
at any time, at a redemption price equal to the greater of (i) 100% of the
principal amount of the notes being redeemed or (ii) the sum of the present
values of the remaining scheduled payments of principal of and interest on the
notes being redeemed discounted to the date of redemption on a semiannual basis
24
(assuming a 360-day year consisting of twelve 30-day months) at a discount rate
equal to the Treasury Yield plus 50 basis points, plus, for (i) or (ii) above,
whichever is applicable, accrued interest on such notes to the date of
redemption.
"Treasury Yield" means, with respect to any Redemption Date, the rate per
annum equal to the semiannual equivalent yield to maturity of the Comparable
Treasury Issue, assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of such notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of the notes.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) on the third
business day preceding such Redemption Date, as set forth in the H.15 Daily
Update of the Federal Reserve Bank of New York or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
business day, the Reference Treasury Dealer Quotation for such redemption date.
"H.15(519)" means the weekly statistical release entitled "Statistical
Release H.15 (519)", or any successor publication, published by the Board of
Governors of the Federal Reserve System.
"H.15 Daily Update" means the daily update of H.15(519) available through
the worldwide website of the Board of Governors of the Federal Reserve System or
any successor site or publication.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by Avista Corp. and reasonably
acceptable to the trustee.
"Reference Treasury Dealer Quotation" means, with respect to the Reference
Treasury Dealer and any redemption date, the average, as determined by the
trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount and quoted in
writing to the trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding such redemption date).
"Reference Treasury Dealer" means a primary U.S. Government securities
dealer in New York City appointed by Avista Corp. and reasonably acceptable to
the trustee.
Notice of redemption shall be given not less than 15 days nor more than 60
days prior to the date fixed for redemption.
Unless Avista Corp. defaults in payment of the Redemption Price (as defined
below), from and after the Redemption Date, the notes or portions thereof called
for redemption will cease to bear interest, and the holders thereof will have no
right in respect to such notes except the right to receive the Redemption Price
thereof.
Under the procedures set forth above, the price (the "Redemption Price")
payable upon the optional redemption at any time of notes is determined by
calculating the present value (the "Present Value") at such time of each
remaining payment of principal of or interest on such notes and then totaling
such Present Values. If the sum of such Present Values is equal to or less than
100% of the principal amount of such notes, the Redemption Price of such notes
will be 100% of its principal amount (redemption at par). If the sum of such
Present Values is greater than 100% of the principal amount of such notes, the
Redemption Price of such notes will be such greater amount (redemption at a
premium). In no event may a note be redeemed optionally at less than 100% of its
principal amount.
The Present Value at any time of a payment of principal of or interest on a
note is calculated by applying to such payment the discount rate (the "Discount
Rate") applicable to such payment. The Discount Rate applicable at any time to a
25
payment of principal of or interest on a note equals the equivalent yield to
maturity at such time of a fixed rate United States treasury security having a
maturity comparable to the maturity of such payment plus 50 basis points; such
yield being calculated on the basis of the interest rate borne by such United
States treasury security and the price at such time of such security. The United
States treasury security employed in the calculation of a Discount Rate (a
"Relevant Security") as well as the price and equivalent yield to maturity of
such Relevant Security will be selected or determined by an investment banker of
national standing selected by Avista Corp. which is reasonably acceptable to the
trustee.
Whether the sum of the Present Values of the remaining payments of
principal of and interest on a note to be redeemed optionally will or will not
exceed 100% of its principal amount and, accordingly, whether such notes will be
redeemed at par or at a premium will depend on the Discount Rate used to
calculate such Present Values. Such Discount Rate, in turn, will depend upon the
equivalent yield to maturity of a Relevant Security which yield will itself
depend on the interest rate borne by, and the price of, the Relevant Security.
While the interest rate borne by the Relevant Security is fixed, the price of
the Relevant Security tends to vary with interest rate levels prevailing from
time to time. In general, if at a particular time the prevailing level of
interest rates for a newly issued United States treasury security having a
maturity comparable to that of a Relevant Security is higher than the level of
interest rates for newly issued United States treasury securities having a
maturity comparable to such Relevant Security prevailing at the time the
Relevant Security was issued, the price of the Relevant Security will be lower
than its issue price. Conversely, if at a particular time the prevailing level
of interest rates for a newly issued United States treasury security having a
maturity comparable to that of a Relevant Security is lower than the level of
interest rates prevailing for newly issued United States treasury securities
having a maturity comparable to the Relevant Security at the time the Relevant
Security was issued, the price of the Relevant Security will be higher than its
issue price.
Because the equivalent yield to maturity on a Relevant Security depends on
the interest rate it bears and its price, an increase or a decrease in the level
of interest rates for newly issued United States treasury securities with a
maturity comparable to that of a Relevant Security above or below the levels of
interest rates for newly issued United States treasury securities having a
maturity comparable to the Relevant Security prevailing at the time of issue of
the Relevant Security will generally result in an increase or a decrease,
respectively, in the Discount Rate used to determine the Present Value of a
payment of principal of or interest on a note. As noted above, if the sum of the
Present Values of the remaining payments of principal of and interest on a note
proposed to be redeemed is less than its principal amount, such note may only be
redeemed at par.
MANDATORY REDEMPTION
Avista Corp. is not required to make any mandatory redemption or sinking
fund payments with respect to the notes.
SELECTION AND NOTICE
If less than all of the notes are to be redeemed at any time, the trustee
will select notes for redemption as follows:
(1) if the notes are listed on any national securities exchange, in
compliance with the requirements of the principal national securities
exchange on which the notes are listed; or
(2) if the notes are not listed on any national securities exchange,
on a pro rata basis, by lot or by such method as the trustee shall deem
fair and appropriate.
No portion of a note less than $1,000 will be redeemed. Notices of
redemption will be mailed by first class mail at least 15 but not more than 60
days before the redemption date to each holder of notes to be redeemed at its
registered address. Notices of redemption may not be conditional.
If any note is to be redeemed in part only, the notice of redemption that
relates to that note will state the portion of the principal amount of that note
that is to be redeemed. A new note in principal amount equal to the unredeemed
26
portion of the original note will be issued in the name of the holder thereof
upon cancellation of the original note. Notes called for redemption become due
on the date fixed for redemption. On and after the redemption date, interest
ceases to accrue on notes or portions of them called for redemption.
REPURCHASE AT THE OPTION OF HOLDERS
CHANGE OF CONTROL
In the event of a Change of Control, each holder of notes will have the
right to require Avista Corp. to repurchase all or any part (equal to $1,000 or
an integral multiple of $1,000) of that holder's notes pursuant to a Change of
Control Offer on the terms set forth in the indenture. In the Change of Control
Offer, Avista Corp. will offer a Change of Control Payment in cash equal to 101%
of the aggregate principal amount of notes repurchased plus accrued and unpaid
interest, if any, thereon, to the date of purchase. Within ten days following
any Change of Control, Avista Corp. will mail a notice to each holder describing
the transaction or transactions that constitute the Change of Control and
offering to repurchase notes on the Change of Control Payment Date specified in
the notice, pursuant to the procedures required by the indenture and described
in such notice. Avista Corp. will comply with the requirements of Rule 14e-1
under the Exchange Act and any other securities laws and regulations thereunder
to the extent those laws and regulations are applicable in connection with the
repurchase of the notes as a result of a Change of Control.
On the Change of Control Payment Date, Avista Corp. will, to the extent
lawful:
(1) accept for payment all notes or portions of notes properly
tendered pursuant to the Change of Control Offer;
(2) deposit with the paying agent an amount equal to the Change of
Control Payment in respect of all notes or portions of notes properly
tendered; and
(3) deliver or cause to be delivered to the trustee the notes so
accepted together with an Officers' Certificate stating the aggregate
principal amount of notes or portions of notes being purchased by Avista
Corp.
The paying agent will promptly mail to each holder of notes properly
tendered the Change of Control Payment for such notes, and the trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each holder a new note equal in principal amount to any unpurchased portion of
the notes surrendered, if any; provided that each new note will be in a
principal amount of $1,000 or an integral multiple of $1,000. Avista Corp. will
publicly announce the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
The provisions described above that require Avista Corp. to make a Change
of Control Offer following a Change of Control will be applicable regardless of
whether any other provisions of the indenture are applicable. Except as
described above with respect to a Change of Control, the indenture does not
contain provisions that permit the holders of the notes to require that Avista
Corp. repurchase or redeem the notes in the event of a takeover,
recapitalization or similar transaction. Accordingly, the indenture may not
afford the holders of notes protection in all circumstances from the adverse
aspects of a highly leveraged transaction, reorganization, restructuring, merger
or similar transaction.
Avista Corp. will not be required to make a Change of Control Offer upon a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in the indenture applicable to a Change of Control Offer made by Avista Corp.
and purchases all notes properly tendered and not withdrawn under such Change of
Control Offer.
The definition of Change of Control includes a phrase relating to the
direct or indirect sale, lease, transfer, conveyance or other disposition of
"all or substantially all" of the properties or assets of Avista Corp. and its
Subsidiaries taken as a whole. Although there is a limited body of case law
interpreting the phrase "substantially all", there is no precise established
27
definition of the phrase under applicable law. Accordingly, it may be uncertain
whether a holder of notes can require Avista Corp. to repurchase those notes as
a result of a sale, lease, transfer, conveyance or other disposition of less
than all of the assets of Avista Corp. and its Subsidiaries taken as a whole.
ASSET SALES
Unless the Rating Condition is satisfied, Avista Corp. will not, and will
not permit any of its Restricted Subsidiaries to, consummate an Asset Sale
unless:
(1) Avista Corp. (or the Restricted Subsidiary, as the case may be)
receives consideration at the time of the Asset Sale at least equal to the
fair market value of the assets or Equity Interests issued or sold or
otherwise disposed of, as determined by Avista Corp.'s Board of Directors
and evidenced by a resolution of the Board of Directors set forth in an
Officers' Certificate delivered to the trustee before or a reasonable time
after such Asset Sale; and
(2) at least 75% of the consideration received in such Asset Sale by
Avista Corp. or such Restricted Subsidiary is in the form of cash or Cash
Equivalents. For purposes of this provision, each of the following shall be
deemed to be cash:
(a) any liabilities (as shown on Avista Corp.'s or such
Restricted Subsidiary's most recent balance sheet) of Avista Corp. or
any Restricted Subsidiary (other than contingent liabilities and
liabilities that are by their terms subordinated in right of payment
to the notes) that are assumed by the transferee or purchaser of any
such assets pursuant to an agreement that releases Avista Corp. or
such Restricted Subsidiary from further liability; and
(b) any securities, notes or other obligations received by
Avista Corp. or any such Restricted Subsidiary from such transferee
that are contemporaneously (subject to ordinary settlement periods)
converted by Avista Corp. or such Restricted Subsidiary into cash (to
the extent of the cash received in that conversion, sale or exchange).
Within 360 days after the receipt of any Net Proceeds from an Asset Sale
that is consummated at a time when the Rating Condition is not satisfied, Avista
Corp. may apply those Net Proceeds:
(1) to repay Indebtedness (other than intercompany Indebtedness) of
Avista Corp., or a Restricted Subsidiary of Avista Corp., and to
correspondingly reduce commitments if such Indebtedness constitutes
revolving credit borrowings;
(2) to make capital expenditures; or
(3) to acquire other long-term assets that are used or useful in a
Permitted Business.
Pending the final application of any Net Proceeds, Avista Corp. may temporarily
reduce revolving credit borrowings or otherwise invest Net Proceeds in any
manner that is not prohibited by the indenture.
Any Net Proceeds from Asset Sales that are consummated at a time when the
Rating Condition is not satisfied that are not applied or invested as provided
above in the preceding paragraph will constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $15 million, Avista Corp. will make
an Asset Sale Offer to all holders of notes (and to all holders of other
Indebtedness that is pari passu with the notes and that contains provisions
similar to those set forth in the indenture relating to the notes with respect
to offers to purchase or redeem with the proceeds of sales of assets) to
purchase the maximum principal amount of notes and such other pari passu
28
Indebtedness that may be purchased out of the Excess Proceeds. The offer price
in any Asset Sale Offer will be equal to 100% of principal amount (or 100% of
the accreted value thereof, in the case of Indebtedness sold at a discount) plus
accrued and unpaid interest to the date of purchase, and will be payable in
cash. If any Excess Proceeds remain after consummation of an Asset Sale Offer,
Avista Corp. may use those Excess Proceeds for any purpose not otherwise
prohibited by the indenture. If the aggregate principal amount of notes and
other Indebtedness tendered into such Asset Sale Offer exceeds the amount of
Excess Proceeds, Avista Corp. will allocate the Excess Proceeds on a pro rata
basis to the notes and such other Indebtedness tendered, and the trustee will
select the notes to be purchased on a pro rata basis based on the principal
amount of notes tendered. Upon completion of each Asset Sale Offer, the amount
of Excess Proceeds will be reset at zero.
Notwithstanding the foregoing,
(1) Avista Corp. may (i) dispose of all or any portion of its
transmission assets in one or more RTO Transactions, or (ii) effect, or
permit any Restricted Subsidiary to effect, an Asset Sale in which the
Capital Stock of Avista Communications, Avista Advantage or Avista Labs
(provided such Person is operating substantially the same business as at
the date of the indenture) is exchanged for Capital Stock or other
securities of another Person if, upon completion thereof, the subject or
transferee Person is no longer a Subsidiary of Avista Corp.; provided,
however, that if the Rating Condition is not satisfied at the time of such
transaction, Avista Corp. shall apply any Net Proceeds therefrom in
accordance with the foregoing provisions; provided, further, that if Avista
Corp. or any Restricted Subsidiary thereafter disposes of any Capital Stock
or other securities or ownership interest in the subject or transferee
Person received in, or retained subsequent to, any such transaction, any
cash realized therefrom shall be treated as Net Proceeds from an Asset Sale
and applied in accordance with the foregoing provisions; and
(2) these provisions shall not apply to any Asset Sale which
constitutes a transfer, conveyance, sale, lease or other disposition of all
or substantially all of Avista Corp.'s properties or assets. See below
under "--Certain Other Covenants--Merger, Consolidation or Sale of Assets."
Avista Corp. will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with each
repurchase of notes pursuant to an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with the Asset Sales
provisions of the indenture, Avista Corp. will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under the Asset Sale provisions of the indenture by virtue of such
conflict.
CERTAIN OTHER COVENANTS
Set forth below are certain other covenants contained in the indenture.
During any period of time that (i) Moody's and S&P have issued credit ratings of
Avista Corp.'s senior unsecured debt of at least Baa2 and BBB, respectively, in
each case with a stable or improving outlook and (ii) no Default has occurred
and is continuing under the indenture (which we refer to collectively as the
"Rating Condition"), Avista Corp. and its Restricted Subsidiaries will not be
subject to the provisions of the Indenture described above under "Repurchase at
the Option of Holders--Asset Sales", and the provisions described below under
"--Restricted Payments", "--Incurrence of Indebtedness and Issuance of Preferred
Stock", "--Dividend and Other Payment Restrictions Affecting Subsidiaries", and
"--Transactions with Affiliates", and clause (4) of the "--Merger, Consolidation
and Sale of Assets" covenant (collectively, the "Suspended Covenants"). If
Avista Corp. and its Restricted Subsidiaries are not subject to the Suspended
Covenants with respect to the notes for any period of time as a result of the
preceding sentence and, subsequently, one or both of Moody's and S&P withdraw
their ratings or downgrade the ratings assigned to the notes below the specified
ratings, then Avista Corp. and each of its Restricted Subsidiaries (except to
the extent that any Restricted Subsidiary is not subject to any such covenant
pursuant to the terms thereof) will thereafter again be subject to the Suspended
Covenants for the benefit of the notes and compliance with the Suspended
Covenants with respect to Restricted Payments made after the time of such
withdrawal or downgrade will be calculated in accordance with the terms of the
covenant described below under "--Restricted Payments" as if such covenant had
been in effect during the entire period of time from the date of the indenture.
RESTRICTED PAYMENTS
Unless the Rating Condition is satisfied, Avista Corp. will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly:
29
(1) declare or pay any dividend or make any other payment or
distribution on account of Avista Corp.'s Equity Interests (including,
without limitation, any payment in connection with any merger or
consolidation involving Avista Corp. or any of its Restricted Subsidiaries)
or to the direct or indirect holders of Avista Corp.'s or any of its
Restricted Subsidiaries' Equity Interests in their capacity as such (other
than dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of Avista Corp. or dividends or distributions to Avista
Corp. or a Restricted Subsidiary of Avista Corp.);
(2) purchase, redeem or otherwise acquire or retire for value
(including, without limitation, in connection with any merger or
consolidation involving Avista Corp.) any Equity Interests of Avista Corp.
or any Person that beneficially owns, directly or indirectly, a majority of
the Capital Stock of Avista Corp.;
(3) make any payment on or with respect to, or purchase, redeem,
defease or otherwise acquire or retire for value any Indebtedness that is
subordinated in right of payment to the notes, except a payment of interest
or principal at or after the Stated Maturity thereof or a refinancing
thereof within one year of the final maturity date thereof; or
(4) make any Restricted Investment (all such payments and other
actions set forth in these clauses (1) through (4) being collectively
referred to as "Restricted Payments"),
unless, at the time of and after giving effect to such Restricted Payment:
(1) no Default or Event of Default has occurred and is continuing or
would occur as a consequence thereof;
(2) Avista Corp. would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph of
the covenant described below under the caption "-- Incurrence of
Indebtedness and Issuance of Preferred Stock"; and
(3) such Restricted Payment, together with the aggregate amount of
all other Restricted Payments made by Avista Corp. and its Subsidiaries
after the date of the indenture (excluding Restricted Payments permitted by
clauses (2) through (7) and (9) of the next succeeding paragraph), is less
than the sum, without duplication, of:
(a) 50% of the Consolidated Net Income of Avista Corp. for the
period (taken as one accounting period) from the beginning of the
first fiscal quarter commencing prior to the date of the indenture to
the end of Avista Corp.'s most recently ended fiscal quarter for which
internal financial statements are available at the time of such
Restricted Payment (or, if such Consolidated Net Income for such
period is a deficit, less 100% of such deficit), plus
(b) 100% of the aggregate net cash proceeds received by Avista
Corp. since the date of the indenture as a contribution to its common
equity capital or from the issue or sale of Equity Interests of Avista
Corp. (other than Disqualified Stock) or upon the exercise of any
options, warrants or other rights to purchase Capital Stock (other
than Disqualified Capital Stock) of Avista Corp. or from the issuance
or sale of convertible or exchangeable Disqualified Stock or
convertible or exchangeable debt securities of Avista Corp. that have
been converted into or exchanged for such Equity Interests (other than
Equity Interests (or Disqualified Stock or debt securities) sold to a
Subsidiary of Avista Corp.), plus
(c) 100% of the net reduction in any Restricted Investment that
was made after the date of the indenture resulting from payments of
interest on Indebtedness, dividends, repayment of loans or advances,
or other transfers of assets, in each case to Avista Corp. or any
Restricted Subsidiary, and the cash return of capital with respect to
any Restricted Investment (less the cost of disposition, if any), plus
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(d) to the extent that any Unrestricted Subsidiary of Avista
Corp. is redesignated as a Restricted Subsidiary after the date of the
indenture, the fair market value of Avista Corp.'s Investment in such
Subsidiary as of the date of such redesignation, plus
(e) any amount which previously qualified as a Restricted
Payment on account of any Guarantee entered into by Avista Corp. or
any Restricted Subsidiary; provided that such Guarantee has not been
called upon and the obligation arising under such Guarantee no longer
exists; less
(f) the after-tax amount of any power and natural gas cost
deferrals for the period (taken as one accounting period) from the
beginning of the first fiscal quarter commencing prior to the date of
the indenture to the end of Avista Corp.'s most recently ended fiscal
quarter for which internal financial statements are available at the
time of such Restricted Payment; plus
(g) the after-tax amount of any amortization of power and
natural gas deferrals for the period (taken as one accounting period)
from the beginning of the first fiscal quarter commencing prior to the
date of the indenture to the end of Avista Corp.'s most recently ended
fiscal quarter for which internal financial statements are available
at the time of such Restricted Payment.
So long as no Default has occurred and is continuing or would be caused
thereby, the preceding provisions will not prohibit:
(1) the payment of any dividend within 60 days after the date of
declaration thereof, if at said date of declaration such payment would have
complied with the provisions of the indenture;
(2) the redemption, repurchase, retirement, defeasance or other
acquisition of any subordinated Indebtedness of Avista Corp. or of any
Equity Interests of Avista Corp. in exchange for, or out of the net cash
proceeds of the substantially concurrent sale (other than to a Subsidiary
of Avista Corp.) of, Equity Interests of Avista Corp. (other than
Disqualified Stock); provided that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement,
defeasance or other acquisition will be excluded from clause (3)(b) of the
preceding paragraph;
(3) the defeasance, redemption, repurchase or other acquisition of
subordinated Indebtedness of Avista Corp. with the net cash proceeds from
an incurrence of Permitted Refinancing Indebtedness;
(4) the repurchase, redemption, retirement, refinancing, acquisition
for value or payment of any Disqualified Stock in exchange for, or out of
the net cash proceeds of, the substantially concurrent issuance of new
Disqualified Stock of Avista Corp.; provided that any such new Disqualified
Stock:
(a) shall have an aggregate liquidation preference that does not
exceed the aggregate liquidation preference of the amount so
refinanced;
(b) has a Weighted Average Life to Maturity greater than the
remaining Weighted Average Life to Maturity of the Disqualified
Capital Stock being refinanced; and
(c) has a Stated Maturity later than the Stated Maturity of the
Disqualified Stock being refinanced;
(5) the repurchase of any subordinated Indebtedness of Avista Corp.
at a purchase price not greater than 101% of the principal amount of such
subordinated Indebtedness in the event of a Change of Control pursuant to a
provision similar to "Repurchase at the Option of Holders--Change of
Control"; provided that prior to consummating any such repurchase, Avista
Corp. has made the Change of Control Offer required by the indenture and
has repurchased all notes validly tendered for payment in connection with
such Change of Control Offer;
(6) the repurchase of any subordinated Indebtedness of Avista Corp.
at a purchase price not greater than 100% of the principal amount of such
Indebtedness in the event of an Asset Sale pursuant to a provision similar
31
to the "--Repurchase at the Option of Holders--Asset Sales" covenant;
provided that prior to consummating any such repurchase, Avista Corp. has
made the Asset Sale Offer required by the indenture and has repurchased all
notes validly tendered for payment in connection with such Asset Sale
Offer;
(7) repurchases of Capital Stock (or warrants or options convertible
into or exchangeable for such Capital Stock) deemed to occur upon exercise
of stock options to the extent that shares of such Capital Stock (or
warrants or options convertible into or exchangeable for such Capital
Stock) represent a portion of the exercise price of such options;
(8) the declaration and payment of regular quarterly cash dividends
in respect of Avista Corp.'s common stock in a per share amount not to
exceed 105% of the quarterly dividend for the immediately preceding
calendar quarter, and in respect of Avista Corp.'s preferred stock in an
aggregate amount not to exceed $2.5 million per calendar quarter; provided
that the aggregate amount of such cash dividends will be included as
Restricted Payments for purposes of determining the amount of Restricted
Payments that may be made pursuant to clause (3) of the preceding
paragraph; or
(9) other Restricted Payments by Avista Corp. or any Restricted
Subsidiary in an aggregate amount not to exceed $10 million since the date
of the indenture.
The amount of all Restricted Payments (other than cash) will be the fair
market value on the date of the Restricted Payment of the asset(s) or securities
proposed to be transferred or issued to or by Avista Corp. or such Subsidiary,
as the case may be, pursuant to the Restricted Payment. The fair market value of
any assets or securities that are required to be valued by this covenant will be
determined by the Board of Directors whose resolution with respect thereto shall
be delivered to the trustee.
INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
Unless the Rating Condition is satisfied, Avista Corp. will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, issue, assume, guarantee or otherwise become directly or
indirectly liable, contingently or otherwise, with respect to (collectively,
"incur") any Indebtedness (including Acquired Debt), and Avista Corp. will not
issue any Disqualified Stock and will not permit any of its Restricted
Subsidiaries to issue any shares of preferred stock; provided, however, that
Avista Corp. may incur Indebtedness (including Acquired Debt) or issue
Disqualified Stock, and Avista Corp.'s Restricted Subsidiaries may incur
Indebtedness or issue preferred stock, if the Fixed Charge Coverage Ratio for
Avista Corp.'s most recently ended four full fiscal quarters for which internal
financial statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock or preferred
stock is issued would have been at least 2.0 to 1, determined on a pro forma
basis (including a pro forma application of the net proceeds therefrom), as if
the additional Indebtedness had been incurred or the preferred stock or
Disqualified Stock had been issued, as the case may be, at the beginning of such
four-quarter period.
This covenant will not prohibit the incurrence of any of the following
items of Indebtedness (collectively, "Permitted Debt"):
(1) the incurrence by Avista Corp. or any of its Restricted
Subsidiaries of Indebtedness and letters of credit under one or more Credit
Facilities in an aggregate principal amount at any one time outstanding
under this clause (1) (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability of Avista Corp.
and its Restricted Subsidiaries thereunder) equal to $600 million
outstanding at any one time, less principal repayments of term loans and
permanent commitment reductions with respect to revolving loans and letters
of credit under any Credit Facility (in each case, other than in connection
with an amendment, refinancing, refunding, replacement, renewal or
modification) made after the date of the Indenture;
(2) the incurrence by Avista Corp. or any of its Restricted
Subsidiaries of the Existing Indebtedness;
(3) the incurrence by Avista Corp. of Indebtedness represented by the
notes;
32
(4) the incurrence by Avista Corp. or any of its Restricted
Subsidiaries of Permitted Refinancing Indebtedness in exchange for, or the
net proceeds of which are used to refund, refinance or replace,
Indebtedness (other than intercompany Indebtedness) that was permitted by
the indenture to be incurred under the first paragraph of this covenant or
clauses (2), (3), (8), (11) or (12) of this paragraph;
(5) the incurrence by Avista Corp. or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among Avista Corp. and
any of its Restricted Subsidiaries; provided, however, that:
(a) if Avista Corp. is the obligor on such Indebtedness, such
Indebtedness must be expressly subordinated to the prior payment in
full in cash of all Obligations with respect to the notes; and
(b)(i) any subsequent issuance or transfer of Equity Interests
that results in any such Indebtedness being held by a Person other
than Avista Corp. or a Restricted Subsidiary thereof and (ii) any sale
or other transfer of any such Indebtedness to a Person that is not
either Avista Corp. or a Restricted Subsidiary thereof, shall be
deemed, in each case, to constitute an incurrence of such Indebtedness
by Avista Corp. or such Restricted Subsidiary, as the case may be,
that was not permitted by this clause (5);
(6) the incurrence by Avista Corp. or any of its Restricted
Subsidiaries of:
(a) Hedging Obligations that are incurred for the purpose of
fixing or hedging interest rate risk with respect to any floating rate
Indebtedness that is permitted by the terms of the indenture to be
outstanding;
(b) Currency Hedging Obligations relating to Indebtedness of
Avista Corp. or any Restricted Subsidiary and/or to obligations to
purchase or sell assets or properties; provided that such Currency
Hedging Obligations do not increase the Indebtedness or other
obligations of Avista Corp. or any Restricted Subsidiary other than as
a result of fluctuations in foreign currency exchange rates or by
reason of fees, indemnities and compensation payable thereunder;
(c) Commodity Price Protection Obligations; provided that such
Commodity Price Protection Obligations do not increase the amount of
Indebtedness or other obligations of Avista Corp. or any Restricted
Subsidiary other than as a result of fluctuations in commodity prices
or by reason of fees, indemnities and compensation payable thereunder;
and
(d) the Guarantee by any Restricted Subsidiary of Avista Corp.
of Indebtedness of Avista Corp. if such Restricted Subsidiary
guarantees the notes by executing a guarantee and supplemental
indenture in the forms prescribed by the indenture;
(7) the Guarantee by Avista Corp. or any Subsidiary of Avista Corp.
of Indebtedness of a Restricted Subsidiary of Avista Corp. that was
permitted to be incurred by another provision of this covenant;
(8) Indebtedness of Avista Corp. or any Restricted Subsidiary of
Avista Corp., represented by Capital Lease Obligations, or preferred stock
of a Restricted Subsidiary issued, or Indebtedness of Avista Corp. or a
Restricted Subsidiary incurred or assumed (i) to finance capital
expenditures or (ii) in connection with the acquisition or development of
real property, plant or equipment or the Capital Stock of a Restricted
Subsidiary that owns such property, plant or equipment in each case
incurred for the purpose of financing all or any part of the purchase price
of such property, plant or equipment or Capital Stock, in each case in an
aggregate principal amount (or accreted value, as applicable) at any time
outstanding pursuant to this clause (8), including all Permitted
Refinancing Indebtedness incurred to refund, refinance or replace any
Indebtedness incurred pursuant to this clause (8), not to exceed $275
million;
(9) Indebtedness incurred to finance power and natural gas cost
deferrals pursuant to, and in accordance with, state statutory or public
utility commission authorization, in an amount not to exceed the amount of
the deferrals so financed;
33
(10) Indebtedness of Avista Corp. or any of its Restricted
Subsidiaries arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except
in the case of daylight overdrafts) drawn against insufficient funds in the
ordinary course of business; provided, however, that such Indebtedness is
extinguished within five business days of incurrence;
(11) shares of preferred stock of a Restricted Subsidiary of Avista
Corp. issued to Avista Corp. or another Restricted Subsidiary of Avista
Corp.; provided that any subsequent transfer of any Capital Stock or any
other event that results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any other subsequent transfer of any such shares
of preferred stock (except to Avista Corp. or another Restricted Subsidiary
of Avista Corp.) shall be deemed, in each case, to be an issuance of
preferred stock that was not permitted by this clause (11); and
(12) the incurrence by Avista Corp. or any of its Restricted
Subsidiaries of additional Indebtedness (including under a Credit Facility)
in an aggregate principal amount (or accreted value, as applicable) at any
time outstanding, including all Permitted Refinancing Indebtedness incurred
to refund, refinance or replace any Indebtedness incurred pursuant to this
clause (12), not to exceed $25 million.
In addition, Avista Corp. will not incur any Indebtedness (including
Permitted Debt) that is contractually subordinated in right of payment to any
other Indebtedness of Avista Corp. unless such Indebtedness is also
contractually subordinated in right of payment to the notes pursuant to terms no
less favorable to the holders of the notes; provided, however, that no
Indebtedness of Avista Corp. shall be deemed to be contractually subordinated in
right of payment to any other Indebtedness of Avista Corp. solely by virtue of
being unsecured.
For purposes of determining compliance with this "Incurrence of
Indebtedness and Issuance of Preferred Stock" covenant:
(1) in the event that an item of proposed Indebtedness meets the
criteria of more than one of the categories of Permitted Debt described in
clauses (1) through (12) above, or is entitled to be incurred pursuant to
the first paragraph of this covenant, Avista Corp. will be permitted to
classify such item of Indebtedness on the date of its incurrence in any
manner that complies with this covenant;
(2) Indebtedness under Credit Facilities outstanding on the date of
the indenture shall be deemed to have been incurred on the date of the
indenture in reliance on the exception provided by clause (1) of the
definition of Permitted Debt;
(3) the accrual of interest, the accretion or amortization of
original issue discount, the payment of interest on any Indebtedness in the
form of additional Indebtedness with the same terms, and the payment of
dividends on Disqualified Stock in the form of additional shares of the
same class of Disqualified Stock will not be deemed to be an incurrence of
Indebtedness or an issuance of Disqualified Stock for purposes of this
covenant; provided, in each such case, that the amount thereof is included
in Fixed Charges of Avista Corp. as accrued; and
(4) for purposes of determining compliance with any
dollar-denominated restriction on the incurrence of Indebtedness
denominated in a foreign currency, the dollar-equivalent principal amount
of such Indebtedness incurred pursuant thereto shall be calculated based on
the relevant currency exchange rate in effect on the date that such
Indebtedness was incurred.
Notwithstanding the foregoing, Avista Corp. will not incur or suffer to
exist, or permit any of its Restricted Subsidiaries or Unrestricted Subsidiaries
to incur or suffer to exist, any Obligations with respect to an Unrestricted
Subsidiary that would violate the provisions set forth in the definition of
Unrestricted Subsidiary. Specifically, without limiting the generality of the
foregoing, if an Unrestricted Subsidiary incurs Indebtedness that is not
Non-Recourse Debt or any Indebtedness of an Unrestricted Subsidiary ceases to be
Non-Recourse Debt, such Unrestricted Subsidiary will then cease to be an
Unrestricted Subsidiary for purposes of the indenture and any Indebtedness of
such Subsidiary will be deemed to be incurred by a Restricted Subsidiary of
Avista Corp. as of such date.
34
LIENS
Avista Corp. will not and will not permit any of its Restricted
Subsidiaries to, create, incur, assume or otherwise cause or suffer to exist or
become effective any consensual Lien of any kind securing Indebtedness or trade
payables (other than Permitted Liens) upon any of their property or assets, now
owned or hereafter acquired, unless all payments due under the indenture and the
notes are secured on an equal and ratable basis with the obligations so secured
until such time as such obligations are no longer secured by a Lien; provided,
however, that Avista Corp. and its Restricted Subsidiaries may incur other Liens
to secure Indebtedness or trade payables as long as the sum of (x) the amount of
outstanding Indebtedness and trade payables secured by Liens incurred pursuant
to this proviso plus (y) the Attributable Debt with respect to all outstanding
leases in connection with Sale/Leaseback Transactions entered into pursuant to
the second paragraph of the covenant described below under the caption "--Sale
and Leaseback Transactions", does not exceed $25 million.
DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
Unless the Rating Condition is satisfied, Avista Corp. will not, and will
not permit any of its Restricted Subsidiaries to, directly or indirectly, create
or permit to exist or become effective any consensual encumbrance or restriction
on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its Capital
Stock to Avista Corp. or any of its Restricted Subsidiaries, or with
respect to any other interest or participation in, or measured by, its
profits, or pay any indebtedness owed to Avista Corp. or any of its
Restricted Subsidiaries;
(2) make loans or advances to Avista Corp. or any of its Restricted
Subsidiaries; or
(3) transfer any of its properties or assets to Avista Corp. or any
of its Restricted Subsidiaries.
However, the preceding restrictions will not apply to encumbrances or
restrictions existing under or by reason of:
(1) Existing Indebtedness and Indebtedness under Credit Facilities as
in effect on the date of the indenture and any amendments, modifications,
restatements, renewals, increases, supplements, refundings, restructurings
(including rate increases), replacements or refinancings thereof, provided
that such amendments, modifications, restatements, renewals, increases,
supplements, refundings, restructurings, replacement or refinancings are
not materially more restrictive, taken as a whole, with respect to such
dividend and other payment restrictions than those contained in such
Indebtedness, as in effect on the date of the indenture;
(2) the indenture and the notes;
(3) applicable law or any requirement of any regulatory body;
(4) any instrument governing Indebtedness or Capital Stock of a
Person acquired by Avista Corp. or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person,
or the property or assets of the Person, so acquired, provided that, in the
case of Indebtedness, such Indebtedness was permitted by the terms of the
indenture to be incurred;
(5) customary non-assignment provisions of (a) any leases governing a
leasehold interest, (b) any supply, license or other agreement entered into
in the ordinary course of business of Avista Corp. or any of its Restricted
Subsidiaries, or (c) any security agreement relating to a Lien incurred
pursuant to clause (10) of the definition of Permitted Liens;
35
(6) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions on the property so acquired of
the nature described in clause (3) of the preceding paragraph;
(7) any agreement for the sale or other disposition of a Restricted
Subsidiary or assets that restricts distributions by that Subsidiary or of
such assets pending such sale or other disposition;
(8) Permitted Refinancing Indebtedness, provided that the
restrictions contained in the agreements governing such Permitted
Refinancing Indebtedness are not materially more restrictive, taken as a
whole, than those contained in the agreements governing the Indebtedness
being refinanced;
(9) Liens securing Indebtedness that limit the right of the debtor to
dispose of the assets subject to such Lien; and
(10) provisions with respect to the disposition or distribution of
assets or property in asset sale agreements entered into in the ordinary
course of business.
MERGER, CONSOLIDATION OR SALE OF ASSETS
Avista Corp. may not, directly or indirectly: (1) consolidate or merge with
or into another Person (whether or not Avista Corp. is the surviving
corporation); or (2) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of Avista Corp. and its
Restricted Subsidiaries taken as a whole, in one or more related transactions,
to another Person; unless:
(1) either:
(a) Avista Corp. is the surviving corporation; or
(b) the Person formed by or surviving any such consolidation or
merger or to which such sale, assignment, transfer, conveyance or
other disposition shall have been made is either (i) a corporation
organized or existing under the laws of the United States, any state
thereof or the District of Columbia or (ii) a partnership or limited
liability company organized or existing under the laws of the United
States, any state thereof or the District of Columbia, in either case,
that has at least one Restricted Subsidiary that is a corporation
organized or existing under the laws of the United States, any state
thereof or the District of Columbia which corporation becomes a
co-issuer of the notes pursuant to a supplemental indenture in form
reasonably satisfactory to the trustee;
(2) the Person formed by or surviving any such consolidation or merger
(if other than Avista Corp.) or the Person to which such sale, assignment,
transfer, conveyance or other disposition shall have been made assumes all
the obligations of Avista Corp. under the notes and, the indenture pursuant
to agreements in form reasonably satisfactory to the trustee;
(3) immediately after such transaction no Default or Event of Default
exists; and
(4) either:
(a) Avista Corp. or the Person formed by or surviving any such
consolidation or merger (if other than Avista Corp.), or to which such
sale, assignment, transfer, conveyance or other disposition shall have
been made will, on the date of such transaction after giving pro forma
effect thereto and any related financing transactions as if the same
had occurred at the beginning of the applicable four-quarter period,
be permitted to incur at least $1.00 of additional Indebtedness,
either pursuant to the Fixed Charge Coverage Ratio test set forth in
the first paragraph of the covenant described above under the caption
"--Incurrence of Indebtedness and Issuance of Preferred Stock" or
because the Rating Condition is then satisfied; or
36
(b) on the date of such transaction after giving pro forma
effect thereto and any related financing transactions, as if the same
had occurred at the beginning of the applicable four-quarter period,
the pro forma Fixed Charge Coverage Ratio of the surviving Person (if
other than Avista Corp.) will exceed the actual Fixed Charge Coverage
Ratio of Avista Corp. as of such date.
In addition, Avista Corp. may not, directly or indirectly, lease all or
substantially all of its properties or assets, in one or more related
transactions, to any other Person.
TRANSACTIONS WITH AFFILIATES
Unless the Rating Condition is satisfied, Avista Corp. will not, and will
not permit any of its Restricted Subsidiaries to, make any payment to, or sell,
lease, transfer or otherwise dispose of any of its properties or assets to, or
purchase any property or assets from, or enter into or make or amend any
transaction, contract, agreement, understanding, loan, advance or guarantee
with, or for the benefit of, any Affiliate (each, an "Affiliate Transaction"),
unless:
(1) the terms of such Affiliate Transaction or series of related
Affiliate Transactions are no less favorable to Avista Corp. or such
Restricted Subsidiary, as the case may be, than those that would be
obtainable in a comparable transaction or series of related transactions in
arm's-length dealings with an unrelated third party; and
(2) Avista Corp. delivers to the trustee (i) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10 million, a resolution of the Board
of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (l) above and that such
Affiliate Transaction has been approved by a majority of the disinterested
members of the Board of Directors and (ii) with respect to any Affiliate
Transaction or series of related Affiliate Transactions involving aggregate
consideration in excess of $25 million, a written opinion of a nationally
recognized investment banking, accounting or appraisal firm stating that
such transaction or series of transactions is fair to the holders from a
financial point of view.
The following items will not be deemed to be Affiliate Transactions and,
therefore, will not be subject to the provisions of the prior paragraph:
(1) any employment, compensation or indemnification arrangement
entered into by Avista Corp. or any of its Restricted Subsidiaries in the
ordinary course of business with employees, directors, officers or
consultants;
(2) loans or advances to officers, directors, consultants and
employees in the ordinary course of business or guarantees in respect
thereof or otherwise made on their behalf (including any payments on such
guarantees);
(3) any redemption of Capital Stock held by employees upon death,
disability or termination of employment at a price not in excess of the
fair market value thereof;
(4) the grant of stock options or similar rights to employees and
directors of Avista Corp.;
(5) payment of reasonable directors fees;
(6) transactions between or among Avista Corp. and/or its Restricted
Subsidiaries; and
(7) Restricted Payments and Permitted Investments that are permitted
by the provisions of the indenture described above under the caption
"--Restricted Payments."
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SALE AND LEASEBACK TRANSACTIONS
Avista Corp. will not, and will not permit any of its Restricted
Subsidiaries to, enter into any Sale/Leaseback Transaction with respect to any
property owned on the date of the indenture or thereafter acquired unless:
(1) Avista Corp. or such Restricted Subsidiary would be entitled to
create a Lien on such property securing Indebtedness in an amount at least
equal to the Attributable Debt with respect to such transaction without
equally and ratably securing the notes pursuant to the covenant described
above under the caption "--Liens";
(2) the Net Proceeds of the sale are at least equal to the fair
market value (as determined by the Board of Directors) of the property sold
and Avista Corp. or such Restricted Subsidiary applies an amount in cash
equal to the net proceeds of such sale to the retirement, within 180 days
of the effective date of any such arrangement, of Indebtedness of Avista
Corp. or a Restricted Subsidiary or purchases other property having a fair
market value at least equal to the fair market value of the assets or
property sold in such transactions; or
(3) such Sale/Leaseback Transaction is between Avista Corp. and any
of its Restricted Subsidiaries or between any Restricted Subsidiaries of
Avista Corp.
In addition to the transactions permitted pursuant to the preceding paragraph,
Avista Corp. or any Restricted Subsidiary may enter into any other
Sale/Leaseback Transaction as long as the sum of:
(a) the Attributable Debt with respect to such Sale/Leaseback
Transaction and all other Sale/Leaseback Transactions entered into pursuant
to this proviso, plus
(b) the amount of outstanding Indebtedness secured by Liens incurred
pursuant to the final proviso to the covenant described under "--Liens",
does not exceed $25 million.
DESIGNATION OF RESTRICTED AND UNRESTRICTED SUBSIDIARIES
The Board of Directors may designate any Restricted Subsidiary to be an
Unrestricted Subsidiary if that designation would not cause a Default. If a
Restricted Subsidiary is designated as an Unrestricted Subsidiary, the aggregate
fair market value of all outstanding Investments owned by Avista Corp. and its
Restricted Subsidiaries in the Subsidiary so designated will be deemed to be an
Investment made as of the time of such designation and will either reduce the
amount available for Restricted Payments under the first paragraph of the
covenant described above under the caption "--Restricted Payments" or reduce the
amount available for future Investments under one or more clauses of the
definition of Permitted Investments, or both, as Avista Corp. shall determine.
That designation will be permitted only if such Investment would be permitted at
that time and if such Restricted Subsidiary otherwise meets the definition of an
Unrestricted Subsidiary. The Board of Directors may redesignate any Unrestricted
Subsidiary to be a Restricted Subsidiary if the redesignation would not cause a
Default. Any designation by the Board of Directors shall be evidenced to the
trustee by filing with the trustee a certified copy of the board resolution
giving effect to the designation and an Officer's Certificate certifying that
the designation complied with these conditions and was permitted by the
"Restricted Payments" covenant.
If, at any time, any Unrestricted Subsidiary would fail to meet the
requirements of the definition of an Unrestricted Subsidiary, it shall
thereafter cease to be an Unrestricted Subsidiary for purposes of the Indenture
and any Indebtedness of the Subsidiary will be deemed to be incurred by a
Restricted Subsidiary of Avista Corp. as of that date (and, if such Indebtedness
is not permitted to be incurred as of that date under the covenant describes
under the caption "--Incurrence of Indebtedness and Issuance of Preferred
Stock", Avista Corp. will be in default of such covenant).
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The Board of Directors of Avista Corp. may at any time designate any
Unrestricted Subsidiary to be a Restricted Subsidiary; provided that such
designation will be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of Avista Corp. of any outstanding Indebtedness of such Unrestricted
Subsidiary and such designation will be permitted only if (i) such Indebtedness
is permitted under the covenant described under the caption "--Incurrence of
Indebtedness and Issuance of Preferred Stock", calculated on a pro forma basis
as if the designation had occurred at the beginning of the four-quarter period,
and (ii) no Default or Event of Default would be in existence following the
designation.
REPORTS
Whether or not required by the rules and regulations of the SEC, so long as
any notes are outstanding, Avista Corp. will furnish to the holders of notes,
within the time periods specified in the SEC's rules and regulations:
(1) all quarterly and annual financial information that would be
required to be contained in a filing with the SEC on Forms 10-Q and 10-K,
including a "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and, with respect to the annual information
only, a report on the annual financial statements by Avista Corp.'s
certified independent accountants; and
(2) all current reports that would be required to be filed with the
SEC on Form 8-K.
In addition, whether or not required by the rules and regulations of the
SEC, Avista Corp. will file a copy of all of the information and reports
referred to in clauses (1) and (2) above with the SEC for public availability
within the time periods specified in the SEC's rules and regulations (unless the
SEC will not accept such a filing) and make such information available to
securities analysts and prospective investors upon request. Avista Corp. has
also agreed that, for so long as any Old Notes remain outstanding, it will
furnish to the holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
EVENTS OF DEFAULT AND REMEDIES
Each of the following is an Event of Default:
(1) default continued for 30 days in the payment when due of interest
on, the notes;
(2) default in payment when due of the principal of, or premium, if
any, on the notes;
(3) failure by Avista Corp. or any of its Restricted Subsidiaries to
comply with any of the provisions described under the captions"--Repurchase
at the Option of Holders--Change of Control", "--Repurchase at the Option
of Holders--Assets Sales" or "Certain Other Covenants--Merger,
Consolidation or Sale of Assets;"
(4) default in performance of any other agreements in the indenture
or in the notes for 30 days after written notice to Avista Corp. by the
trustee or to Avista Corp. and the trustee by the holders of at least 25%
in principal amount on the notes then outstanding;
(5) there shall have occurred either (i) a default by Avista Corp. or
any Restricted Subsidiary under any instrument or instruments under which
there is or may be secured or evidenced any Indebtedness of Avista Corp. or
any Restricted Subsidiary of Avista Corp. (other than the notes) having an
outstanding principal amount of $25 million or more that has caused the
holders thereof to declare such Indebtedness to be due and payable prior to
its maturity or (ii) a default by Avista Corp. or any Restricted Subsidiary
39
in the payment at maturity of the principal under any such instrument, and
such unpaid portion exceeds $25 million and is not paid, or such default is
not cured or waived, within any grace period applicable thereto, unless
such acceleration is rescinded or annulled or such Indebtedness is
discharged within 20 days of Avista Corp. or a Restricted Subsidiary
becoming aware of such default; provided, however, that this clause (5)
shall not apply to any default on Non-Recourse Debt;
(6) any final judgment or order for the payment of money shall be
rendered against Avista Corp., or any Restricted Subsidiary of Avista Corp.
that is a Significant Subsidiary, in an amount in excess of $25 million and
shall not be discharged, and there shall be any period of 30 consecutive
days following entry of the final judgment or order in excess of $25
million during which a stay of enforcement of such final judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect;
(7) certain events of bankruptcy or insolvency with respect to Avista
Corp. or any Restricted Subsidiary of Avista Corp. that is a Significant
Subsidiary; and
(8) except as permitted by the indenture, any guarantee of the notes
is held in any judicial proceeding to be unenforceable or invalid or shall
cease for any reason to be in full force and effect or any guarantor, or
any Person acting on behalf of any guarantor, shall deny or disaffirm its
obligations under such guarantor's guarantee of the notes.
In the case of an Event of Default arising from certain events of
bankruptcy or insolvency, with respect to Avista Corp. or any Restricted
Subsidiary that is a Significant Subsidiary of Avista Corp., all outstanding
notes will become due and payable immediately without further action or notice.
If any other Event of Default occurs and is continuing, the trustee or the
holders of at least 25% in principal amount of the then outstanding notes may
declare all the notes to be due and payable immediately.
Holders of the notes may not enforce the indenture or the notes except as
provided in the indenture. Subject to certain limitations, holders of a majority
in principal amount of the then outstanding notes may direct the trustee in its
exercise of any trust or power. The trustee may withhold from holders of the
notes notice of any continuing Default or Event of Default (except a Default or
Event of Default relating to the payment of principal or interest if it
determines that withholding notice is in their interest.
The holders of a majority in aggregate principal amount of the notes then
outstanding by notice to the trustee may on behalf of the holders of all of the
notes waive any existing Default or Event of Default and its consequences under
the indenture except a continuing Default or Event of Default in the payment of
interest on, premium, if any, or the principal of, the notes.
Avista Corp. is required to deliver to the trustee annually a statement
regarding compliance with the indenture. Upon becoming aware of any Default or
Event of Default, Avista Corp. is required to deliver to the trustee a statement
specifying such Default or Event of Default.
NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS
No director, officer, employee, incorporator, controlling person or
stockholder of Avista Corp., as such, shall have any liability for any
obligations of Avista Corp. under the notes or the indenture, or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each holder of notes by accepting a note waives and releases all such liability.
The waiver and release are part of the consideration for issuance of the notes.
The waiver may not be effective to waive liabilities under the federal
securities laws.
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Avista Corp. may, at its option and at any time, elect to have all of its
obligations discharged with respect to all or a portion of the outstanding notes
("Legal Defeasance") except for:
(1) the rights of holders of outstanding notes to receive payments in
respect of the principal of, or interest or premium, if any, on such notes,
when such payments are due from the trust referred to below;
40
(2) Avista Corp.'s obligations with respect to the notes concerning
issuing temporary notes, registration of notes, mutilated, destroyed, lost
or stolen notes and the maintenance of an office or agency for payment and
money for security payments held in trust;
(3) the rights, powers, trusts, duties and immunities of the trustee,
and Avista Corp.'s obligations in connection therewith; and
(4) the Legal Defeasance provisions of the indenture.
In addition, Avista Corp. may, at its option and at any time, elect to have
the obligations of Avista Corp. released with respect to certain covenants that
are described in the indenture ("Covenant Defeasance") and thereafter any
omission to comply with those covenants shall not constitute a Default or Event
of Default with respect to the notes. In the event Covenant Defeasance occurs,
certain events (not including non-payment, bankruptcy, receivership,
rehabilitation and insolvency events) described under "-Events of Default" will
no longer constitute an Event of Default with respect to the notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(1) Avista Corp. must irrevocably deposit with the trustee, in trust,
for the benefit of the holders of the notes (or, in the case of Legal
Defeasance, a specified principal amount thereof), cash in U.S. dollars,
non-callable Government Securities, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants to pay the principal of, premium, if
any, and interest on the notes (or in the case of Legal Defeasance, such
specified principal amount thereof) on the stated maturity or prior
Redemption Date thereof, as the case may be,
(2) in the case of Legal Defeasance, Avista Corp. shall have
delivered to the trustee:
(a) an opinion of counsel in the United States reasonably
acceptable to the trustee confirming that (i) Avista Corp. has
received from, or there has been published by, the Internal Revenue
Service a ruling or (ii) since the date of the indenture, there has
been a change in the applicable federal income tax law, in either case
to the effect that, and based thereon such opinion of counsel shall
confirm that, the holders of the outstanding notes will not recognize
income, gain or loss for federal income tax purposes as a result of
such Legal Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred; or
(b)(i) an instrument wherein Avista Corp., notwithstanding the
satisfaction and discharge of its Indebtedness in respect of the notes
or a portion of the principal amount thereof, shall assume the
obligation (which shall be absolute and unconditional) to irrevocably
deposit with the trustee such additional sums of money, if any, or
additional Government Securities, if any, or any combination thereof,
at such time or times, as shall be necessary, together with the money
and/or Government Securities theretofore so deposited, to pay when due
the principal of and premium, if any, and interest due and to become
due on such notes or portions thereof, provided, however, that such
instrument may state that the obligation of Avista Corp. to make
additional deposits as aforesaid shall arise only upon the delivery to
Avista Corp. by the trustee of a notice asserting the deficiency and
showing the calculation thereof and shall continue only until Avista
Corp. shall have delivered to the trustee a further opinion of an
independent public accountant of nationally recognized standing to the
effect that no such deficiency exists and showing the calculation of
the sufficiency of the deposits then held by the trustee; and (ii) an
opinion of recognized tax counsel in the United States reasonably
acceptable to the trustee to the effect that the holders of the
outstanding notes will not recognize income, gain or loss for federal
income tax purposes as a result of such Legal Defeasance and will be
subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal
Defeasance had not occurred;
41
(3) in the case of Covenant Defeasance, Avista Corp. shall have
delivered to the trustee an opinion of counsel reasonably acceptable to the
trustee confirming that the holders of the outstanding notes will not
recognize income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(4) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit;
(5) such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material
agreement or instrument (other than the indenture) to which Avista Corp. or
any of it Subsidiaries is a party or by which Avista Corp. or any of its
Subsidiaries is bound;
(6) Avista Corp. must deliver to the trustee an opinion of counsel to
the effect that (assuming that no holder of any notes would be considered
an insider of Avista Corp. under applicable bankruptcy or insolvency law)
after the 123rd day following the deposit, the trust funds will not
constitute a "voidable preference" under Section 547 of the Bankruptcy
Code;
(7) Avista Corp. must deliver to the trustee an Officers' Certificate
stating that the deposit was not made by Avista Corp. with the intent of
preferring the holders of notes over the other creditors of Avista Corp. or
with the intent of defeating, hindering, delaying or defrauding creditors
of Avista Corp. or others; and
(8) Avista Corp. must deliver to the trustee an Officers' Certificate
and an opinion of counsel (with usual and customary exceptions acceptable
to the trustee), each stating that all conditions precedent relating to the
Legal Defeasance or the Covenant Defeasance have been complied with.
AMENDMENT, SUPPLEMENT AND WAIVER
Except as provided in the next two succeeding paragraphs, the indenture or
the notes may be amended or supplemented with the consent of the holders of at
least a majority in principal amount of the notes then outstanding (including,
without limitation, consents obtained in connection with a purchase of, or
tender offer or exchange offer for, notes), and any existing default or
compliance with any provision of the indenture or the notes may be waived with
the consent of the holders of a majority in principal amount of the then
outstanding notes (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, notes).
Without the consent of each holder affected, an amendment or waiver may not
(with respect to any notes held by a non-consenting holder):
(1) reduce the principal amount of notes whose holders must consent
to an amendment, supplement or waiver;
(2) reduce the principal of or change the fixed maturity of any note;
(3) reduce the rate of or change the time for payment of interest on
any note;
(4) waive a Default or Event of Default in the payment of principal
of, or interest or premium, if any, on the notes (except a rescission of
acceleration of the notes by the holders of at least a majority in
aggregate principal amount of the then outstanding notes and a waiver of
the payment default that resulted from such acceleration);
(5) make any note payable in money other than that stated in the
notes;
(6) make any change in the provisions of the indenture relating to
waivers of past Defaults or the rights of holders of notes to receive
payments of principal of, or interest or premium, if any, on the notes; and
(7) make any change in the preceding amendment and waiver provisions.
42
Notwithstanding the preceding, without the consent of any holder of notes,
Avista Corp. and the trustee may amend or supplement the indenture or the notes:
(1) to cure any ambiguity, defect or inconsistency;
(2) to provide for uncertificated notes in addition to or in place of
certificated notes;
(3) to provide for the assumption of Avista Corp.'s obligations to
holders of notes in the case of a merger or consolidation or sale of all or
substantially all of Avista Corp.'s assets;
(4) to make any change that would provide any additional rights or
benefits to the holders of notes or that does not adversely affect the
legal rights under the indenture of any such holder;
(5) to comply with requirements of the SEC in order to effect or
maintain the qualification of the indenture under the Trust Indenture Act,
or
(6) to evidence and provide the acceptance of the appointment of a
successor trustee under the indenture.
SATISFACTION AND DISCHARGE
The indenture will be discharged and will cease to be of further effect as
to all notes issued thereunder except as to:
(1) Avista Corp.'s right to redeem the notes at its option;
(2) substitution of apparently mutilated, defaced, destroyed, lost or
stolen notes;
(3) rights of holders to receive payment of principal of and premium,
if any, and interest on the notes;
(4) rights, obligations an immunity of the trustee under the
indenture; and
(5) rights of the holder of notes with respect to any property
deposited with the trustee payable to all or any of them,
if:
(1) either (a) all notes that have been authenticated (except lost,
stolen or destroyed notes that have been replaced or paid and notes for
whose payment money has theretofore been deposited in trust and thereafter
repaid to Avista Corp.) have been delivered to the trustee for
cancellation; or (b) a Legal Defeasance has been effected with respect to
all notes that have not been so delivered;
(2) no Default or Event of Default shall have occurred and be
continuing on the date Legal Defeasance has occurred or shall occur as a
result of such Legal Defeasance and such Legal Defeasance will not result
in a breach or violation of, or constitute a default under, any other
material instrument to which Avista Corp. is a party or by which Avista
Corp. is bound;
(3) Avista Corp. has paid or caused to be paid all sums payable by it
under the indenture; and
(4) Avista Corp. has delivered irrevocable instructions to the
trustee under the indenture to apply the deposited money toward the payment
of the notes at the maturity date of the notes.
In addition, Avista Corp. must deliver an Officers' Certificate and an
Opinion of Counsel to the trustee stating that all conditions precedent to
satisfaction and discharge have been satisfied.
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CONCERNING THE TRUSTEE
If the trustee becomes a creditor of Avista Corp., the indenture limits its
right to obtain payment of claims in certain cases, or to realize on certain
property received in respect of any such claim as security or otherwise. The
trustee will be permitted to engage in other transactions; however, if it
acquires any conflicting interest it must eliminate such conflict within 90
days, apply to the SEC for permission to continue or resign.
The holders of a majority in principal amount of the then outstanding notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the trustee, subject to
certain exceptions. The indenture provides that in case an Event of Default
shall occur and be continuing, the trustee will be required, in the exercise of
its power, to use the degree of care of a prudent man in the conduct of his own
affairs. Subject to such provisions, the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
holder of notes, unless such holder shall have offered to the trustee security
and indemnity satisfactory to it against any loss, liability or expense.
BOOK-ENTRY, DELIVERY AND FORM
The New Notes initially will be represented by one or more notes in
registered, global form without interest coupons (collectively, the "Global
Notes"). Upon issuance, the Global Notes will be deposited upon issuance with
the trustee as custodian for The Depository Trust Company ("DTC"), in New York,
New York, and registered in the name of DTC or its nominee, in each case for
credit to an account of a direct or indirect participant in DTC as described
below.
Except as set forth below, the Global Notes may be transferred, in whole
and not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for notes
in certificated form except in the limited circumstances described below. See
"--Exchange of Global Notes for Certificated Notes." Except in the limited
circumstances described below, owners of beneficial interests in the Global
Notes will not be entitled to receive physical delivery of notes in certificated
form. In addition, transfers of beneficial interests in the Global Notes will be
subject to the applicable rules and procedures of DTC and its direct or indirect
participants (including, if applicable, those of the Euroclear System
("Euroclear") and Clearstream Banking ("Clearstream")), which may change from
time to time.
DEPOSITORY PROCEDURES
The following description of the operations and procedures of DTC,
Euroclear and Clearstream are provided solely as a matter of convenience. These
operations and procedures are solely within the control of the respective
settlement systems and are subject to changes by them from time to time. Avista
Corp. takes no responsibility for these operations and procedures and urges
investors to contact the system or their participants directly to discuss these
matters.
DTC has advised Avista Corp. that DTC is a limited-purpose trust company
organized under the laws of the State of New York, a member of the Federal
Reserve System, a "clearing corporation" within the meaning of the Uniform
Commercial Code and a "Clearing Agency" registered pursuant to the provisions of
Section 17A of the Exchange Act. DTC was created to hold securities for its
participating organizations (collectively, the "Participants") and to facilitate
the clearance and settlement of transactions in those securities between
Participants through electronic book-entry changes in accounts of its
Participants. The Participants include securities brokers and dealers (including
the initial purchasers), banks, trust companies, clearing corporations and
certain other organizations. Access to DTC's system is also available to other
entities such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a Participant, either directly or
indirectly (collectively, the "Indirect Participants"). Persons who are not
Participants may beneficially own securities held by or on behalf of DTC only
through the Participants or the Indirect Participants. The ownership interests
in, and transfers of ownership interests in, each security held by or on behalf
of DTC are recorded on the records of the Participants and Indirect
Participants.
DTC has also advised Avista Corp. that, pursuant to procedures established
by it:
44
(1) Upon deposit of the Global Notes representing the Old Notes, DTC
credited the accounts of Participants designated by the initial purchasers
of the Old Notes with portions of the principal amount of such Global
Notes; and
(2) ownership of interests in the Global Notes representing Old Notes
are, and ownership of interests in New Notes will be, shown on, and the
transfer of ownership thereof will be effected only through, records
maintained by DTC (with respect to the Participants) or by the Participants
and the Indirect Participants (with respect to other owners of beneficial
interest in the Global Notes).
Investors in the Global Notes who are Participants in DTC's system may hold
their interests therein directly through DTC. Investors in the Global Notes who
are not Participants may hold their interests therein indirectly through
organizations (including Euroclear and Clearstream) which are Participants in
such system. Euroclear and Clearstream will hold interests in Global Notes on
behalf of their participants through customers' securities accounts in their
respective names on the books of their respective depositories, which are
Euroclear Bank, S.A./N.V., as operator of Euroclear, and Citibank, N.A., as
operator of Clearstream. All interests in a Global Note, including those held
through Euroclear or Clearstream, may be subject to the procedures and
requirements of DTC. Those interests held through Euroclear or Clearstream may
also be subject to the procedures and requirements of such systems. The laws of
some states require that certain Persons take physical delivery in definitive
form of securities that they own. Consequently, the ability to transfer
beneficial interests in a Global Note to such Persons will be limited to that
extent. Because DTC can act only on behalf of Participants, which in turn act on
behalf of Indirect Participants, the ability of a Person having beneficial
interests in a Global Note to pledge such interests to Persons that do not
participate in the DTC system, or otherwise take actions in respect of such
interests, may be affected by the lack of a physical certificate evidencing such
interests.
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTES WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
"HOLDERS" THEREOF UNDER THE INDENTURE OR THE NOTES FOR ANY PURPOSE.
Payments in respect of the principal of, and interest and premium, if any,
on a Global Note registered in the name of DTC or its nominee, will be payable
to DTC in its capacity as the registered Holder under the indenture. Under the
terms of the indenture, Avista Corp. and the trustee will treat the Persons in
whose names the notes, including the Global Notes, are registered as the owners
thereof for the purpose of receiving payments and for all other purposes.
Consequently, neither Avista Corp., the trustee nor any agent of Avista Corp. or
the trustee has or will have any responsibility or liability for:
(1) any aspect of DTC's records or any Participant's or Indirect
Participant's records relating to or payments made on account of beneficial
ownership interests in the Global Notes or for maintaining, supervising or
reviewing any of DTC's records or any Participant's or Indirect
Participant's records relating to the beneficial ownership interests in the
Global Notes; or
(2) any other matter relating to the actions and practices of DTC or
any of its Participants or Indirect Participants.
DTC has advised Avista Corp. that its current practice, upon receipt of any
payment in respect of securities (including principal and interest), is to
credit the accounts of the relevant Participants with the payment on the payment
date unless DTC has reason to believe it will not receive payment on such
payment date. Each relevant Participant is credited with an amount proportionate
to its beneficial ownership of an interest in the principal amount of the
relevant security as shown on the records of DTC. Payments by the Participants
and the Indirect Participants to the beneficial owners of notes will be governed
by standing instructions and customary practices and will be the responsibility
of the Participants or the Indirect Participants and will not be the
responsibility of DTC, the trustee or Avista Corp. Neither Avista Corp. nor the
trustee will be liable for any delay by DTC or any of its Participants in
identifying the beneficial owners of the notes, and Avista Corp. and the trustee
may conclusively rely on and will be protected in relying on instructions from
DTC or its nominee for all purposes.
45
DTC has also advised Avista Corp. that, transfers between Participants in
DTC will be effected in accordance with DTC's procedures, and will be settled in
same-day funds and transfers between participants in Euroclear and Clearstream
will be effected in accordance with their respective rules and operating
procedures.
Subject to compliance with the applicable transfer and exchange
restrictions described herein, cross-market transfers between the Participants
in DTC, on the one hand, and Euroclear or Clearstream participants, on the other
hand, will be effected through DTC in accordance with DTC's rules on behalf of
Euroclear or Clearstream, as the case may be, by its respective depositary;
however, such cross-market transactions will require delivery of instructions to
Euroclear or Clearstream, as the case may be, by the counterparty in such system
in accordance with the rules and procedures and within the established deadlines
(Brussels time) of such system. Euroclear or Clearstream, as the case may be,
will, if the transaction meets its settlement requirements, deliver instructions
to its respective depositary to take action to effect final settlement on its
behalf by delivering or receiving interests in the relevant Global Note in DTC,
and making or receiving payment in accordance with normal procedures for
same-day funds settlement applicable to DTC. Euroclear participants and
Clearstream participants may not deliver instructions directly to the
depositories for Euroclear or Clearstream.
DTC has advised Avista Corp. that it will take any action permitted to be
taken by a Holder of notes only at the direction of one or more Participants to
whose account DTC has credited the interests in the Global Notes and only in
respect of such portion of the aggregate principal amount of the notes as to
which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the notes, DTC reserves the right
to exchange the Global Notes for legended notes in certificated form, and to
distribute such notes to its Participants.
Although DTC, Euroclear and Clearstream have agreed to the foregoing
procedures to facilitate transfers of interests in the Global Notes among
participants in DTC, Euroclear and Clearstream, they are under no obligation to
perform or to continue to perform such procedures, and may discontinue such
procedures at any time. Neither Avista Corp. nor the trustee nor any of their
respective agents will have any responsibility for the performance by DTC,
Euroclear or Clearstream or their respective participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.
EXCHANGE OF GLOBAL NOTES FOR CERTIFICATED NOTES
A Global Note is exchangeable for definitive notes in registered
certificated form ("Certificated Notes") if:
(1) DTC (a) notifies Avista Corp. that it is unwilling or unable to
continue as depositary for the Global Notes and Avista Corp. fails to
appoint a successor depositary or (b) has ceased to be a clearing agency
registered under the Exchange Act and Avista Corp. fails to appoint a
successor depositary;
(2) Avista Corp., at its option, notifies the trustee in writing that
it elects to cause the issuance of the Certificated Notes; or
(3) there shall have occurred and be continuing a Default or Event of
Default with respect to the notes.
In addition, beneficial interests in a Global Note may be exchanged for
Certificated Notes upon prior written notice given to the trustee by or on
behalf of DTC in accordance with the indenture. In all cases, Certificated Notes
delivered in exchange for any Global Note or beneficial interests in Global
Notes will be registered in the names, and issued in any approved denominations,
requested by or on behalf of DTC (in accordance with its customary procedures).
Any such exchange will be effected through the DTC Deposit/Withdraw at Custodian
system and an appropriate adjustment will be made to reflect a decrease in the
principal amount of the relevant Global Note.
SAME DAY SETTLEMENT AND PAYMENT
Avista Corp. will make payments in respect of the notes represented by the
Global Notes (including principal, premium, if any, and interest by wire
transfer of immediately available funds to the accounts specified by the Global
46
Note Holder. Avista Corp. will make all payments of principal, interest and
premium with respect to Certificated Notes by wire transfer of immediately
available funds to the accounts specified by the Holders thereof or, if no such
account is specified, by mailing a check to each such Holder's registered
address. The notes represented by the Global Notes are expected to trade in
DTC's Same-Day Funds Settlement System, and any permitted secondary market
trading activity in such notes will, therefore, be required by DTC to be settled
in immediately available funds. Avista Corp. expects that secondary trading in
any Certificated Notes will also be settled in immediately available funds.
Because of time zone differences, the securities account of a Euroclear or
Clearstream participant purchasing an interest in a Global Note from a
Participant in DTC will be credited, and any such crediting will be reported to
the relevant Euroclear or Clearstream participant, during the securities
settlement processing day (which must be a business day for Euroclear and
Clearstream) immediately following the settlement date of DTC. DTC has advised
Avista Corp. that cash received in Euroclear or Clearstream as a result of sales
of interests in a Global Note by or through a Euroclear or Clearstream
participant to a Participant in DTC will be received with value on the
settlement date of DTC but will be available in the relevant Euroclear or
Clearstream cash account only as of the business day for Euroclear or
Clearstream following DTC's settlement date.
GOVERNING LAW
The internal laws of the state of New York will govern and be used to
construe the indenture without giving effect to applicable principles of
conflicts of law to the extent that the application of the laws of another
jurisdiction would be required thereby.
CERTAIN DEFINITIONS
Set forth below are certain defined terms used in the indenture. Reference
is made to the indenture for a full disclosure of all such terms, as well as any
other capitalized terms used herein for which no definition is provided.
"Acquired Debt" means, with respect to any specified Person:
(1) Indebtedness of any other Person existing at the time such other
Person is merged with or into or became a Subsidiary of such specified
Person, whether or not such Indebtedness is incurred in connection with, or
in contemplation of, such other Person merging with or into, or becoming a
Subsidiary of, such specified Person; and
(2) Indebtedness secured by a Lien encumbering any asset acquired by
such specified Person.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control",
as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise; provided that beneficial ownership of 10% or more of the
Voting Stock of a Person shall be deemed to be control. For purposes of this
definition, the terms "controlling", "controlled by" and "under common control
with" shall have correlative meanings.
"Asset Sale" means any sale, transfer or other disposition (including by
way of merger, consolidation or Sale/Leaseback Transaction) in one or a series
of transactions by Avista Corp. or any Restricted Subsidiary to any Person other
than Avista Corp. or any Restricted Subsidiary of Avista Corp., of:
(1) all or any of the Capital Stock of any Restricted Subsidiary of
Avista Corp.;
(2) all or substantially all of the assets of any operating unit,
Facility, division or line of business of Avista Corp. or any Restricted
Subsidiary; or
47
(3) any other property or assets or rights to acquire property or
assets of Avista Corp. or any Restricted Subsidiary of Avista Corp. outside
of the ordinary course of business of Avista Corp. or such Restricted
Subsidiary.
Notwithstanding the preceding, the following items shall not be deemed to
be Asset Sales:
(1) any single transaction or series of related transactions that
involves assets having a fair market value of less than $10 million;
(2) an issuance of Equity Interests by a Restricted Subsidiary to
Avista Corp. or to another Restricted Subsidiary of Avista Corp.;
(3) any sale or lease of obsolete equipment or other assets that are
no longer being used by Avista Corp. or any of its Restricted Subsidiaries;
(4) any primary offering of Common Stock of Avista Communications,
Avista Advantage or Avista Labs, or any Subsidiary of any of them, provided
that the issuer of such Common Stock is operating substantially the same
business as is conducted by such issuer (or in case of a Subsidiary, all or
a portion of the same business as is conducted by the respective parent
company named above in this clause (4)) as of the date of the indenture;
(5) a Restricted Payment or Permitted Investment that is not
prohibited by the covenant described above under the caption "-Certain
Covenants--Restricted Payments"; and
(6) any disposition of property or assets by a Restricted Subsidiary
of Avista Corp. to Avista Corp. or by Avista Corp. or a Restricted
Subsidiary of Avista Corp. to a Restricted Subsidiary of Avista Corp.
"Attributable Debt" means, in respect of a Sale/Leaseback Transaction, as
of the time of determination, the present value discounted at the interest rate
assumed in making calculations in accordance with GAAP of the total obligations
of the lessee for rental payments during the remaining term of the lease
included in such Sale/Leaseback Transaction, including any period for which such
lease has been extended or may be extended at the option of the lessor.
"Beneficial Owner" has the meaning assigned to such term in Rule 13d-3 and
Rule 13d-5 under the Exchange Act. The terms "Beneficially Owns" and
"Beneficially Owned" shall have a corresponding meaning.
"Board of Directors" means:
(1) with respect to a corporation, the board of directors of the
corporation or any duly authorized committee of such board of directors;
(2) with respect to a partnership, the Board of Directors of the
general partner of the partnership; and
(3) with respect to any other Person, the board or committee of such
Person serving a similar function.
"Capital Lease Obligation" means, at the time any determination thereof is
to be made, the amount of the liability in respect of a capital lease that would
at that time be required to be capitalized on a balance sheet in accordance with
GAAP.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents, however designated, of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of the Person.
"Cash Equivalents" means:
48
(1) United States dollars;
(2) securities issued or directly and fully guaranteed or insured by
the United States government or any agency or instrumentality thereof
(provided that the full faith and credit of the United States is pledged in
support thereof) having maturities of not more than twelve months from the
date of acquisition;
(3) certificates of deposit and eurodollar time deposits with
maturities of twelve months or less from the date of acquisition, bankers'
acceptances with maturities not exceeding twelve months and overnight bank
deposits, in each case, issued or accepted by any financial institution
organized under the laws of the United States or any state thereof or the
District of Columbia that either (x) has a long-term deposit rating of at
least A-2 from Moody's and A from S&P or (y) is at least "adequately
capitalized" (as defined in the regulations of its primary federal banking
regulator) and (b) has Tier 1 Capital (as defined in such regulations) of
not less than $100,000,000;
(4) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (2) and (3)
above entered into with any financial institution meeting the
qualifications specified in clause (3) above;
(5) commercial paper having the highest rating obtainable from
Moody's or S&P (or in their absence an equivalent rating from another
nationally recognized securities rating agency) and in each case maturing
within twelve months after the date of acquisition; and
(6) money market funds at least 95% of the assets of which constitute
Cash Equivalents of the kinds described in clauses (1) through (5) of this
definition.
"Change of Control" means the occurrence of any of the following:
(1) the direct or indirect sale, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all of the
properties or assets of Avista Corp. and its Restricted Subsidiaries taken
as a whole to any "person" (as that term is used in Section 13(d)(3) of the
Exchange Act);
(2) the adoption of a plan relating to the liquidation or dissolution
of Avista Corp. other than in a transaction that complies with the
provisions of the covenant described above under "-Certain
Covenants--Merger, Consolidation or Sale of Assets";
(3) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above) becomes the Beneficial Owner, directly or
indirectly, of more than 35% of the Voting Stock of Avista Corp., measured
by voting power rather than number of shares;
(4) the first day on which a majority of the members of the Board of
Directors of Avista Corp. are not Continuing Directors; or
(5) Avista Corp. consolidates with, or merges with or into, any
Person, or any Person consolidates with, or merges with or into, Avista
Corp., in any such event pursuant to a transaction in which any of the
outstanding Voting Stock of Avista Corp. or such other Person is converted
into or exchanged for cash, securities or other property, other than any
such transaction where the Voting Stock of Avista Corp. outstanding
immediately prior to such transaction is converted into or exchanged for
Voting Stock (other than Disqualified Stock) of the surviving or transferee
Person constituting a majority of the outstanding shares of such Voting
Stock of such surviving or transferee Person (immediately after giving
effect to such issuance).
"Commodity Price Protection Obligation" means any forward contract,
commodity swap, commodity option or other similar financial agreement or
arrangement relating to, or the value of which is dependent on, fluctuations in
commodity prices entered into in the ordinary course of business.
49
"Common Stock" of any Person means any class of Capital Stock of such
Person that has no preference, as to dividends or upon liquidation, over any
other class of Capital Stock of such Person and that is not convertible into or
exchangeable for any other class of Capital Stock or other securities of such
Person.
"Consolidated Cash Flow" means, with respect to any specified Person for
any period, the Consolidated Net Income of such Person for such period plus:
(1) provision for taxes based on income or profits of such Person and
its Restricted Subsidiaries for such period, to the extent that such
provision for taxes was deducted in computing such Consolidated Net Income;
plus
(2) consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued and whether or not
capitalized (including, without limitation, amortization of debt issuance
costs (other than those in existence on or created on the date of the
indenture) and original issue discount, non-cash interest payments, the
interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations,
imputed interest with respect to Attributable Debt, commissions, discounts
and other fees and charges incurred in respect of letter of credit or
bankers' acceptance financings, and net of the effect of all payments made
or received pursuant to Hedging Obligations), to the extent that any such
expense was deducted in computing such Consolidated Net Income; plus
(3) depreciation, amortization (including amortization of goodwill
and other intangibles but excluding amortization of prepaid cash expenses
that were paid in a prior period, and excluding amortization of power and
natural gas cost deferrals, to the extent such deferrals were previously
financed with Indebtedness permitted by clause (9) of the definition of
Permitted Debt) and other non-cash expenses (excluding any such non-cash
expense to the extent that it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense
that was paid in a prior period) of such Person and its Restricted
Subsidiaries for such period to the extent that such depreciation,
amortization and other non-cash expenses were deducted in computing such
Consolidated Net Income; minus
(4) non-cash items increasing such Consolidated Net Income for such
period (including power and natural gas cost deferrals, but only to the
extent not financed with Indebtedness permitted by clause (9) of the
definition of Permitted Debt) in each case, on a consolidated basis and
determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any specified Person for
any period, the aggregate of the net income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(1) the net income (but not loss) of any Person that is not a
Restricted Subsidiary or that is accounted for by the equity method of
accounting shall be included only to the extent of the amount of dividends
or distributions paid in cash to the specified Person or a Wholly Owned
Subsidiary thereof;
(2) the net income of any Restricted Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar
distributions by the Restricted Subsidiary of that net income is not at the
date of determination permitted without any prior governmental approval
(that has not been obtained) or, directly or indirectly, by operation of
the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to that
Restricted Subsidiary or its stockholders;
(3) the net income of any Person acquired in a pooling of interests
transaction for any period prior to the date of such acquisition shall be
excluded;
(4) the cumulative effect of a change in accounting principles shall
be excluded;
50
(5) all extraordinary or nonrecurring gains and losses (including
without limitation any one-time costs incurred in connection with
acquisitions, or regulatory disallowances or write-offs of regulatory
assets) shall be excluded; and
(6) any gain or loss realized upon the sale or other disposition of
any property, plant or equipment of Avista Corp. or its Restricted
Subsidiaries (including pursuant to any sale-and-leaseback arrangement)
which is not sold or otherwise disposed of in the ordinary course of
business and any gain or loss realized upon the sale or other disposition
by Avista Corp. or any Restricted Subsidiary of any Capital Stock of any
Person shall be excluded.
"Continuing Directors" means, as of any date of determination, any member
of the Board of Directors of Avista Corp. who:
(1) was a member of such Board of Directors on the date of the
indenture; or
(2) was nominated for election or elected to such Board of Directors
with the approval of a majority of the Continuing Directors who were
members of such Board at the time of such nomination or election.
"Credit Facilities" means one or more debt facilities or commercial paper
facilities, in each case with banks or other institutional lenders providing for
revolving credit loans, term loans, or letters of credit, in each case, as
amended, restated, modified, renewed, refunded, restructured, supplemented,
replaced or refinanced in whole or in part from time to time, including without
limitation any amendment increasing the amount of Indebtedness incurred or
available to be borrowed thereunder, extending the maturity of any Indebtedness
incurred thereunder or contemplated thereby or deleting, adding or substituting
one or more parties thereto (whether or not with banks or other institutional
lenders).
"Currency Hedging Obligations" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect against the fluctuations in currency values entered into in the ordinary
course of business and not for speculative purposes.
"Debt Rating" shall mean the rating assigned to the notes offered hereby by
Moody's or S&P, as the case may be.
"Default" means any event that is, or with the passage of time or the
giving of notice or both would be, an Event of Default.
"Disinterested Director" means, with respect to any transaction or series
of related transactions, a member of the Board of Directors of Avista Corp. who
does not have any material direct or indirect financial interest in or with
respect to such transaction or series of related transactions.
"Disqualified Stock" means any Capital Stock that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable at the option of the holder
thereof, in whole or in part, on or prior to the date on which the notes mature.
Notwithstanding the preceding sentence, any Capital Stock that would constitute
Disqualified Stock solely because the holders thereof have the right to require
Avista Corp. to repurchase such Capital Stock upon the occurrence of a change of
control or an asset sale shall not constitute Disqualified Stock if the terms of
such Capital Stock provide that Avista Corp. may not repurchase or redeem any
such Capital Stock pursuant to such provisions unless such repurchase or
redemption complies with the covenant described above under the caption
"--Certain Covenants--Restricted Payments."
"Eligible Institution" means a commercial banking institution that has
combined capital and surplus of not less that $500 million or its equivalent in
foreign currency, whose debt is rated "A" or higher (or the equivalent rating or
higher), according to Moody's or S&P (or such similar equivalent rating by at
least one "nationally recognized statistical rating organization" (as defined in
51
Rule 436 under the Securities Act)), respectively, at the time as of which any
investment or rollover therein is made.
"Equity Interests" means Capital Stock and all warrants, options or other
rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Existing Indebtedness" means Indebtedness of Avista Corp. and its
Subsidiaries in existence on the date of the indenture, other than amounts
outstanding under Credit Facilities, until such amounts are repaid.
"Facility" means retail electric and natural gas distribution and storage
facilities, electric transmission facilities and electric generation and
production facilities, and assets related to or used in the operation of such
facilities.
"Fixed Charges" means, with respect to any specified Person for any period,
the sum, without duplication, of:
(1) the consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued,
including, without limitation, amortization of debt issuance costs (other
than those in existence on or created on the date of the indenture) and
original issue discount, non-cash interest payments, the interest component
of any deferred payment obligations, the interest component of all payments
associated with Capital Lease Obligations, imputed interest with respect to
Attributable Debt, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings,
and net of the effect of all payments made or received pursuant to Hedging
Obligations; plus
(2) the consolidated interest of such Person and its Restricted
Subsidiaries that was capitalized during such period (excluding interest
capitalized in connection with the construction of a new Facility or
addition to a Facility, in each case, to the extent such interest is
capitalized during the construction of such Facility); plus
(3) any interest expense actually paid on Indebtedness of another
Person that is Guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or one of its
Restricted Subsidiaries, whether or not such Guarantee or Lien is called
upon; plus
(4) the product of (a) all dividends, whether paid or accrued and
whether or not in cash, on any series of preferred stock of such Person or
any of its Restricted Subsidiaries, other than dividends on Equity
Interests payable solely in Equity Interests of such Person (other than
Disqualified Stock) or to such Person or a Restricted Subsidiary of such
Person, times (b) a fraction, the numerator of which is one and the
denominator of which is one minus the then current combined federal, state
and local statutory tax rate of such Person, expressed as a decimal; in
each case, calculated on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any specified Person
for any period, the ratio of the Consolidated Cash Flow of such Person for such
period to the Fixed Charges of such Person for such period. In the event that
the specified Person or any of its Subsidiaries incurs, assumes, Guarantees,
repays, repurchases or redeems any Indebtedness (other than ordinary working
capital borrowings) or issues, repurchases or redeems preferred stock subsequent
to the commencement of the period for which the Fixed Charge Coverage Ratio is
being calculated and on or prior to the date of the event for which the
calculation of the Fixed Charge Coverage Ratio is made (the "Calculation Date"),
including the incurrence of the Indebtedness giving rise to the need to make
such calculation, then the Fixed Charge Coverage Ratio shall be calculated
giving pro forma effect to such incurrence, assumption, Guarantee, repayment,
repurchase or redemption of Indebtedness, or such issuance, repurchase or
redemption of preferred stock, and the use of the proceeds therefrom including
to refinance other Indebtedness as if the same had occurred at the beginning of
the applicable four-quarter reference period.
In addition, for purposes of calculating the Fixed Charge Coverage Ratio:
(1) acquisitions that have been made by the specified Person or any
of its Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter
52
reference period or subsequent to such reference period and on or prior to
the Calculation Date shall be given pro forma effect as if they had
occurred on the first day of the four-quarter reference period and
Consolidated Cash Flow for such reference period shall be calculated on a
pro forma basis (calculated in accordance with Regulation S-X under the
Securities Act), but without giving effect to clause (3) of the proviso set
forth in the definition of Consolidated Net Income;
(2) the consolidated interest expense attributable to interest on any
Indebtedness computed on a pro forma basis and (a) bearing a floating
interest rate shall be computed as if the rate in effect on the date of
computation had been the applicable rate for the entire period and (b) that
was not outstanding during the period for which the computation is being
made but which bears, at the option of such Person, a fixed or floating
rate of interest, shall be computed by applying at the option of such
Person either the fixed or floating rate;
(3) the consolidated interest expense attributable to interest on any
working capital borrowings under a revolving credit facility computed on a
pro forma basis shall be computed based upon the average daily balance of
such working capital borrowings during the applicable period; and
(4) acquisitions and dispositions that have been made by any Person
that has become a Restricted Subsidiary of Avista Corp. or been merged with
or into Avista Corp. or any Restricted Subsidiary of Avista Corp. during
the four-quarter reference period, or subsequent to the four-quarter
reference period but prior to the Calculation Date, shall be calculated on
a pro forma basis, including all of the calculations referred to above,
assuming that such acquisitions and dispositions had occurred on the first
day of the reference period.
In addition, in calculating the Fixed Charge Coverage Ratio, discontinued
operations will be given pro forma effect as follows:
(1) the Consolidated Cash Flow attributable to discontinued
operations, as determined in accordance with GAAP, and operations or
businesses disposed of on or prior to the Calculation Date, shall be
excluded, and
(2) the Fixed Charges attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed
of on or prior to the Calculation Date, shall be excluded, but only to the
extent that the obligations giving rise to such Fixed Charges will not be
obligations of Avista Corp. or any of its Restricted Subsidiaries following
the Calculation Date.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect (i) with respect to periodic reporting
requirements, from time to time, and (ii) otherwise on the date of the
indenture.
"Government Securities" means securities issued directly and fully
guaranteed or insured by the United States government or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof).
"Guarantee" means a guarantee other than by endorsement of negotiable
instruments for collection in the ordinary course of business, direct or
indirect, in any manner including, without limitation, by way of a pledge of
assets or through letters of credit or reimbursement agreements in respect
thereof, of all or any part of any Indebtedness.
"Hedging Obligations" means, with respect to any specified Person, the
obligations of such Person under:
(1) interest rate swap agreements, interest rate cap agreements and
interest rate collar agreements; and
53
(2) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.
"Indebtedness" means, with respect to any specified Person, any
indebtedness of such Person, whether or not contingent:
(1) in respect of borrowed money;
(2) evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof);
(3) representing banker's acceptances;
(4) representing Capital Lease Obligations;
(5) representing the balance deferred and unpaid of the purchase
price of any property, except any such balance that constitutes an accrued
expense or trade payable; or
(6) representing any Hedging Obligations,
if and to the extent any of the preceding items (other than letters of credit
and Hedging Obligations) appears as a liability upon a balance sheet of the
specified Person prepared in accordance with GAAP. In addition, the term
"Indebtedness" includes all Indebtedness of others secured by a Lien on any
asset of the specified Person (whether or not such Indebtedness is assumed by
the specified Person) and, to the extent not otherwise included, the Guarantee
by the specified Person of any indebtedness of any other Person.
The amount of any Indebtedness outstanding as of any date shall be:
(1) the accreted value thereof, in the case of any Indebtedness
issued with original issue discount; and
(2) the principal amount thereof, together with any interest thereon
that is more than 30 days past due, in the case of any other Indebtedness;
provided that for purposes of determining the amount of any Indebtedness,
if recourse with respect to such Indebtedness is limited to such asset, the
amount of such Indebtedness shall be limited to the lesser of the fair
market value of such asset or the amount of such Indebtedness.
"Investments" means, with respect to any Person, all direct or indirect
investments by such Person in other Persons (including Affiliates) in the forms
of loans (including Guarantees of Indebtedness or other obligations), advances
or capital contributions (excluding commission, travel, entertainment, moving
and similar advances or loans to officers, directors, consultants and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities, together
with all items that are or would be classified as investments on a balance sheet
prepared in accordance with GAAP. The term "Investment" shall exclude extensions
of trade credit on commercially reasonable terms in accordance with normal trade
terms. If Avista Corp. or any Subsidiary of Avista Corp. sells or otherwise
disposes of any Equity Interests of any direct or indirect Subsidiary of Avista
Corp. such that, after giving effect to any such sale or disposition, such
Person is no longer a Subsidiary of Avista Corp., Avista Corp. shall be deemed
to have made an Investment on the date of any such sale or disposition equal to
the fair market value of the Equity Interests of such Subsidiary not sold or
disposed of in an amount determined as provided in the final paragraph of the
covenant described above under the caption "--Certain Covenants--Restricted
Payments." The acquisition by Avista Corp. or any Subsidiary of Avista Corp. of
a Person that holds an Investment in a third Person shall be deemed to be an
Investment by Avista Corp. or such Subsidiary in such third Person in an amount
equal to the fair market value of the Investment held by the acquired Person in
such third Person in an amount determined as provided in the final paragraph of
the covenant described above under the caption "--Certain Covenants--Restricted
Payments."
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"Lancaster Project" means a 270 MW combined cycle project, presently under
construction, in Rathdrum, Idaho, in which Avista Power owns an indirect 49%
interest through its wholly-owned subsidiary Avista Rathdrum, LLC. The project
is presently scheduled to begin commercial operation in August 2001. All of the
output has been sold to Avista Energy under a 25-year capacity sales contract,
under which Avista Energy is responsible for dispatch and delivery of fuel to
the project.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law,
including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"Liquidity Condition Date" means the date on which Avista Corp. obtains
funding in cash from completed financing transactions, or contractual
entitlement to such funding on such date pursuant to definitive credit
facilities then in effect and available to be drawn pursuant to arrangements put
into effect (or amendments increasing the amount available under existing credit
facilities) after the date of the indenture, in an aggregate amount that, when
added to the net proceeds of the offering of the Old Notes, is not less than
$475 million.
"Marketable U.S. Securities" means: (i) any time deposit account, money
market deposit and certificate of deposit maturing not more that 365 days after
the date of acquisition issued by, or time deposit of, an Eligible Institution;
(ii) commercial paper maturing not more than 365 days after the date of
acquisition issued by a corporation (other than an Affiliate of Avista Corp.)
with a rating, at the time as of which any investment therein is made, of "P-1"
or higher according to Moody's or "A-1" or higher according to S&P (or such
similar equivalent rating by at least one "nationally recognized statistical
rating organization" (as defined in Rule 436 under the Securities Act)); (iii)
any banker's acceptances or money market deposit accounts issued or offered by
an Eligible Institution; (iv) repurchase obligations with a term of not more
than 7 days for Government Securities entered into with an Eligible Institution;
and (v) any fund investing exclusively in investments of the types described in
clauses (i) through (iv) above and or Government Securities.
"Moody's" mean Moody's Investors Service, Inc., and its successors.
"Net Proceeds" means the aggregate cash proceeds and Cash Equivalents
received by Avista Corp. or any of its Restricted Subsidiaries in respect of any
Asset Sale (including, without limitation, any cash received upon the sale or
other disposition of any non-cash consideration received in any Asset Sale), net
of the direct costs relating to such Asset Sale, including, without limitation,
legal, accounting and investment banking fees, and sales commissions, and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof, in each case, after taking into account any available tax
credits or deductions and any tax sharing arrangements, any amounts that Avista
Corp. may be required by any regulatory authority to refund or repay to
customers in respect of or as a result of such Asset Sale, any amounts required
to be applied to the repayment of Indebtedness secured by a Lien on the asset or
assets that were the subject of such Asset Sale and any reserve for adjustment
in respect of the sale price of such asset or assets established in accordance
with GAAP.
"Non-Recourse Debt" means Indebtedness:
(1) as to which neither Avista Corp. nor any of its Restricted
Subsidiaries (a) provides credit support of any kind (including any
undertaking, agreement or instrument that would constitute Indebtedness but
excluding any agreement to provide managerial support), (b) is directly or
indirectly liable as a guarantor or otherwise, or (c) constitutes the
lender; and
(2) no default with respect to which (including any rights that the
holders thereof may have to take enforcement action against an Unrestricted
Subsidiary) would permit upon notice, lapse of time or both any holder of
any other Indebtedness (other than the notes) of Avista Corp. or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or
cause the payment thereof to be accelerated or payable prior to its stated
maturity.
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"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Peaker Turbine Project" means a 95 MW simple cycle project presently under
development, currently expected to be located in southwest Washington and
currently 100% owned by Avista Power. A letter of intent has been signed for the
purchase of the output of the facility for five years under a capacity sales
contract for a fixed price per KW-month. The purchaser will be financially
responsible for purchasing natural gas to fuel the turbines and for contracting
for gas transportation. The turbines are General Electric simple cycle LM6000.
"Permitted Business" means the business of acquiring, developing,
constructing, expanding, managing, improving, owning and operating Facilities,
as well as any other activities reasonably related, complimentary or ancillary
to the foregoing activities (including acquiring and holding reserves),
including but not limited to investing in Persons engaged in one or more
Permitted Businesses.
"Permitted Debt" has the meaning set forth under "-Certain Other
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock."
"Permitted Investments" means:
(1) any Investment in Avista Corp. or in a Restricted Subsidiary of
Avista Corp.; provided, that prior to the Liquidity Condition Date, Avista
Corp. and its Restricted Subsidiaries will not make Investments in
Subsidiaries of Avista Corp. (other than Avista Energy or Avista Power)
exceeding $35 million in the aggregate; provided further that Avista Corp.
may nonetheless make reimbursement to a Subsidiary, pursuant to the Tax
Sharing Agreement as in effect on the date of the indenture, in an amount
not to exceed the net tax benefit realized by Avista Corp. in any period,
as reflected in its consolidated federal income tax return, by reason of
losses incurred by such Subsidiary;
(2) any Investment in cash or Cash Equivalents or Marketable U.S.
Securities;
(3) any Investment by Avista Corp. or any Subsidiary of Avista Corp.
in a Person, if as a result of such Investment:
(a) such Person becomes a Restricted Subsidiary of Avista Corp.;
or
(b) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or
is liquidated into, Avista Corp. or a Restricted Subsidiary of Avista
Corp.;
(4) any Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in
compliance with the covenant described above under the caption
"--Repurchase at the Option of Holders--Asset Sales";
(5) any Investment in exchange for the issuance of Equity Interests
other than Disqualified Stock of Avista Corp.;
(6) Hedging Obligations;
(7) Investments in any of the notes;
(8) Indebtedness of Avista Corp. or a Restricted Subsidiary of Avista
Corp. described under clause (5) of the definition of Permitted Debt;
(9) Investments in existence on the date of the indenture or made
pursuant to a legally binding written commitment in existence on the date
of the indenture;
56
(10) Guarantees of Indebtedness of a Restricted Subsidiary of Avista
Corp. given by Avista Corp. or another Restricted Subsidiary of Avista
Corp., in each case, in accordance with the terms of the indenture;
(11) Investments in prepaid expenses, negotiable instruments held for
collection and lease, utility and worker's compensation, performance and
other similar deposits provided to third parties in the ordinary course of
business;
(12) Hedging Obligations, Currency Hedging Obligations and Commodity
Price Protection Obligations permitted by the indenture that are entered
into in the ordinary course of business;
(13) Investments representing Capital Stock or obligations issued to
Avista Corp. or any Restricted Subsidiary of Avista Corp. (i) in settlement
of claims against any other Person by reason of a composition or
readjustment of debt or a reorganization of any debtor (including customers
and suppliers) of Avista Corp. or such Restricted Subsidiary, or (ii) as a
result of an Asset Sale in which the Capital Stock of Avista
Communications, Avista Advantage or Avista Labs is exchanged for Capital
Stock or other securities of another Person, upon completion of which the
subject or transferee Person is not a Subsidiary of Avista Corp.;
(14) Investments in the Lancaster Project and the Peaker Turbine
Project in an aggregate amount not to exceed $40 million;
(15) Investments by Avista Corp. or any Restricted Subsidiary in
Avista -STEAG, LLC; and
(16) loans or advances, or performance guarantees in support of Avista
Energy or Avista Power to customers or suppliers in the ordinary course of
business.
"Permitted Liens" means:
(1) Liens securing Indebtedness and other Obligations of Avista Corp.
and its Restricted Subsidiaries under Credit Facilities (to the extent that
such Indebtedness and Obligations under such Credit Facilities were
permitted by the terms of the indenture to be incurred);
(2) Liens in favor of Avista Corp. or a Restricted Subsidiary of
Avista Corp.;
(3) Liens on assets or Equity Interests of a Person existing at the
time such Person is merged with or into or consolidated with Avista Corp.
or any Restricted Subsidiary of Avista Corp.; provided that such Liens were
in existence prior to the contemplation of such merger or consolidation and
do not extend to any assets other than those of the Person merged into or
consolidated with Avista Corp. or the Restricted Subsidiary;
(4) Liens on assets existing at the time of acquisition thereof by
Avista Corp. or any Restricted Subsidiary of Avista Corp., provided that
such Liens were in existence prior to the contemplation of such
acquisition;
(5) Liens to secure the performance of statutory obligations, surety
or appeal bonds, performance bonds, performance bids, tenders or contracts,
statutory and common law landlord's liens or other obligations of a like
nature incurred in the ordinary course of business;
(6) Liens existing on the date of the indenture;
(7) Liens for taxes, assessments or governmental charges or claims
that are not yet delinquent or that are being contested in good faith by
appropriate proceedings promptly instituted and diligently conducted,
provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor;
(8) Liens to secure any refinancing, refunding, extension, renewal or
replacement (or successive refinancings, refundings, extensions, renewals
or replacements) as a whole, or in part, of any Indebtedness secured by any
57
Lien referred to in the foregoing clauses (3), (4), or (6), provided,
however, that (x) such new Lien shall be limited to all or part of the same
assets that secured the original Lien (plus improvements on such property)
and (y) the Indebtedness secured by such Lien at such time is not increased
(other than by an amount necessary to pay fees and expenses, including
premiums, related to the refinancing, refunding, extension, renewal or
replacement of such Indebtedness);
(9) any Lien securing Indebtedness permitted to be incurred under
Hedging Obligations or otherwise incurred to hedge interest rate risk or
risks of commodity price fluctuations;
(10) Liens securing Indebtedness relating to governmental obligations
the interest on which is not included in gross income for purposes of
federal income taxation pursuant to Section 103 of the Internal Revenue
Code of 1986, as amended (or any successor provision of law), for the
purpose of financing or refinancing, in whole or in part, costs of
acquisition or construction of property to be used by Avista Corp., to the
extent that the Lien which secures such secured Indebtedness is required
either by applicable law or by the issuer of such governmental obligations
or is otherwise necessary in order to establish or maintain such exclusion
from gross income;
(11) any Lien securing Capital Lease Obligations or other Indebtedness
incurred pursuant to clause (8) of the definition of Permitted Debt; and
(12) any Lien securing Indebtedness permitted to be incurred pursuant
to clause (9) of the definition of Permitted Debt.
"Permitted Refinancing Indebtedness" means any Indebtedness of Avista Corp.
or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, restructure,
supplement, defease or refund other Indebtedness of Avista Corp. or any of its
Restricted Subsidiaries (other than intercompany Indebtedness); provided that:
(1) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Indebtedness does not exceed the principal amount (or
accreted value, if applicable) of the Indebtedness so extended, refinanced,
renewed, replaced, restructured, supplemented, defeased or refunded (plus
all accrued interest thereon and the amount of all expenses and premiums
incurred in connection therewith);
(2) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to the
notes, such Permitted Refinancing Indebtedness is subordinated in right of
payment to the notes on terms at least as favorable to the holders of notes
as those contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; and
(3) Indebtedness is incurred by Avista Corp. if the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded was
Indebtedness of Avista Corp.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company, government, governmental subdivision or other entity.
"Restricted Investment" means an Investment other than a Permitted
Investment. "Restricted Subsidiary" means any Subsidiary of the referent Person
that is not an Unrestricted Subsidiary.
"RTO Transaction" means an Asset Sale entered into in connection with the
formation of a regional transmission organization pursuant to or in a manner
consistent with regulatory requirements applicable to Avista Corp.
"Sale/Leaseback Transaction" means an arrangement relating to property
owned as of the date of the indenture or thereafter acquired whereby Avista
Corp. or a Restricted Subsidiary transfers such property to a Person and leases
58
it back from such Person, other than leases for a term of not more than 36
months or between Avista Corp. and a Restricted Subsidiary or between Restricted
Subsidiaries.
"S&P" means Standard & Poor's, and its successors.
"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date
hereof.
"Stated Maturity" means, with respect to any installment of interest or
principal on any series of Indebtedness, or any redemption or similar payment in
respect of Disqualified Stock, the date on which such payment was scheduled to
be paid in the original documentation governing such Indebtedness or
Disqualified Stock, and shall not include any contingent obligations to repay,
redeem or repurchase any such interest or principal, or made such redemption of
other payment, prior to the date originally scheduled for the payment thereof.
"Subsidiary" means, with respect to any specified Person:
(1) any corporation, association or other business entity of which
more than 50% of the total voting power of shares of Capital Stock entitled
(without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by such Person or one or more of the
other Subsidiaries of that Person (or a combination thereof); and
(2) any partnership (a) the sole general partner or the managing
general partner of which is such Person or a Subsidiary of such Person or
(b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"Tax Sharing Agreement" means the Tax Sharing Agreement among Avista Corp.
and its Subsidiaries as in effect on the date of the indenture.
"Unrestricted Subsidiary" means any Subsidiary of Avista Corp. that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to a
Board Resolution, but only to the extent that such Subsidiary:
(1) has no Indebtedness other than Non-Recourse Debt;
(2) is not party to any agreement, contract, arrangement or
understanding with Avista Corp. or any Restricted Subsidiary of Avista
Corp. unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to Avista Corp. or such Restricted
Subsidiary than those that might be obtained at the time from Persons who
are not Affiliates of Avista Corp.;
(3) is a Person with respect to which neither Avista Corp. nor any of
its Restricted Subsidiaries has any direct or indirect obligation (a) to
subscribe for additional Equity Interests or (b) to maintain or preserve
such Person's financial condition or to cause such Person to achieve any
specified levels of operating results; and
(4) has not guaranteed or otherwise directly or indirectly provided
credit support for any Indebtedness of Avista Corp. or any of its
Restricted Subsidiaries.
Any designation of a Subsidiary of Avista Corp. as an Unrestricted
Subsidiary shall be evidenced to the trustee by filing with the trustee a
certified copy of the Board Resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
preceding conditions and was permitted by the covenant described above under the
caption "--Certain Covenants--Restricted Payments." If, at any time, any
Unrestricted Subsidiary would fail to meet the preceding requirements as an
Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the indenture and any Indebtedness of such Subsidiary
shall be deemed to be incurred by a Restricted Subsidiary of Avista Corp. as of
such date and, if such Indebtedness is not permitted to be incurred as of such
date under the covenant described under the caption "--Certain
Covenants--Incurrence of Indebtedness and Issuance of Preferred Stock", Avista
Corp. shall be in default of such covenant. The Board of Directors of Avista
59
Corp. may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; provided that such designation shall be deemed to be an incurrence
of Indebtedness by a Restricted Subsidiary of Avista Corp. of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (1) such Indebtedness is permitted under the covenant described
under the caption "--Certain Covenants--Incurrence of Indebtedness and Issuance
of Preferred Stock", calculated on a pro forma basis as if such designation had
occurred at the beginning of the four-quarter reference period; and (2) no
Default or Event of Default would be in existence following such designation.
"Voting Stock" of any Person as of any date means the Capital Stock of such
Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"Weighted Average Life to Maturity" means, when applied to any Indebtedness
or Disqualified Stock at any date, the number of years obtained by dividing (i)
the sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required payments
or principal or redemption or similar payment, including payment at final
maturity, in respect thereof, by (b) the number of years (calculated to the
nearest one-twelfth) that will elapse between such date and the making of such
payment, by (ii) the sum of all such payments.
"Wholly Owned Subsidiary" of any specified Person means a Subsidiary of
such Person all of the outstanding capital stock or other ownership interests of
which (other than directors' qualifying shares) will at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person and one
or more Wholly Owned Subsidiaries of such Person.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
This section describes the material United States federal income tax
consequences of exchanging the Old Notes for New Notes and of owning and
disposing of notes. This section reflects the opinion of Thelen Reid & Priest
LLP, counsel to Avista Corp. This section applies to you only if you acquired
the Old Notes in the offering at the offering price and you hold your notes as
capital assets for tax purposes. This section does not apply to you if you are a
member of a class of holders subject to special rules, such as:
o a dealer in securities or currencies,
o a trader in securities that elects to use a mark-to-market method of
accounting for your securities holdings,
o a bank,
o a life insurance company,
o a tax-exempt organization,
o a person that owns notes that are a hedge or that are hedged against
interest rate risks,
o a person that owns notes as part of a straddle or conversion
transaction for tax purposes, or
o a person whose functional currency for tax purposes is not the U.S.
dollar.
If you purchase notes at a price other than the offering price, the
amortizable bond premium or market discount rules may also apply to you. You
should consult your tax advisor regarding this possibility.
This section is based on the Internal Revenue Code of 1986, as amended, its
legislative history, existing and proposed regulations under the Internal
Revenue Code, published rulings and court decisions, all as currently in effect.
These laws are subject to change, possibly on a retroactive basis.
60
UNITED STATES HOLDERS
This subsection describes the tax consequences to a United States holder.
You are a United States holder if you are a beneficial owner of a note and you
are:
o a citizen or resident of the United States,
o a domestic corporation or partnership,
o an estate whose income is subject to United States federal income tax
regardless of its source, or
o a trust if a United States court can exercise primary supervision over
the trust's administration and one or more United States persons are
authorized to control all substantial decisions of the trust.
If you are not a United States holder, this subsection does not apply to
you and you should refer to "United States Alien Holders" below.
Exchange of Old Notes for New Notes
An exchange of Old Notes for New Notes will not be a taxable event for
federal income tax purposes. Rather, the New Notes will be treated as a
continuation of the Old Notes in the hands of a United States holder. As a
result, you will not recognize any income, gain or loss for federal income tax
purposes upon an exchange of Old Notes for New Notes, and you will have the same
tax basis and holding period in the New Notes as you had in the Old Notes.
Payments of Interest
You will be taxed on interest on your notes as ordinary income at the time
you receive the interest or when it accrues, depending on your method of
accounting for tax purposes.
Purchase, Sale and Retirement of the Notes
Your tax basis in your Old Notes generally will be their cost, and your tax
basis in any New Notes acquired in the Exchange Offer will be equal to your tax
basis in the Old Notes surrendered. You will generally recognize capital gain or
loss on the sale or retirement of notes equal to the difference between the
amount you realize on the sale or retirement, excluding any amounts attributable
to accrued but unpaid interest, and your tax basis in your notes. Capital gain
of a noncorporate United States holder is generally taxed at a maximum rate of
20% where the property is held more than one year.
UNITED STATES ALIEN HOLDERS
This subsection describes the tax consequences to a United States alien
holder. You are a United States alien holder if you are the beneficial owner of
a note and are, for United States federal income tax purposes:
o a nonresident alien individual,
o a foreign corporation,
o a foreign partnership,
o an estate unless its income is subject to United States federal income
tax regardless of its source, or
o a trust unless a United States court can exercise primary supervision
over the trust's administration and one or more United States persons
are authorized to control all substantial decisions of the trust.
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If you are a United States holder, this section does not apply to you.
An exchange of Old Notes for New Notes will not constitute a taxable event
for federal income tax purposes. Rather, the New Notes will be treated as a
continuation of the Old Notes in the hands of a United States alien holder. As a
result, you will not recognize any income, gain or loss for federal income tax
purposes upon an exchange of Old Notes for New Notes, and you will have the same
tax basis and holding period in the New Notes as you had in the Old Notes.
Under United States federal income and estate tax law, and subject to the
discussion of backup withholding below, if you are a United States alien holder
of a note:
o we and other U.S. payors generally will not be required to deduct
United States withholding tax from payments of principal, premium, if
any, and interest to you if, in the case of payments of interest:
(1) you do not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of Avista
Corp. entitled to vote,
(2) you are not a controlled foreign corporation that is related to
Avista Corp. through stock ownership,
(3) your income or gain from the note is not effectively connected
with a trade or business that you conduct within the United
States, and
(4) either (i) you furnish the U.S. payor an Internal Revenue Service
Form W-8BEN certifying under penalties of perjury that you are
not a United States person, or (ii) the payor can otherwise be
satisfied that you are not a United States person by relying on
account documentation or other evidence as prescribed in Treasury
regulations. However, this requirement will not be considered
satisfied if the payor has actual knowledge or reason to know
that you are a United States person notwithstanding the
certificate or other documentation.
o no deduction for any United States federal withholding tax will be
made from any gain that you realize on the sale or exchange of your
note, including the exchange of Old Notes for New Notes.
We and other payors are required to report payments of interest on your
notes on Internal Revenue Service Form 1042-S even if the payments are not
otherwise subject to information reporting requirements.
If you are engaged in a trade or business within the United States and the
interest on the note is effectively connected with your United States business,
the interest and any gain on the note will not be subject to withholding if you
have provided the payor an Internal Revenue Service Form W-8 as prescribed in
the Treasury regulations. However, interest on a note that is effectively
connected with your United States business will be subject to United States
taxation in the same manner as applies to United States holders. In addition, if
you are entitled to the benefits of a tax treaty with the United States,
interest and gain from the note will generally not be taxable, even if
effectively connected with a United States trade or business, unless you also
have a permanent establishment in the United States to which the interest or
gain is attributable. In order to claim benefits under a tax treaty with the
United States, you must furnish an Internal Revenue Service Form W-8BEN to the
payor.
Further, a note held by an individual who at death is not a citizen or
resident of the United States will not be includible in the individual's gross
estate for United States federal estate tax purposes if:
o the decedent did not actually or constructively own 10% or more of the
total combined voting power of all classes of stock of Avista Corp.
entitled to vote at the time of death, and
o the income on the note would not have been effectively connected with
a United States trade or business of the decedent at the same time.
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BACKUP WITHHOLDING AND INFORMATION REPORTING
We and other payors, including brokers, may be required to report to you
and to the Internal Revenue Service any payments of principal, premium and
interest on your note and the amount of any proceeds from the sale or exchange
of your note. As described more fully below, we and other payors may also be
required to make "backup withholding" from payments of principal, premium,
interest and sales proceeds if you fail to provide an accurate taxpayer
identification number or otherwise establish an exemption from backup
withholding.
Backup withholding is not an additional tax. If you are subject to backup
withholding, you may obtain a credit or refund of the amount withheld by filing
the required information with the Internal Revenue Service.
UNITED STATES HOLDERS
In general, if you are a noncorporate United States holder, we and other
payors are required to report to the Internal Revenue Service all payments of
principal, any premium and interest on your note. In addition, we and other
payors are required to report to the Internal Revenue Service any payment of
proceeds of the sale of your note before maturity within the United States.
Additionally, backup withholding at a rate of 31% will apply to any payments if
you fail to provide an accurate taxpayer identification number, or you are
notified by the Internal Revenue Service that you have failed to report all
interest and dividends required to be shown on your federal income tax returns.
UNITED STATES ALIEN HOLDERS
In general, payments of principal, premium or interest made by us and other
payors to you will not be subject to backup withholding and information
reporting, provided that the certification requirements described above under
"United States Alien Holders" are satisfied or you otherwise establish an
exemption.
In general, proceeds of your sale of a note will not be subject to backup
withholding or information reporting if:
o you furnish your broker an Internal Revenue Service Form W-8BEN
certifying under penalties of perjury that you are not a United States
person, or
o your broker possesses other documentation concerning your account on
which the broker is permitted to rely under Treasury regulations to
establish that you are a non-United States person, or
o you otherwise establish an exemption.
If you are not exempted from backup withholding and information reporting
under the preceding paragraph:
o Backup withholding and information reporting will apply to the
proceeds of any sale that you make through the United States office of
any broker, foreign or domestic.
o Information reporting will also apply to the proceeds of sales that
are made through a foreign office of a broker if the proceeds are paid
into a United States account, or such proceeds or the confirmation of
the sale are mailed to you at a United States address, or if you have
opened an account with a United States office of your broker, or
regularly communicated with the broker from the United States
concerning the sale in question and other sales, or negotiated the
sale in question through the broker's United States office. Backup
withholding will also apply unless the proceeds of such a sale are
paid to an account maintained at a bank or other financial institution
located outside the United States.
o Information reporting, but not backup withholding, will apply to sales
made through a foreign office of a broker that is a United States
person, or that is a foreign corporation or partnership controlled by
U.S. persons or that derives more than 50% of its income from U.S.
63
business activities over a three-year period as specified in the
Treasury regulations.
Notwithstanding any withholding certificate or documentary evidence in a
broker's possession, a broker who has actual knowledge or reason to know that
you are a United States person will be required to make backup withholdings and
file information reports with the Internal Revenue Service if the broker is a
U.S. person or is a foreign person that has a U.S. connection of the type
discussed in the last bullet point of the preceding paragraph.
PLAN OF DISTRIBUTION
As discussed under THE EXCHANGE OFFER, based on an interpretation of the
staff of the SEC, New Notes issued pursuant to the Exchange Offer may be offered
for resale and resold or otherwise transferred by any Holder of such New Notes
(other than any such Holder which is an "affiliate" of Avista Corp. within the
meaning of Rule 405 under the Securities Act and except as otherwise discussed
below with respect to Holders which are broker-dealers) without compliance with
the registration and prospectus delivery requirements of the Securities Act so
long as such New Notes are acquired in the ordinary course of such Holder's
business and such Holder has no arrangement or understanding with any person to
participate in the distribution (within the meaning of the Securities Act) of
such New Notes.
Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes which were acquired by such broker-dealer as a result of
market-making activities or other trading activities must, and must agree to,
deliver a prospectus in connection with any resale of such New Notes. This
prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Notes received in exchange
for Old Notes where such Old Notes were acquired as a result of market-making
activities or other trading activities. Avista Corp. will for a period of 90
days after the Expiration Date make this prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until _____, 2001, all dealers effecting transactions in the New Notes
may be required to deliver a prospectus.
New Notes received by broker-dealers for their own account in the Exchange
Offer as described above may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or at negotiated prices. Any such resale may be
made directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The letter of transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
The interpretation of the staff of the SEC referred to in the first
paragraph of this section does not apply to, and this prospectus may not be used
in connection with, the resale by any broker-dealer of any New Notes received in
exchange for an unsold allotment of Old Notes purchased directly from Avista
Corp.
Avista Corp. will not receive any proceeds from the issuance of the New
Notes pursuant to the Exchange Offer or from any subsequent sale of the New
Notes. Avista Corp. has agreed to pay all expenses incident to the Exchange
Offer other than commissions or concessions of any brokers or dealers and
expenses of counsel for the holders of the New Notes and will indemnify the
holders of the New Notes (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
64
WHERE YOU CAN FIND MORE INFORMATION
Avista Corp. files annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any document Avista
Corp. files at the SEC's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. Avista Corp. SEC filings are also
available to the public from the SEC's website at http://www.sec.gov. However,
information on this website does not constitute a part of this prospectus.
During 2001, Avista Corp. has filed the following documents with the SEC
pursuant to the Exchange Act:
o Annual Report on Form 10-K for the year ended December 31, 2000, as
amended by Form 10-K/A (the "Form 10-K").
o Quarterly Report on Form 10-Q for the quarter ended March 31, 2001.
o Current Report on Form 8-K filed May 2, 2001.
These documents, as well as any other documents subsequently filed with the
SEC before the termination of the offering of the New Notes, are incorporated
herein by reference and are considered to be part of this prospectus. Later
information contained in this prospectus updates and supersedes the information
set forth in the Form 10-K and any other incorporated documents.
LEGAL MATTERS
The validity of the New Notes will be passed upon for Avista Corp. by
Thelen Reid & Priest LLP and Heller Ehrman White & McAuliffe LLP. In addition,
matters of federal income tax law and federal securities law will be passed upon
by Thelen Reid & Priest LLP. In giving their opinion, Thelen Reid & Priest LLP
may rely as to matters of Washington, California, Idaho, Montana and Oregon law
upon the opinion of Heller Ehrman White & McAuliffe LLP.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this prospectus by reference from Avista Corp.'s Annual Report
on Form 10-K for the year ended December 31, 2000 have been audited by Deloitte
& Touche LLP, independent auditors, as stated in their report, which is
incorporated herein by reference, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
65
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Seventh of the Registrant's Restated Articles of Incorporation
("Articles") provides, in part, as follows:
"The Corporation shall, to the full extent permitted by applicable law, as
from time to time in effect, indemnify any person made a party to, or otherwise
involved in, any proceeding by reason of the fact that he or she is or was a
director of the Corporation against judgments, penalties, fines, settlements and
reasonable expenses actually incurred by him or her in connection with any such
proceeding. The Corporation shall pay any reasonable expenses incurred by a
director in connection with any such proceeding in advance of the final
determination thereof upon receipt from such director of such undertakings for
repayment as may be required by applicable law and a written affirmation by such
director that he or she has met the standard of conduct necessary for
indemnification, but without any prior determination, which would otherwise be
required by Washington law, that such standard of conduct has been met. The
Corporation may enter into agreements with each director obligating the
Corporation to make such indemnification and advances of expenses as are
contemplated herein. Notwithstanding the foregoing, the Corporation shall not
make any indemnification or advance which is prohibited by applicable law. The
rights to indemnity and advancement of expenses granted herein shall continue as
to any person who has ceased to be a director and shall inure to the benefit of
the heirs, executors and administrators of such a person. "
The Registrant has entered into indemnification agreements with each
director as contemplated in Article Seventh of the Articles.
Reference is made to Revised Code of Washington 23B.08.510, which sets
forth the extent to which indemnification is permitted under the laws of the
State of Washington.
Article IX of the Registrant's Bylaws contains an indemnification provision
similar to that contained in the Articles and, in addition, provides in part as
follows:
"SECTION 2. LIABILITY INSURANCE. The Corporation shall have the power to
purchase and maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the Corporation or is or was serving at
the request of the Corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust, other enterprise, or
employee benefit plan against any liability asserted against him and incurred by
him in any such capacity or arising out of his status as such, whether or not
the Corporation would have the power to indemnify him against such liability
under the laws of the State of Washington."
Insurance is maintained on a regular basis (and not specifically in
connection with this offering) against liabilities arising on the part of
directors and officers out of their performance in such capacities or arising on
the part of the Registrant out of its foregoing indemnification provisions,
subject to certain exclusions and to the policy limits.
ITEM 21. EXHIBITS.
Reference is made to the Exhibit Index on p. II-6 hereof.
ITEM 22. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act (and, where applicable, each
II-1
filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof;
(2) To respond to requests for information that is incorporated by
reference into the prospectus pursuant to item 4,10(b), 11 or 13 of Form
S-4, within one business day of receipt of such request, and to send the
incorporated documents by first class mail or other equally prompt means.
This includes information contained in documents filed subsequent to the
effective date of this registration statement through the date of
responding to the request.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted against the
Registrant by such director, officer or controlling person in connection with
the securities being registered, such Registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and will be
governed by the final adjudication of such issue.
II-2
POWER OF ATTORNEY
The Registrant hereby appoints each Agent for Service named in this
registration statement as its attorney-in-fact to sign in its name and behalf,
and to file with the Securities and Exchange Commission any and all amendments,
including post effective amendments, to this registration statement, and each
director and/or officer of the Registrant whose signature appears below hereby
appoints each such Agent for Service as his or her attorney-in-fact with like
authority to sign in his or her name and behalf, in any and all capacities
stated below, and to file with the Securities and Exchange Commission, any and
all such amendments.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Spokane and
State of Washington on the 31st day of May, 2001.
AVISTA CORPORATION
/s/ JON E. ELIASSEN
----------------------------------
Senior Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the date indicated.
SIGNATURE TITLE DATES
/s/ GARY G. ELY
- ----------------------------------
Gary G. Ely Director and Principal May 31, 2001
(Director, President and Chief Executive Officer
Executive Officer)
/s/ JON E. ELIASSEN
- ----------------------------------
Jon E. Eliassen Principal Financial and May 31, 2001
(Senior Vice President and Chief Accounting Officer
Financial Officer)
/s/ ERIK J. ANDERSON
- ----------------------------------
Erik. J. Anderson Director May 31, 2001
/s/ KRISTIANNE BLAKE
- ----------------------------------
Kristianne Blake Director May 31, 2001
II-3
/s/ D.A. CLACK
- ----------------------------------
David A. Clack Director May 31, 2001
/s/ S.M.R. JEWELL
- ----------------------------------
Sarah M. R. (Sally) Jewell Director May 31, 2001
/s/ J.F. KELLY
- ----------------------------------
John F. Kelly Director May 31, 2001
/s/ JESSIE J. KNIGHT JR.
- ----------------------------------
Jessie J. Knight, Jr. Director May 31, 2001
/s/ EUGENE W. MEYER
- ----------------------------------
Eugene W. Meyer Director May 31, 2001
/s/ BOBBY SCHMIDT
- ----------------------------------
Bobby Schmidt Director May 31, 2001
/s/ R. JOHN TAYLOR
- ----------------------------------
R. John Taylor Director May 31, 2001
/s/ DANIEL J. ZALOUDEK
- ----------------------------------
Daniel J. Zaloudek Director May 31, 2001
II-4
EXHIBIT 23(B)
CONSENT
We consent to the incorporation by reference in this Registration Statement
of Avista Corporation on Form S-4 of our report dated February 2, 2001 (February
26, 2001 as to Note 22), appearing in the Annual Report on Form 10-K of Avista
Corporation for the year ended December 31, 2000 and to the reference to us
under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
/s/ Deloitte & Touche LLP
Seattle, Washington
June 1, 2001
II-5
EXHIBIT INDEX
Exhibit No. Description of Exhibit
----------- ----------------------
4(a) - Indenture dated as of April 3, 2001, by and among Avista
Corporation and Chase Manhattan Bank and Trust Company, National
Association, as Trustee (filed as Exhibit 4(f) to Quarterly
Report on Form 10-Q for quarter ended March 31, 2001).
4(b) - Registration Rights Agreement between Avista Corporation and
Goldman Sachs & Co.
4(c) - Form of Letter of Transmittal.
5(a) - Opinion of Heller Ehrman White & McAuliffe LLP.
5(b) - Opinion of Thelen Reid & Priest LLP.
8 - Opinion as to tax matters of Thelen Reid & Priest LLP (contained
in their opinion filed as Exhibit 5(b)) and 8.
23(a) - Consents of Heller Ehrman White & McAuliffe LLP and Thelen Reid &
Priest LLP are contained in their opinions filed as Exhibits 5(a)
and 5(b) and 8, respectively.
23(b) - Consent of Deloitte & Touche LLP (contained on page II-5).
24 - Power of Attorney (contained on page II-3).
25 - Statement of Eligibility of Trustee on Form T-1 of Chase
Manhattan Bank and Trust Company, National Association.
II-6
EXHIBIT 4(b)
AVISTA CORPORATION
9.75% SENIOR NOTES DUE JUNE 1, 2008
-----
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
------------------------------------------
April 3, 2001
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Avista Corporation, a Washington corporation (the "Company"), proposes
to issue and sell to the Purchasers (as defined herein) upon the terms set forth
in the Purchase Agreement (as defined herein) its 9.75% Senior Notes due June 1,
2008. As an inducement to the Purchasers to enter into the Purchase Agreement
and in satisfaction of a condition to the obligations of the Purchasers
thereunder, the Company agrees with the Purchasers for the benefit of holders
(as defined herein) from time to time of the Registrable Securities (as defined
herein) as follows:
1. Certain Definitions. For purposes of this Exchange and
Registration Rights Agreement, the following terms shall have the following
respective meanings:
"Base Interest" shall mean the interest that would otherwise accrue on
the Securities under the terms thereof and the Indenture, without giving
effect to the provisions of this Agreement.
The term "broker-dealer" shall mean any broker or dealer registered
with the Commission under the Exchange Act.
"Closing Date" shall mean the date on which the Securities are
initially issued.
"Commission" shall mean the United States Securities and Exchange
Commission, or any other federal agency at the time administering the
Exchange Act or the Securities Act, whichever is the relevant statute for
the particular purpose.
"Effective Time," in the case of (i) an Exchange Registration, shall
mean the time and date as of which the Commission declares the Exchange
Registration Statement effective or as of which the Exchange Registration
Statement otherwise becomes effective and (ii) a Shelf Registration, shall
mean the time and date as of which the Commission declares the Shelf
Registration Statement effective or as of which the Shelf Registration
Statement otherwise becomes effective.
"Electing Holder" shall mean any holder of Registrable Securities that
has returned a completed and signed Notice and Questionnaire to the Company
in accordance with Section 3(d)(ii) or 3(d)(iii) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, or any
successor thereto, as the same shall be amended from time to time.
"Exchange Offer" shall have the meaning assigned thereto in Section
2(a) hereof.
"Exchange Registration" shall have the meaning assigned thereto in
Section 3(c) hereof.
"Exchange Registration Statement" shall have the meaning assigned
thereto in Section 2(a) hereof.
"Exchange Securities" shall have the meaning assigned thereto in
Section 2(a) hereof.
The term "holder" shall mean each of the Purchasers and other persons
who acquire Registrable Securities from time to time (including any
successors or assigns), in each case for so long as such person owns any
Registrable Securities.
"Indenture" shall mean the Indenture, dated as of April 3, 2001,
between the Company and Chase Manhattan Bank and Trust Company, National
Association, as Trustee, as the same shall be amended from time to time.
"Liquidated Damages" shall have the meaning assigned thereto in
Section 2(c) hereof.
"Notice and Questionnaire" means a Notice of Registration Statement
and Selling Securityholder Questionnaire substantially in the form of
Exhibit A hereto.
The term "person" shall mean a corporation, association, partnership,
organization, business, individual, government or political subdivision
thereof or governmental agency.
"Purchase Agreement" shall mean the Purchase Agreement, dated as of
March 29, 2001, between the Purchasers and the Company relating to the
Securities.
"Purchasers" shall mean the Purchasers named in Schedule I to the
Purchase Agreement.
"Registrable Securities" shall mean the Securities; provided, however,
that a Security shall cease to be a Registrable Security when (i) in the
circumstances contemplated by Section 2(a) hereof, the Security has been
exchanged for an Exchange Security in an Exchange Offer as contemplated in
Section 2(a) hereof (provided that any Exchange Security that, pursuant to
the next to last sentence of Section 2(a), is included in a prospectus for
use in connection with resales by broker-dealers shall be deemed to be a
Registrable Security with respect to Sections 5, 6 and 9 until resale of
such Registrable Security has been effected within the 180-day period
referred to in Section 2(a)(4)); (ii) in the circumstances contemplated by
Section 2(b) hereof, a Shelf Registration Statement registering such
Security under the Securities Act has been declared or becomes effective
and such Security has been sold or otherwise transferred by the holder
thereof pursuant to and in a manner contemplated by such effective Shelf
Registration Statement; (iii) such Security is sold pursuant to Rule 144
under circumstances in which any legend borne by such Security relating to
2
restrictions on transferability thereof, under the Securities Act or
otherwise, is removed by the Company or pursuant to the Indenture; (iv)
such Security is eligible to be sold pursuant to paragraph (k) of Rule 144;
or (v) such Security shall cease to be outstanding.
"Registration Default" shall have the meaning assigned thereto in
Section 2(c) hereof.
"Registration Expenses" shall have the meaning assigned thereto in
Section 4 hereof.
"Resale Period" shall have the meaning assigned thereto in Section
2(a) hereof.
"Restricted Holder" shall mean (i) a holder that is an affiliate of
the Company within the meaning of Rule 405, (ii) a holder who acquires
Exchange Securities outside the ordinary course of such holder's business,
(iii) a holder who has arrangements or understandings with any person to
participate in the Exchange Offer for the purpose of distributing Exchange
Securities and (iv) a holder that is a broker-dealer, but only with respect
to Exchange Securities received by such broker-dealer pursuant to an
Exchange Offer in exchange for Registrable Securities acquired by the
broker-dealer directly from the Company.
"Rule 144," "Rule 405" and "Rule 415" shall mean, in each case, such
rule promulgated under the Securities Act (or any successor provision), as
the same shall be amended from time to time.
"Securities" shall mean, collectively, the 9.75% Senior Notes due June
1, 2008 of the Company to be issued and sold to the Purchasers, and
securities issued in exchange therefor or in lieu thereof pursuant to the
Indenture.
"Securities Act" shall mean the Securities Act of 1933, or any
successor thereto, as the same shall be amended from time to time.
"Shelf Registration" shall have the meaning assigned thereto in
Section 2(b) hereof.
"Shelf Registration Statement" shall have the meaning assigned thereto
in Section 2(b) hereof.
"Trust Indenture Act" shall mean the Trust Indenture Act of 1939, or
any successor thereto, and the rules, regulations and forms promulgated
thereunder, all as the same shall be amended from time to time.
Unless the context otherwise requires, any reference herein to a
"Section" or "clause" refers to a Section or clause, as the case may be, of
this Exchange and Registration Rights Agreement, and the words "herein,"
"hereof" and "hereunder" and other words of similar import refer to this
Exchange and Registration Rights Agreement as a whole and not to any
particular Section or other subdivision.
2. Registration Under the Securities Act.
(a) Except as set forth in Section 2(b) below, the Company agrees to
file under the Securities Act, as soon as practicable, but no later than 90
days after the Closing Date, a registration statement relating to an offer
to exchange (such registration statement, the "Exchange Registration
3
Statement", and such offer, the "Exchange Offer") any and all of the
Securities for a like aggregate principal amount of debt securities issued
by the Company, which debt securities are substantially identical to the
Securities (and are entitled to the benefits of a trust indenture which is
substantially identical to the Indenture or is the Indenture and which has
been qualified under the Trust Indenture Act), except that they have been
registered pursuant to an effective registration statement under the
Securities Act and do not contain provisions for the liquidated damages
contemplated in Section 2(c) below (such new debt securities hereinafter
called "Exchange Securities"). The Company agrees to use all commercially
reasonable efforts to cause the Exchange Registration Statement to become
effective under the Securities Act as soon as practicable, but no later
than 180 days after the Closing Date. The Exchange Offer will be registered
under the Securities Act on the appropriate form and will comply with all
applicable tender offer rules and regulations under the Exchange Act. The
Company further agrees to use its best efforts to commence and complete the
Exchange Offer promptly, but no later than 45 days after such registration
statement has become effective, hold the Exchange Offer open for at least
30 days and exchange Exchange Securities for all Registrable Securities
that have been properly tendered and not withdrawn on or prior to the
expiration of the Exchange Offer. The Exchange Offer will be deemed to have
been "completed" only if the debt securities received in the Exchange Offer
by holders other than Restricted Holders are, upon receipt, transferable by
each such holder without restriction under the Securities Act and the
Exchange Act and without material restrictions under the blue sky or
securities laws of a substantial majority of the states of the United
States of America. The Exchange Offer shall be deemed to have been
completed upon the earlier to occur of (i) the Company having exchanged the
Exchange Securities for all outstanding Registrable Securities pursuant to
the Exchange Offer and (ii) the Company having exchanged, pursuant to the
Exchange Offer, Exchange Securities for all Registrable Securities that
have been properly tendered and not withdrawn before the expiration of the
Exchange Offer, which shall be on a date that is at least 30 days following
the commencement of the Exchange Offer. The Company agrees (x) to include
in the Exchange Registration Statement a prospectus for use in any resales
by any holder of Exchange Securities that is a broker-dealer and (y) to
keep such Exchange Registration Statement effective for a period (the
"Resale Period") beginning when Exchange Securities are first issued in the
Exchange Offer and ending upon the earlier of the expiration of the 180th
day after the Exchange Offer has been completed or such time as such
broker-dealers no longer own any Registrable Securities. With respect to
such Exchange Registration Statement, such holders shall have the benefit
of the rights of indemnification and contribution set forth in Sections
6(a), (c), (d) and (e) hereof.
(b) If (i) on or prior to the time the Exchange Offer is completed,
existing Commission interpretations are changed such that the debt
securities received by holders other than Restricted Holders in the
Exchange Offer are not or would not be, upon receipt, transferable by each
such holder without restriction under the Securities Act, (ii) the Exchange
Offer has not been completed within 225 days following the Closing Date or
(iii) the Exchange Offer is not available to any holder of the Securities,
the Company shall, in lieu of (or, in the case of clause (iii), in addition
to) conducting the Exchange Offer contemplated by Section 2(a), file under
the Securities Act as soon as practicable, but no later than 30 days after
the time such obligation to file arises, a "shelf" registration statement
providing for the registration of, and the sale on a continuous or delayed
basis by the holders of, all of the Registrable Securities, pursuant to
Rule 415 or any similar rule that may be adopted by the Commission (such
filing, the "Shelf Registration" and such registration statement, the
"Shelf Registration Statement"). The Company agrees to use all commercially
reasonable efforts (x) to cause the Shelf Registration Statement to become
4
or be declared effective no later than 120 days after such Shelf
Registration Statement is filed and to keep such Shelf Registration
Statement continuously effective for a period ending on the earlier of the
second anniversary of the Effective Time or such time as there are no
longer any Registrable Securities outstanding, provided, however, that no
holder shall be entitled to be named as a selling securityholder in the
Shelf Registration Statement or to use the prospectus forming a part
thereof for resales of Registrable Securities unless such holder is an
Electing Holder, and (y) after the Effective Time of the Shelf Registration
Statement, promptly upon the request of any holder of Registrable
Securities that is not then an Electing Holder, to take any action
reasonably necessary to enable such holder to use the prospectus forming a
part thereof for resales of Registrable Securities, including, without
limitation, any action necessary to identify such holder as a selling
securityholder in the Shelf Registration Statement, provided, however, that
nothing in this Clause (y) shall relieve any such holder of the obligation
to return a completed and signed Notice and Questionnaire to the Company in
accordance with Section 3(d)(iii) hereof. The Company further agrees to
supplement or make amendments to the Shelf Registration Statement, as and
when required by the rules, regulations or instructions applicable to the
registration form used by the Company for such Shelf Registration Statement
or by the Securities Act or rules and regulations thereunder for shelf
registration, and the Company agrees to furnish to each Electing Holder
copies of any such supplement or amendment prior to its being used or
promptly following its filing with the Commission. Notwithstanding the
foregoing, if the Board of Directors of the Company determines in good
faith that it is in the best interests of the Company not to disclose the
existence of or facts surrounding any proposed or pending material
corporate transaction involving the Company, the Company may allow the
Shelf Registration Statement to fail to be effective and usable as a result
of such nondisclosure for up to 60 days during the two year period of
effectiveness required by Section 2 hereof, but in no event for any period
in excess of 30 consecutive days.
(c) In the event that (i) the Company has not filed the Exchange
Registration Statement or Shelf Registration Statement on or before the
date on which such registration statement is required to be filed pursuant
to Section 2(a) or 2(b), respectively, or (ii) such Exchange Registration
Statement or Shelf Registration Statement has not become effective or been
declared effective by the Commission on or before the date on which such
registration statement is required to become or be declared effective
pursuant to Section 2(a) or 2(b), respectively, or (iii) the Exchange Offer
has not been completed within 45 days after the initial effective date of
the Exchange Registration Statement relating to the Exchange Offer (if the
Exchange Offer is then required to be made) or (iv) any Exchange
Registration Statement or Shelf Registration Statement required by Section
2(a) or 2(b) hereof is filed and declared effective but shall thereafter
either be withdrawn by the Company or shall become subject to an effective
stop order issued pursuant to Section 8(d) of the Securities Act suspending
the effectiveness of such registration statement (except as specifically
permitted herein) without being succeeded immediately by an additional
registration statement filed and declared effective (each such event
referred to in clauses (i) through (iv), a "Registration Default" and each
period during which a Registration Default has occurred and is continuing,
a "Registration Default Period"), then, as liquidated damages for such
Registration Default, subject to the provisions of Section 9(b), liquidated
damages ("Liquidated Damages"), in addition to the Base Interest, shall
accrue at a per annum rate of 0.25% for the first 90 days of the
Registration Default Period, at a per annum rate of 0.50% for the second 90
days of the Registration Default Period, at a per annum rate of 0.75% for
5
the third 90 days of the Registration Default Period and at a per annum
rate of 1.0% thereafter for the remaining portion of the Registration
Default Period.
(d) The Company shall take all actions necessary or advisable to be
taken by it to ensure that the transactions contemplated herein are
effected as so contemplated.
(e) Any reference herein to a registration statement as of any time
shall be deemed to include any document incorporated, or deemed to be
incorporated, therein by reference as of such time and any reference herein
to any post-effective amendment to a registration statement as of any time
shall be deemed to include any document incorporated, or deemed to be
incorporated, therein by reference as of such time.
3. Registration Procedures.
If the Company files a registration statement pursuant to Section 2(a)
or Section 2(b), the following provisions shall apply:
(a) At or before the Effective Time of the Exchange Registration
Statement or the Shelf Registration Statement, as the case may be, the
Company shall qualify the Indenture under the Trust Indenture Act of 1939.
(b) In the event that such qualification would require the appointment
of a new trustee under the Indenture, the Company shall appoint a new
trustee thereunder pursuant to the applicable provisions of the Indenture.
(c) In connection with the Company's obligations with respect to the
registration of Exchange Securities as contemplated by Section 2(a) (the
"Exchange Registration"), if applicable, the Company shall, as soon as
practicable (or as otherwise specified):
(i) prepare and file with the Commission, as soon as practicable
but no later than 90 days after the Closing Date, an Exchange
Registration Statement on any form which may be utilized by the
Company and which shall permit the Exchange Offer and resales of
Exchange Securities by broker-dealers during the Resale Period to be
effected as contemplated by Section 2(a), and use commercially
reasonable efforts to cause such Exchange Registration Statement to
become effective as soon as practicable thereafter, but no later than
180 days after the Closing Date;
(ii) as soon as practicable prepare and file with the Commission
such amendments and supplements to such Exchange Registration
Statement and the prospectus included therein as may be necessary to
effect and maintain the effectiveness of such Exchange Registration
Statement for the periods and purposes contemplated in Section 2(a)
hereof and as may be required by the applicable rules and regulations
of the Commission and the instructions applicable to the form of such
Exchange Registration Statement, and promptly provide each
broker-dealer holding Exchange Securities with such number of copies
of the prospectus included therein (as then amended or supplemented),
in conformity in all material respects with the requirements of the
Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder, as such broker-dealer
reasonably may request in writing to the Company prior to the
expiration of the Resale Period, for use in connection with resales of
Exchange Securities;
6
(iii) promptly notify each broker-dealer that has requested or
received copies of the prospectus included in such registration
statement, and confirm such advice in writing, (A) when such Exchange
Registration Statement or the prospectus included therein or any
prospectus amendment or supplement or post-effective amendment has
been filed, and, with respect to such Exchange Registration Statement
or any post-effective amendment, when the same has become effective,
(B) of any comments by the Commission and by the blue sky or
securities commissioner or regulator of any state with respect thereto
or any request by the Commission for amendments or supplements to such
Exchange Registration Statement or prospectus or for additional
information, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of such Exchange Registration Statement
or the initiation or threatening of any proceedings for that purpose,
(D) if at any time the representations and warranties of the Company
contemplated by Section 5 or contained in any underwriting agreement
or similar agreement relating to the offering cease to be true and
correct in all material respects, (E) of the receipt by the Company of
any notification with respect to the suspension of the qualification
of the Exchange Securities for sale in any jurisdiction or the
initiation or threatening of any proceeding for such purpose, or (F)
at any time during the Resale Period when a prospectus is required to
be delivered under the Securities Act, that such Exchange Registration
Statement, prospectus, prospectus amendment or supplement or
post-effective amendment does not conform in all material respects to
the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission
thereunder or contains an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the
circumstances then existing;
(iv) in the event that the Company would be required, pursuant to
Section 3(c)(iii)(F) above, to notify any broker-dealers holding
Exchange Securities, the Company shall without delay prepare and
furnish to each such holder a reasonable number of copies of a
prospectus supplemented or amended so that, as thereafter delivered to
purchasers of such Exchange Securities during the Resale Period, such
prospectus shall conform in all material respects to the applicable
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder and shall not
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 in light of the circumstances then
existing;
(v) use commercially reasonable efforts to obtain the withdrawal
of any order suspending the effectiveness of such Exchange
Registration Statement or any post-effective amendment thereto at the
earliest practicable date;
(vi) use commercially reasonable efforts to (A) register or
qualify the Exchange Securities under the securities laws or blue sky
laws of such jurisdictions as are contemplated by Section 2(a) no
later than the commencement of the Exchange Offer, (B) keep such
registrations or qualifications in effect and comply with such laws so
as to permit the continuance of offers, sales and dealings therein in
such jurisdictions until the expiration of the Resale Period and (C)
take any and all other actions as may be reasonably necessary or
advisable to enable each broker-dealer holding Exchange Securities to
consummate the disposition thereof in such jurisdictions; provided,
7
however, that the Company shall not be responsible for any filing
obligations that such broker-dealer may incur as such under the laws
of such jurisdiction; and provided further, that the Company shall not
be required for any such purpose to (1) qualify as a foreign
corporation in any jurisdiction wherein it would not otherwise be
required to qualify but for the requirements of this Section 3(c)(vi),
(2) consent to general service of process in any such jurisdiction or
(3) make any changes to its certificate of incorporation or by-laws or
any agreement between it and its stockholders;
(vii) use commercially reasonable efforts to obtain the consent
or approval of each governmental agency or authority, whether federal,
state or local, which may be required in order for the Company to
effect the Exchange Registration, the Exchange Offer and the offering
and sale of Exchange Securities by broker-dealers during the Resale
Period;
(viii) provide a CUSIP number for all Exchange Securities, not
later than the applicable Effective Time;
(ix) comply with all applicable rules and regulations of the
Commission, and make generally available to its securityholders as
soon as practicable but no later than 18 months after the effective
date of such Exchange Registration Statement, an earning statement of
the Company and its subsidiaries complying with Section 11(a) of the
Securities Act (including, at the option of the Company, Rule 158
thereunder).
(d) In connection with the Company's obligations with respect to the
Shelf Registration, if applicable, the Company shall, as soon as
practicable (or as otherwise specified):
(i) prepare and file with the Commission, as soon as practicable
but in any case within the time periods specified in Section 2(b), a
Shelf Registration Statement on any form which may be utilized by the
Company and which shall register all of the Registrable Securities for
resale by the holders thereof in accordance with such method or
methods of disposition as may be specified by such of the holders as,
from time to time, may be Electing Holders and use its best efforts to
cause such Shelf Registration Statement to become effective as soon as
practicable but in any case within the time periods specified in
Section 2(b);
(ii) not less than 30 calendar days prior to the Effective Time
of the Shelf Registration Statement, mail the Notice and Questionnaire
to the holders of Registrable Securities; no holder shall be entitled
to be named as a selling securityholder in the Shelf Registration
Statement as of the Effective Time, and no holder shall be entitled to
use the prospectus forming a part thereof for resales of Registrable
Securities at any time, unless such holder has returned a completed
and signed Notice and Questionnaire to the Company by the deadline for
response set forth therein; provided, however, holders of Registrable
Securities shall have at least 28 calendar days from the date on which
the Notice and Questionnaire is first mailed to such holders to return
a completed and signed Notice and Questionnaire to the Company;
(iii) after the Effective Time of the Shelf Registration
Statement, upon the request of any holder of Registrable Securities
that is not then an Electing Holder, promptly send a Notice and
Questionnaire to such holder; provided that the Company shall not be
8
required to take any action to name such holder as a selling
securityholder in the Shelf Registration Statement or to enable such
holder to use the prospectus forming a part thereof for resales of
Registrable Securities until such holder has returned a completed and
signed Notice and Questionnaire to the Company;
(iv) as soon as practicable prepare and file with the Commission
such amendments and supplements to such Shelf Registration Statement
and the prospectus included therein as may be necessary to effect and
maintain the effectiveness of such Shelf Registration Statement for
the period specified in Section 2(b) hereof and as may be required by
the applicable rules and regulations of the Commission and the
instructions applicable to the form of such Shelf Registration
Statement, and furnish to the Electing Holders copies of any such
supplement or amendment simultaneously with or prior to its being used
or filed with the Commission;
(v) comply in all material respects with the provisions of the
Securities Act with respect to the disposition of all of the
Registrable Securities covered by such Shelf Registration Statement in
accordance with the intended methods of disposition by the Electing
Holders provided for in such Shelf Registration Statement;
(vi) provide (A) the Electing Holders, (B) the underwriters
(which term, for purposes of this Exchange and Registration Rights
Agreement, shall include a person deemed to be an underwriter within
the meaning of Section 2(a)(11) of the Securities Act), if any,
thereof, (C) any sales or placement agent therefor, (D) not more than
one counsel for all such underwriters or agents and (E) not more than
one counsel for all the Electing Holders the opportunity to
participate in the preparation of such Shelf Registration Statement,
each prospectus included therein or filed with the Commission and each
amendment or supplement thereto;
(vii) for a reasonable period prior to the filing of such Shelf
Registration Statement, and throughout the period specified in Section
2(b), make available at reasonable times at the Company's principal
place of business or such other reasonable place for inspection by the
persons referred to in Section 3(d)(vi) who shall certify to the
Company that they have a current intention to sell the Registrable
Securities pursuant to the Shelf Registration such financial and other
information and books and records of the Company, and cause the
officers, employees, counsel and independent certified public
accountants of the Company to respond to such inquiries, as shall be
reasonably necessary, in the judgment of the respective counsel
referred to in such Section, to conduct a reasonable investigation
within the meaning of Section 11 of the Securities Act; provided,
however, that each such party shall be required to maintain in
confidence and not to disclose to any other person any information or
records reasonably designated by the Company as being confidential,
until such time as (A) such information becomes a matter of public
record (whether by virtue of its inclusion in such registration
statement or otherwise), or (B) such person shall be required so to
disclose such information pursuant to a subpoena or order of any court
or other governmental agency or body having jurisdiction over the
matter (subject to the requirements of such order, and only after such
person shall have given the Company prompt prior written notice of
such requirement), or (C) such information is required to be set forth
9
in such Shelf Registration Statement or the prospectus included
therein or in an amendment to such Shelf Registration Statement or an
amendment or supplement to such prospectus in order that such Shelf
Registration Statement, prospectus, amendment or supplement, as the
case may be, complies with applicable requirements of the federal
securities laws and the rules and regulations of the Commission and
does not contain an untrue statement of a material fact or omit to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of
the circumstances then existing;
(viii) promptly notify each of the Electing Holders, any sales or
placement agent therefor and any underwriter thereof (which
notification may be made through any managing underwriter that is a
representative of such underwriter for such purpose) and confirm such
advice in writing, (A) when such Shelf Registration Statement or the
prospectus included therein or any prospectus amendment or supplement
or post-effective amendment has been filed, and when such Shelf
Registration Statement or any post-effective amendment has become
effective, (B) of any comments by the Commission and by the blue sky
or securities commissioner or regulator of any state with respect
thereto or any request by the Commission for amendments or supplements
to such Shelf Registration Statement or prospectus or for additional
information, (C) of the issuance by the Commission of any stop order
suspending the effectiveness of such Shelf Registration Statement or
the initiation or threatening of any proceedings for that purpose, (D)
if at any time the representations and warranties of the Company
contemplated by Section 3(d)(xvii) or Section 5 or contained in any
underwriting agreement or similar agreement relating to the offering
cease to be true and correct in all material respects, (E) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Registrable Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose, or (F) if at any time when a prospectus is required
to be delivered under the Securities Act, that such Shelf Registration
Statement, prospectus, prospectus amendment or supplement or
post-effective amendment does not conform in all material respects to
the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission
thereunder or contains an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading in light of the
circumstances then existing;
(ix) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of such registration statement or any
post-effective amendment thereto at the earliest practicable date;
(x) if requested by any managing underwriter or underwriters, any
placement or sales agent or any Electing Holder, promptly incorporate
in a prospectus supplement or post-effective amendment such
information as is required by the applicable rules and regulations of
the Commission and as such managing underwriter or underwriters, such
agent or such Electing Holder specifies should be included therein
relating to the terms of the sale of such Registrable Securities,
including information with respect to the principal amount of
Registrable Securities being sold by such Electing Holder or agent or
to any underwriters, the name and description of such Electing Holder,
agent or underwriter, the offering price of such Registrable
Securities and any discount, commission or other compensation payable
10
in respect thereof, the purchase price being paid therefor by such
underwriters and with respect to any other terms of the offering of
the Registrable Securities to be sold by such Electing Holder or agent
or to such underwriters; and make all required filings of such
prospectus supplement or post-effective amendment promptly after
notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment;
(xi) furnish to each Electing Holder, each placement or sales
agent, if any, therefor, each underwriter, if any, thereof and the
respective counsel referred to in Section 3(d)(vi) an executed copy
(or, in the case of an Electing Holder, a conformed copy) of such
Shelf Registration Statement, each such amendment and supplement
thereto (in each case including all exhibits thereto (in the case of
an Electing Holder of Registrable Securities, upon request) and
documents incorporated by reference therein) and such number of copies
of such Shelf Registration Statement (excluding exhibits thereto and
documents incorporated by reference therein unless specifically so
requested by such Electing Holder, agent or underwriter, as the case
may be) and of the prospectus included in such Shelf Registration
Statement (including each preliminary prospectus and any summary
prospectus), in conformity in all material respects with the
applicable requirements of the Securities Act and the Trust Indenture
Act and the rules and regulations of the Commission thereunder, and
such other documents, as such Electing Holder, agent, if any, and
underwriter, if any, may reasonably request in order to facilitate the
offering and disposition of the Registrable Securities owned by such
Electing Holder, offered or sold by such agent or underwritten by such
underwriter and to permit such Electing Holder, agent and underwriter
to satisfy the prospectus delivery requirements of the Securities Act;
and the Company hereby consents to the use of such prospectus
(including such preliminary and summary prospectus) and any amendment
or supplement thereto by each such Electing Holder and by any such
agent and underwriter, in each case in the form most recently provided
to such person by the Company, in connection with the offering and
sale of the Registrable Securities covered by the prospectus
(including such preliminary and summary prospectus) or any supplement
or amendment thereto;
(xii) use commercially reasonable efforts to (A) register or
qualify the Registrable Securities to be included in such Shelf
Registration Statement under such securities laws or blue sky laws of
such jurisdictions as any Electing Holder and each placement or sales
agent, if any, therefor and underwriter, if any, thereof shall
reasonably request and, (B) keep such registrations or qualifications
in effect and comply with such laws so as to permit the continuance of
offers, sales and dealings therein in such jurisdictions during the
period the Shelf Registration is required to remain effective under
Section 2(b) above and for so long as may be necessary to enable any
such Electing Holder, agent or underwriter to complete its
distribution of Securities pursuant to such Shelf Registration
Statement and (C) take any and all other actions as may be reasonably
necessary or advisable to enable each such Electing Holder, agent, if
any, and underwriter, if any, to consummate the disposition in such
jurisdictions of such Registrable Securities; provided, however, that
the Company shall not be required for any such purpose to (1) qualify
as a foreign corporation in any jurisdiction wherein it would not
otherwise be required to qualify but for the requirements of this
Section 3(d)(xii), (2) consent to general service of process in any
11
such jurisdiction or (3) make any changes to its certificate of
incorporation or by-laws or any agreement between it and its
stockholders;
(xiii) use commercially reasonable efforts to obtain the consent
or approval of each governmental agency or authority, whether federal,
state or local, which may be required to effect the Shelf Registration
or the offering or sale in connection therewith or to enable the
selling holder or holders to offer, or to consummate the disposition
of, their Registrable Securities;
(xiv) Unless any Registrable Securities shall be in book-entry
only form, cooperate with the Electing Holders and the managing
underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be
sold, which certificates, if so required by any securities exchange
upon which any Registrable Securities are listed, shall be penned,
lithographed or engraved, or produced by any combination of such
methods, on steel engraved borders, and which certificates shall not
bear any restrictive legends; and, in the case of an underwritten
offering, enable such Registrable Securities to be in such
denominations and registered in such names as the managing
underwriters may request at least two business days prior to any sale
of the Registrable Securities;
(xv) provide a CUSIP number for all Registrable Securities, not
later than the applicable Effective Time;
(xvi) enter into one or more underwriting agreements, engagement
letters, agency agreements, "best efforts" underwriting agreements or
similar agreements, as appropriate, including customary provisions
relating to indemnification and contribution, and take such other
actions in connection therewith as any Electing Holders aggregating at
least 20% in aggregate principal amount of the Registrable Securities
at the time outstanding shall request in order to expedite or
facilitate the disposition of such Registrable Securities;
(xvii) whether or not an agreement of the type referred to in
Section 3(d)(xvi) hereof is entered into and whether or not any
portion of the offering contemplated by the Shelf Registration is an
underwritten offering or is made through a placement or sales agent or
any other entity, (A) make such representations and warranties to the
Electing Holders and the placement or sales agent, if any, therefor
and the underwriters, if any, thereof in form, substance and scope as
are customarily made in connection with an offering of debt securities
pursuant to any appropriate agreement or to a registration statement
filed on the form applicable to the Shelf Registration; (B) obtain an
opinion or opinions of counsel to the Company in customary form and
covering such matters, of the type customarily covered by such an
opinion, as the managing underwriters, if any, or as any Electing
Holders of at least 20% in aggregate principal amount of the
Registrable Securities at the time outstanding may reasonably request,
addressed to such Electing Holder or Electing Holders and the
placement or sales agent, if any, therefor and the underwriters, if
any, thereof and dated the effective date of such Shelf Registration
Statement (and if such Shelf Registration Statement contemplates an
underwritten offering of a part or all of the Registrable Securities,
dated the date of the closing under the underwriting agreement
relating thereto) (it being agreed that the matters to be covered by
such opinion shall include the due incorporation and good standing of
12
the Company and its subsidiaries; the qualification of the Company and
its subsidiaries to transact business as foreign corporations; the due
authorization, execution and delivery of the relevant agreement of the
type referred to in Section 3(d)(xvi) hereof; the due authorization,
execution, authentication and issuance, and the validity and
enforceability, of the Securities; the absence of material legal or
governmental proceedings involving the Company; the absence of a
breach by the Company or any of its subsidiaries of, or a default
under, material agreements binding upon the Company or any subsidiary
of the Company; the absence of governmental approvals required to be
obtained in connection with the Shelf Registration, the offering and
sale of the Registrable Securities, this Exchange and Registration
Rights Agreement or any agreement of the type referred to in Section
3(d)(xvi) hereof, except such approvals as may be required under state
securities or blue sky laws; the material compliance as to form of
such Shelf Registration Statement and any documents incorporated by
reference therein and of the Indenture with the requirements of the
Securities Act and the Trust Indenture Act and the rules and
regulations of the Commission thereunder, respectively; and, as of the
date of the opinion and of the Shelf Registration Statement or most
recent post-effective amendment thereto, as the case may be, the
absence from such Shelf Registration Statement and the prospectus
included therein, as then amended or supplemented, and from the
documents incorporated by reference therein (in each case other than
the financial statements and other financial information contained
therein) of an untrue statement of a material fact or the omission to
state therein a material fact necessary to make the statements therein
not misleading (in the case of such documents, in the light of the
circumstances existing at the time that such documents were filed with
the Commission under the Exchange Act)); (C) obtain a "cold comfort"
letter or letters from the independent certified public accountants of
the Company addressed to the selling Electing Holders, the placement
or sales agent, if any, therefor or the underwriters, if any, thereof,
dated (i) the effective date of such Shelf Registration Statement and
(ii) the effective date of any prospectus supplement to the prospectus
included in such Shelf Registration Statement or post-effective
amendment to such Shelf Registration Statement which includes
unaudited or audited financial statements as of a date or for a period
subsequent to that of the latest such statements included in such
prospectus (and, if such Shelf Registration Statement contemplates an
underwritten offering pursuant to any prospectus supplement to the
prospectus included in such Shelf Registration Statement or
post-effective amendment to such Shelf Registration Statement which
includes unaudited or audited financial statements as of a date or for
a period subsequent to that of the latest such statements included in
such prospectus, dated the date of the closing under the underwriting
agreement relating thereto), such letter or letters to be in customary
form and covering such matters of the type customarily covered by
letters of such type; (D) deliver such documents and certificates,
including officers' certificates, as may be reasonably requested by
any Electing Holders of at least 20% in aggregate principal amount of
the Registrable Securities at the time outstanding or the placement or
sales agent, if any, therefor and the managing underwriters, if any,
thereof to evidence the accuracy of the representations and warranties
made pursuant to clause (A) above or those contained in Section 5(a)
hereof and the compliance with or satisfaction of any agreements or
conditions contained in the underwriting agreement or other agreement
entered into by the Company; and (E) undertake such obligations
relating to expense reimbursement, indemnification and contribution as
are provided in Section 6 hereof;
13
(xviii) notify in writing each holder of Registrable Securities
of any proposal by the Company to amend or waive any provision of this
Exchange and Registration Rights Agreement pursuant to Section 9(h)
hereof and of any amendment or waiver effected pursuant thereto, each
of which notices shall contain the text of the amendment or waiver
proposed or effected, as the case may be; and
(xix) comply in all material respects with all applicable rules
and regulations of the Commission, and make generally available to its
securityholders as soon as practicable but in any event not later than
18 months after the effective date of such Shelf Registration
Statement, an earning statement of the Company and its subsidiaries
complying with Section 11(a) of the Securities Act (including, at the
option of the Company, Rule 158 thereunder).
(e) In the event that the Company would be required, pursuant to
Section 3(d)(viii)(F) above, to notify the Electing Holders, the placement
or sales agent, if any, therefor and the managing underwriters, if any,
thereof, the Company shall without delay prepare and furnish to each of the
Electing Holders, to each placement or sales agent, if any, and to each
such underwriter, if any, a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to purchasers of
Registrable Securities, such prospectus shall conform in all material
respects to the applicable requirements of the Securities Act and the Trust
Indenture Act and the rules and regulations of the Commission thereunder
and shall not 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 in light of the circumstances then
existing. Each Electing Holder agrees that upon receipt of any notice from
the Company pursuant to Section 3(d)(viii)(F) hereof, such Electing Holder
shall forthwith discontinue the disposition of Registrable Securities
pursuant to the Shelf Registration Statement applicable to such Registrable
Securities until such Electing Holder shall have received copies of such
amended or supplemented prospectus, and if so directed by the Company, such
Electing Holder shall deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in such Electing Holder's
possession of the prospectus covering such Registrable Securities at the
time of receipt of such notice.
(f) In the event of a Shelf Registration, in addition to the
information required to be provided by each Electing Holder in its Notice
Questionnaire, the Company may require such Electing Holder to furnish to
the Company such additional information regarding such Electing Holder and
such Electing Holder's intended method of distribution of Registrable
Securities as may be required in order to comply with the Securities Act.
Each such Electing Holder agrees to notify the Company as promptly as
practicable of any inaccuracy or change in information previously furnished
by such Electing Holder to the Company or of the occurrence of any event in
either case as a result of which any prospectus relating to such Shelf
Registration contains or would contain an untrue statement of a material
14
fact regarding such Electing Holder or such Electing Holder's intended
method of disposition of such Registrable Securities or omits to state any
material fact regarding such Electing Holder or such Electing Holder's
intended method of disposition of such Registrable Securities required to
be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing, and promptly to
furnish to the Company any additional information required to correct and
update any previously furnished information or required so that such
prospectus shall not contain, with respect to such Electing Holder or the
disposition of such Registrable Securities, 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 in light
of the circumstances then existing.
(g) Until the expiration of two years after the Closing Date, the
Company will not, and will not permit any of its "affiliates" (as defined
in Rule 144) to, resell any of the Securities that have been reacquired by
any of them except pursuant to an effective registration statement under
the Securities Act.
4. Registration Expenses.
The Company agrees to bear and to pay or cause to be paid promptly all
expenses incident to the Company's performance of or compliance with this
Exchange and Registration Rights Agreement, including (a) all Commission and any
NASD registration, filing and review fees and expenses including fees and
disbursements of counsel for the placement or sales agent or underwriters in
connection with such registration, filing and review, (b) all fees and expenses
in connection with the qualification of the Securities for offering and sale
under the state securities and blue sky laws referred to in Section 3(d)(xii)
hereof and determination of their eligibility for investment under the laws of
such jurisdictions as any managing underwriters or the Electing Holders may
designate, including any fees and disbursements of counsel for the Electing
Holders or underwriters in connection with such qualification and determination,
(c) all expenses relating to the preparation, printing, production, distribution
and reproduction of each registration statement required to be filed hereunder,
each prospectus included therein or prepared for distribution pursuant hereto,
each amendment or supplement to the foregoing, the expenses of preparing the
Securities for delivery and the expenses of printing or producing any
underwriting agreements, agreements among underwriters, selling agreements and
blue sky or legal investment memoranda and all other documents in connection
with the offering, sale or delivery of Securities to be disposed of (including
certificates representing the Securities), (d) messenger, telephone and delivery
expenses relating to the offering, sale or delivery of Securities and the
preparation of documents referred in clause (c) above, (e) fees and expenses of
the Trustee under the Indenture, any agent of the Trustee and any counsel for
the Trustee and of any collateral agent or custodian, (f) internal expenses
(including all salaries and expenses of the Company's officers and employees
performing legal or accounting duties), (g) fees, disbursements and expenses of
counsel and independent certified public accountants of the Company (including
the expenses of any opinions or "cold comfort" letters required by or incident
to such performance and compliance), (h) fees, disbursements and expenses of one
counsel for the Electing Holders retained in connection with a Shelf
Registration, as selected by the Electing Holders of a majority in aggregate
principal amount of the Registrable Securities held by Electing Holders (which
counsel shall be reasonably satisfactory to the Company), (i) any fees charged
by securities rating services for rating the Securities, and (j) fees, expenses
and disbursements of any other persons, including special experts, retained by
the Company in connection with such registration (collectively, the
"Registration Expenses"). To the extent that any Registration Expenses are
incurred, assumed or paid by any holder of Registrable Securities or any
placement or sales agent therefor or underwriter thereof, the Company shall
reimburse such person for the full amount of the Registration Expenses so
incurred, assumed or paid promptly after receipt of a request therefor.
Notwithstanding the foregoing, the holders of the Registrable Securities being
registered shall pay all agency fees and commissions and underwriting discounts
and commissions attributable to the sale of such Registrable Securities and the
fees and disbursements of any counsel or other advisors or experts retained by
such holders (severally or jointly), other than the counsel and experts
specifically referred to above.
15
5. Representations and Warranties.
The Company represents and warrants to, and agrees with, each
Purchaser and each of the holders from time to time of Registrable Securities
that:
(a) Each registration statement covering Registrable Securities and
each prospectus (including any preliminary or summary prospectus) contained
therein or furnished pursuant to Section 3(d) or Section 3(c) hereof and
any further amendments or supplements to any such registration statement or
prospectus, when it becomes effective or is filed with the Commission, as
the case may be, and, in the case of an underwritten offering of
Registrable Securities, at the time of the closing under the underwriting
agreement relating thereto, will conform in all material respects to the
requirements of the Securities Act and the Trust Indenture Act and the
rules and regulations of the Commission thereunder and will not 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; and at all times subsequent to the Effective Time when a
prospectus would be required to be delivered under the Securities Act,
other than from (i) such time as a notice has been given to holders of
Registrable Securities pursuant to Section 3(d)(viii)(F) or Section
3(c)(iii)(F) hereof until (ii) such time as the Company furnishes an
amended or supplemented prospectus pursuant to Section 3(e) or Section
3(c)(iv) hereof, each such registration statement, and each prospectus
(including any summary prospectus) contained therein or furnished pursuant
to Section 3(d) or Section 3(c) hereof, as then amended or supplemented,
will conform in all material respects to the requirements of the Securities
Act and the Trust Indenture Act and the rules and regulations of the
Commission thereunder and will not 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 in the
light of the circumstances then existing; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by a holder of Registrable Securities expressly for
use therein.
(b) Any documents incorporated by reference in any prospectus referred
to in Section 5(a) hereof, when they become or became effective or are or
were filed with the Commission, as the case may be, will conform or
conformed in all material respects to the requirements of the Securities
Act or the Exchange Act, as applicable, and none of such documents will
contain or contained an untrue statement of a material fact or will omit or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by a holder of Registrable Securities expressly for
use therein.
(c) The compliance by the Company with all of the provisions of this
Exchange and Registration Rights Agreement and the consummation by the
Company of the transactions herein contemplated will not result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company is a party or by which any of
the property or assets of the Company is subject, nor will such action
result in any violation of the provisions of any statute or the Restated
Articles of Incorporation, as amended, or the Bylaws, as amended, of the
Company or any order, rule or regulation of any court or other governmental
agency or body having jurisdiction over the Company or any of its
16
properties; and no consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the consummation by the Company of the transactions
contemplated by this Exchange and Registration Rights Agreement, except for
the registration under the Securities Act of the Securities, qualification
of the Indenture under the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as may be
required under state securities or Blue Sky laws in connection with the
offering and distribution of the Securities.
(d) This Exchange and Registration Rights Agreement has been duly
authorized, executed and delivered by the Company.
6. Indemnification.
(a) Indemnification by the Company. The Company will indemnify and
hold harmless each of the holders of Registrable Securities included in an
Exchange Registration Statement, each of the Electing Holders of
Registrable Securities included in a Shelf Registration Statement and each
person who participates as a placement or sales agent or as an underwriter
in any offering or sale of such Registrable Securities against any losses,
claims, damages or liabilities, joint or several, to which such holder,
agent or underwriter may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in any
Exchange Registration Statement or Shelf Registration Statement, as the
case may be, under which such Registrable Securities were registered under
the Securities Act, or any preliminary, final or summary prospectus
contained therein or furnished by the Company to any such holder, Electing
Holder, agent or underwriter, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse such holder, such
Electing Holder, such agent and such underwriter for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such losses, claims, damages, liabilities or actions as such
expenses are incurred; provided, however, that the Company shall not be
liable to any such person in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in such registration statement, or preliminary, final or summary
prospectus, or amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company by such person
expressly for use therein; and provided, further, that the Company shall
not be liable to any such person with respect to any preliminary prospectus
to the extent that any such loss, claim, damage or liability of such person
results from the fact that such person participated in a sale of
Registrable Securities to a person as to whom it shall be established that
there was not sent or given, at or prior to the written confirmation of
such sale, a copy of the final prospectus as then amended or supplemented
if the Company has previously furnished copies thereof in sufficient
quantity to such person and sufficiently in advance of the time of delivery
of such Registrable Securities to allow for distribution by such time of
delivery and the loss, claim, damage or liability of person results from an
untrue statement or omission of a material fact contained in or omitted
from the preliminary prospectus which was identified in writing at such
time to person and corrected in the final prospectus as then amended or
supplemented and each correction would have cured the defect giving rise to
such loss, claim, damage or liability.
17
(b) Indemnification by the Holders and any Agents and Underwriters.
The Company may require, as a condition to including any Registrable
Securities in any registration statement filed pursuant to Section 2(b)
hereof and to entering into any underwriting agreement with respect
thereto, that the Company shall have received an undertaking reasonably
satisfactory to it from the Electing Holder of such Registrable Securities
and from each underwriter named in any such underwriting agreement,
severally and not jointly, to (i) indemnify and hold harmless the Company,
and all other holders of Registrable Securities, against any losses,
claims, damages or liabilities to which the Company or such other holders
of Registrable Securities may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, or any preliminary, final or summary prospectus
contained therein or furnished by the Company to any such Electing Holder,
agent or underwriter, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by such Electing Holder
or underwriter expressly for use therein, and (ii) reimburse the Company
for any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending any such losses, claims,
damages, liabilities or actions as such expenses are incurred; provided,
however, that no such Electing Holder shall be required to undertake
liability to any person under this Section 6(b) for any amounts in excess
of the dollar amount of the proceeds to be received by such Electing Holder
from the sale of such Electing Holder's Registrable Securities pursuant to
such registration.
(c) Notices of Claims, Etc. Promptly after receipt by an indemnified
party under subsection (a) or (b) above of written notice of the
commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party pursuant to the
indemnification provisions of or contemplated by this Section 6, notify
such indemnifying party in writing of the commencement of such action; but
the omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise than
under the indemnification provisions of or contemplated by Section 6(a) or
6(b) hereof. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the
commencement thereof, such indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party (who shall
not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, such
indemnifying party shall not be liable to such indemnified party for any
legal expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection with the
defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified
party, effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or threatened action or claim in
respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to
such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all
18
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act
by or on behalf of any indemnified party.
(d) Contribution. If for any reason the indemnification provisions
contemplated by Section 6(a) or Section 6(b) are unavailable to or
insufficient to hold harmless an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (or actions in respect thereof) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and the indemnified party in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of such indemnifying party and
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact relates to
information supplied by such indemnifying party or by such indemnified
party, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The
parties hereto agree that it would not be just and equitable if
contributions pursuant to this Section 6(d) were determined by pro rata
allocation (even if the holders or any agents or underwriters or all of
them were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to in this Section 6(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages, or
liabilities (or actions in respect thereof) referred to above shall be
deemed to include any legal or other fees or expenses reasonably incurred
by such indemnified party in connection with investigating or defending any
such losses, claims, damages, liabilities or actions. Notwithstanding the
provisions of this Section 6(d), no holder shall be required to contribute
any amount in excess of the amount by which the dollar amount of the
proceeds received by such holder from the sale of any Registrable
Securities (after deducting any fees, discounts and commissions applicable
thereto) exceeds the amount of any damages which such holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission, and no underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Registrable Securities underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which
such underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
holders' and any underwriters' obligations in this Section 6(d) to
contribute shall be several in proportion to the principal amount of
Registrable Securities registered or underwritten, as the case may be, by
them and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each officer, director and
partner of each holder, agent and underwriter and each person, if any, who
controls any holder, agent or underwriter within the meaning of the
Securities Act; and the obligations of the holders and any agents or
underwriters contemplated by this Section 6 shall be in addition to any
liability which the respective holder, agent or underwriter may otherwise
19
have and shall extend, upon the same terms and conditions, to each officer
and director of the Company (including any person who, with his consent, is
named in any registration statement as about to become a director of the
Company) and to each person, if any, who controls the Company within the
meaning of the Securities Act.
7. Underwritten Offerings.
(a) Selection of Underwriters. If any of the Registrable Securities
covered by the Shelf Registration are to be sold pursuant to an
underwritten offering, the managing underwriter or underwriters thereof
shall be designated by Electing Holders holding a majority in aggregate
principal amount of the Registrable Securities to be included in such
offering, provided that such designated managing underwriter or
underwriters is or are reasonably acceptable to the Company.
(b) Participation by Holders. Each holder of Registrable Securities
hereby agrees with each other such holder that no such holder may
participate in any underwritten offering hereunder unless such holder (i)
agrees to sell such holder's Registrable Securities on the basis provided
in any underwriting arrangements approved by the persons entitled hereunder
to approve such arrangements and (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements
and other documents reasonably required under the terms of such
underwriting arrangements.
8. Rule 144.
The Company covenants to the holders of Registrable Securities that to
the extent it shall be required to do so under the Exchange Act, the Company
shall timely file the reports required to be filed by it under the Exchange Act
or the Securities Act (including the reports under Section 13 and 15(d) of the
Exchange Act referred to in subparagraph (c)(1) of Rule 144 adopted by the
Commission under the Securities Act) and the rules and regulations adopted by
the Commission thereunder, and shall take such further action as any holder of
Registrable Securities may reasonably request, all to the extent required from
time to time to enable such holder to sell Registrable Securities without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar or successor rule or regulation hereafter adopted
by the Commission. Upon the request of any holder of Registrable Securities in
connection with that holder's sale pursuant to Rule 144, the Company shall
deliver to such holder a written statement as to whether it has complied with
such requirements.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company represents, warrants,
covenants and agrees that it has not granted, and shall not grant,
registration rights with respect to Registrable Securities or any other
securities which would be inconsistent with the terms contained in this
Exchange and Registration Rights Agreement.
(b) Specific Performance. The parties hereto acknowledge that there
would be no adequate remedy at law if the Company fails to perform any of
its obligations hereunder and that the Purchasers and the holders from time
to time of the Registrable Securities may be irreparably harmed by any such
failure, and accordingly agree that the Purchasers and such holders, in
addition to any other remedy to which they may be entitled at law or in
equity, shall be entitled to compel specific performance of the obligations
20
of the Company under this Exchange and Registration Rights Agreement in
accordance with the terms and conditions of this Exchange and Registration
Rights Agreement, in any court of the United States or any State thereof
having jurisdiction.
(c) Notices. All notices, requests, claims, demands, waivers and other
communications hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, if delivered personally or by
courier, or three days after being deposited in the mail (registered or
certified mail, postage prepaid, return receipt requested) as follows: if
to the Company, to it at 1411 East Mission Avenue, Spokane, Washington
99202, and if to a holder, to the address of such holder set forth in the
security register or other records of the Company, or to such other address
as the Company or any such holder may have furnished to the other in
writing in accordance herewith, except that notices of change of address
shall be effective only upon receipt.
(d) Parties in Interest. All the terms and provisions of this Exchange
and Registration Rights Agreement shall be binding upon, shall inure to the
benefit of and shall be enforceable by the parties hereto and the holders
from time to time of the Registrable Securities and the respective
successors and assigns of the parties hereto and such holders. In the event
that any transferee of any holder of Registrable Securities shall acquire
Registrable Securities, in any manner, whether by gift, bequest, purchase,
operation of law or otherwise, such transferee shall, without any further
writing or action of any kind, be deemed a beneficiary hereof for all
purposes and such Registrable Securities shall be held subject to all of
the terms of this Exchange and Registration Rights Agreement, and by taking
and holding such Registrable Securities such transferee shall be entitled
to receive the benefits of, and be conclusively deemed to have agreed to be
bound by all of the applicable terms and provisions of this Exchange and
Registration Rights Agreement. If the Company shall so request, any such
successor, assign or transferee shall agree in writing to acquire and hold
the Registrable Securities subject to all of the applicable terms hereof.
(e) Survival. The respective indemnities, agreements, representations,
warranties and each other provision set forth in this Exchange and
Registration Rights Agreement or made pursuant hereto shall remain in full
force and effect regardless of any investigation (or statement as to the
results thereof) made by or on behalf of any holder of Registrable
Securities, any director, officer or partner of such holder, any agent or
underwriter or any director, officer or partner thereof, or any controlling
person of any of the foregoing, and shall survive delivery of and payment
for the Registrable Securities pursuant to the Purchase Agreement and the
transfer and registration of Registrable Securities by such holder and the
consummation of an Exchange Offer.
(f) GOVERNING LAW. THIS EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.
(g) Headings. The descriptive headings of the several Sections and
paragraphs of this Exchange and Registration Rights Agreement are inserted
for convenience only, do not constitute a part of this Exchange and
Registration Rights Agreement and shall not affect in any way the meaning
or interpretation of this Exchange and Registration Rights Agreement.
(h) Entire Agreement; Amendments. This Exchange and Registration
Rights Agreement and the other writings referred to herein (including the
Indenture and the form of Securities) or delivered pursuant hereto which
21
form a part hereof contain the entire understanding of the parties with
respect to its subject matter. This Exchange and Registration Rights
Agreement supersedes all prior agreements and understandings between the
parties with respect to its subject matter. This Exchange and Registration
Rights Agreement may be amended and the observance of any term of this
Exchange and Registration Rights Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively) only
by a written instrument duly executed by the Company and the holders of a
majority in aggregate principal amount of the Registrable Securities at the
time outstanding. Each holder of any Registrable Securities at the time or
thereafter outstanding shall be bound by any amendment or waiver effected
pursuant to this Section 9(h), whether or not any notice, writing or
marking indicating such amendment or waiver appears on such Registrable
Securities or is delivered to such holder.
(i) Inspection. For so long as this Exchange and Registration Rights
Agreement shall be in effect, this Exchange and Registration Rights
Agreement and a complete list of the names and addresses of all the holders
of Registrable Securities shall be made available for inspection and
copying on any business day by any holder of Registrable Securities for
proper purposes only (which shall include any purpose related to the rights
of the holders of Registrable Securities under the Securities, the
Indenture and this Agreement) at the offices of the Company at the address
thereof set forth in Section 9(c) above and at the office of the Trustee
under the Indenture.
(j) Counterparts. This agreement may be executed by the parties in
counterparts, each of which shall be deemed to be an original, but all such
respective counterparts shall together constitute one and the same
instrument.
22
If the foregoing is in accordance with your understanding, please sign
and return to us four counterparts hereof, and upon the acceptance hereof by
you, this letter and such acceptance hereof shall constitute a binding agreement
between you and the Company.
Very truly yours,
Avista Corporation
By: /s/ JON E. ELIASSEN
------------------------------------
Name: JON E. ELIASSEN
Title: SR. VP & CFO
Accepted as of the date hereof:
Goldman, Sachs & Co.
GOLDMAN, SACHS & CO.
- --------------------
23
EXHIBIT A
AVISTA CORPORATION
INSTRUCTION TO DTC PARTICIPANTS
-------------------------------
(DATE OF MAILING)
URGENT - IMMEDIATE ATTENTION REQUESTED
--------------------------------------
DEADLINE FOR RESPONSE: [DATE] *
The Depository Trust Company ("DTC") has identified you as a DTC Participant
through which beneficial interests in Avista Corporation (the "Company") 9.75%
Senior Notes due June 1, 2008 (the "Securities") are held.
The Company is in the process of registering the Securities under the Securities
Act of 1933 for resale by the beneficial owners thereof. In order to have their
Securities included in the registration statement, beneficial owners must
complete and return the enclosed Notice of Registration Statement and Selling
Securityholder Questionnaire.
It is important that beneficial owners of the Securities receive a copy of the
- ------------------------------------------------------------------------------
enclosed materials as soon as possible as their rights to have the Securities
- --------------------------------------
included in the registration statement depend upon their returning the Notice
and Questionnaire by [DEADLINE FOR RESPONSE]. Please forward a copy of the
enclosed documents to each beneficial owner that holds interests in the
Securities through you. If you require more copies of the enclosed materials or
have any questions pertaining to this matter, please contact Avista Corporation,
1411 East Mission Avenue, Spokane, Washington 99202, Attention: [ ],
Telephone No. [ ].
- ------------------------
*Not less than 28 calendar days from date of mailing.
A-1
AVISTA CORPORATION
Notice of Registration Statement
and
Selling Securityholder Questionnaire
------------------------------------
(Date)
Reference is hereby made to the Exchange and Registration Rights Agreement (the
"Exchange and Registration Rights Agreement") between Avista Corporation (the
"Company") and the Purchasers named therein. Pursuant to the Exchange and
Registration Rights Agreement, the Company has filed with the United States
Securities and Exchange Commission (the "Commission") a registration statement
on Form [__] (the "Shelf Registration Statement") for the registration and
resale under Rule 415 of the Securities Act of 1933, as amended (the "Securities
Act"), of the Company's _____% Notes due __________ (the "Securities"). A copy
of the Exchange and Registration Rights Agreement is attached hereto. All
capitalized terms not otherwise defined herein shall have the meanings ascribed
thereto in the Exchange and Registration Rights Agreement.
Each beneficial owner of Registrable Securities (as defined in the Exchange and
Registration Rights Agreement) is entitled to have the Registrable Securities
beneficially owned by it included in the Shelf Registration Statement. In order
to have Registrable Securities included in the Shelf Registration Statement,
this Notice of Registration Statement and Selling Securityholder Questionnaire
("Notice and Questionnaire") must be completed, executed and delivered to the
Company's counsel at the address set forth herein for receipt ON OR BEFORE
[DEADLINE FOR RESPONSE]. Beneficial owners of Registrable Securities who do not
complete, execute and return this Notice and Questionnaire by such date (i) will
not be named as selling securityholders in the Shelf Registration Statement and
(ii) may not use the Prospectus forming a part thereof for resales of
Registrable Securities.
Certain legal consequences arise from being named as a selling securityholder in
the Shelf Registration Statement and related Prospectus. Accordingly, holders
and beneficial owners of Registrable Securities are advised to consult their own
securities law counsel regarding the consequences of being named or not being
named as a selling securityholder in the Shelf Registration Statement and
related Prospectus.
A-2
ELECTION
The undersigned holder (the "Selling Securityholder") of Registrable Securities
hereby elects to include in the Shelf Registration Statement the Registrable
Securities beneficially owned by it and listed below in Item (3). The
undersigned, by signing and returning this Notice and Questionnaire, agrees to
be bound with respect to such Registrable Securities by the terms and conditions
of this Notice and Questionnaire and the Exchange and Registration Rights
Agreement, including, without limitation, Section 6 of the Exchange and
Registration Rights Agreement, as if the undersigned Selling Securityholder were
an original party thereto.
Upon any sale of Registrable Securities pursuant to the Shelf Registration
Statement, the Selling Securityholder will be required to deliver to the Company
and Trustee the Notice of Transfer set forth in Appendix A to the Prospectus and
as Exhibit B to the Exchange and Registration Rights Agreement.
The Selling Securityholder hereby provides the following information to the
Company and represents and warrants that such information is accurate and
complete:
A-3
QUESTIONNAIRE
(1)(a) Full Legal Name of Selling Securityholder:
---------------------------------------------------------------------
(b) Full Legal Name of Registered Holder (if not the same as in (a) above)
of Registrable Securities Listed in Item (3) below:
---------------------------------------------------------------------
(c) Full Legal Name of DTC Participant (if applicable and if not the same
as (b) above) Through Which Registrable Securities Listed in Item
(3) below are Held:
---------------------------------------------------------------------
(2) Address for Notices to Selling Securityholder:
-----------------------------------------
Telephone:
-----------------------------------------
Fax:
-----------------------------------------
Contact Person:
-----------------------------------------
(3) Beneficial Ownership of Securities:
Except as set forth below in this Item (3), the undersigned does not
beneficially own any Securities.
(a) Principal amount of Registrable Securities beneficially owned:
---------------------------------------------------------------------
CUSIP No(s). of such Registrable Securities:
-------------------------
(b) Principal amount of Securities other than Registrable Securities
beneficially owned:
---------------------------------------------------------------------
CUSIP No(s). of such other Securities:
-------------------------------
(c) Principal amount of Registrable Securities which the undersigned
wishes to be included in the Shelf Registration Statement:
---------------------------------------------------------------------
CUSIP No(s). of such Registrable Securities to be included in the
Shelf Registration Statement:
----------------------------------------
(4) Beneficial Ownership of Other Securities of the Company:
Except as set forth below in this Item (4), the undersigned Selling
Securityholder is not the beneficial or registered owner of any other
securities of the Company, other than the Securities listed above in
Item (3).
State any exceptions here:
A-4
(5) Relationships with the Company:
Except as set forth below, neither the Selling Securityholder nor any
of its affiliates, officers, directors or principal equity holders (5%
or more) has held any position or office or has had any other material
relationship with the Company (or its predecessors or affiliates)
during the past three years.
State any exceptions here:
(6) Plan of Distribution:
Except as set forth below, the undersigned Selling Securityholder
intends to distribute the Registrable Securities listed above in Item
(3) only as follows (if at all): Such Registrable Securities may be
sold from time to time directly by the undersigned Selling
Securityholder or, alternatively, through underwriters, broker-dealers
or agents. Such Registrable Securities may be sold in one or more
transactions at fixed prices, at prevailing market prices at the time
of sale, at varying prices determined at the time of sale, or at
negotiated prices. Such sales may be effected in transactions (which
may involve crosses or block transactions) (i) on any national
securities exchange or quotation service on which the Registered
Securities may be listed or quoted at the time of sale, (ii) in the
over-the-counter market, (iii) in transactions otherwise than on such
exchanges or services or in the over-the-counter market, or (iv)
through the writing of options. In connection with sales of the
Registrable Securities or otherwise, the Selling Securityholder may
enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the Registrable Securities in the course of
hedging the positions they assume. The Selling Securityholder may also
sell Registrable Securities short and deliver Registrable Securities
to close out such short positions, or loan or pledge Registrable
Securities to broker-dealers that in turn may sell such securities.
State any exceptions here:
By signing below, the Selling Securityholder acknowledges that it understands
its obligation to comply, and agrees that it will comply, with the provisions of
the Exchange Act and the rules and regulations thereunder, particularly
Regulation M.
In the event that the Selling Securityholder transfers all or any portion of the
Registrable Securities listed in Item (3) above after the date on which such
information is provided to the Company, the Selling Securityholder agrees to
notify the transferee(s) at the time of the transfer of its rights and
obligations under this Notice and Questionnaire and the Exchange and
Registration Rights Agreement.
By signing below, the Selling Securityholder consents to the disclosure of the
information contained herein in its answers to Items (1) through (6) above and
the inclusion of such information in the Shelf Registration Statement and
related Prospectus. The Selling Securityholder understands that such information
A-5
will be relied upon by the Company in connection with the preparation of the
Shelf Registration Statement and related Prospectus.
In accordance with the Selling Securityholder's obligation under Section 3(d) of
the Exchange and Registration Rights Agreement to provide such information as
may be required by law for inclusion in the Shelf Registration Statement, the
Selling Securityholder agrees to promptly notify the Company of any inaccuracies
or changes in the information provided herein which may occur subsequent to the
date hereof at any time while the Shelf Registration Statement remains in
effect. All notices hereunder and pursuant to the Exchange and Registration
Rights Agreement shall be made in writing, by hand-delivery, first-class mail,
or air courier guaranteeing overnight delivery as follows:
(i) To the Company:
-------------------------
-------------------------
-------------------------
-------------------------
-------------------------
(ii) With a copy to:
-------------------------
-------------------------
-------------------------
-------------------------
-------------------------
Once this Notice and Questionnaire is executed by the Selling Securityholder and
received by the Company's counsel, the terms of this Notice and Questionnaire,
and the representations and warranties contained herein, shall be binding on,
shall inure to the benefit of and shall be enforceable by the respective
successors, heirs, personal representatives, and assigns of the Company and the
Selling Securityholder (with respect to the Registrable Securities beneficially
owned by such Selling Securityholder and listed in Item (3) above. This
Agreement shall be governed in all respects by the laws of the State of New
York.
A-6
IN WITNESS WHEREOF, the undersigned, by authority duly given, has caused this
Notice and Questionnaire to be executed and delivered either in person or by its
duly authorized agent.
Dated:
----------------------------------
--------------------------------------------------------------------------
Selling Securityholder
(Print/type full legal name of beneficial owner of Registrable Securities)
By:
------------------------------------------------------------------------
Name:
Title:
PLEASE RETURN THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE FOR RECEIPT ON
OR BEFORE [DEADLINE FOR RESPONSE] TO THE COMPANY'S COUNSEL AT:
-------------------------
-------------------------
-------------------------
-------------------------
-------------------------
A-7
EXHIBIT B
NOTICE OF TRANSFER PURSUANT TO REGISTRATION STATEMENT
Chase Manhattan Bank and Trust Company, National Association
Avista Corporation
c/o The Chase Manhattan Bank
101 California, Suite 2725
San Francisco, California 94111
Attention: Trust Officer
Re: Avista Corporation (the "Company")
9.75% Senior Notes due June 1, 2008
Dear Sirs:
Please be advised that __________________ has transferred $____________________
aggregate principal amount of the above-referenced Notes pursuant to an
effective Registration Statement on Form [_______] (File No. 333-_________)
filed by the Company.
We hereby certify that the prospectus delivery requirements, if any, of the
Securities Act of 1933, as amended, have been satisfied and that the above-named
beneficial owner of the Notes is named as a "Selling Holder" in the Prospectus
dated [date] or in supplements thereto, and that the aggregate principal amount
of the Notes transferred are the Notes listed in such Prospectus opposite such
owner's name.
Dated:
Very truly yours,
----------------------------------
(Name)
By:
----------------------------------
(Authorized Signature)
B-1
EXHIBIT 4(C)
AVISTA CORPORATION
------------------------
LETTER OF TRANSMITTAL
Avista Corp. is offering to issue its
9.75% SENIOR NOTES DUE JUNE 1, 2008
(REGISTERED)
in exchange for its
9.75% SENIOR NOTES DUE JUNE 1, 2008
(UNREGISTERED)
PURSUANT TO THE PROSPECTUS, DATED _________ , 2001
- --------------------------------------------------------------------------------
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON __________
___________________, 2001 UNLESS EXTENDED (THE "EXPIRATION DATE").
TENDERS MAY BE WITHDRAWN PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE
EXPIRATION DATE.
- --------------------------------------------------------------------------------
Delivery To:
CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION, AS EXCHANGE AGENT
By Registered or Certified Mail: By Facsimile:
The Chase Manhattan Bank (214) 468-6494
Institutional Trust Services Confirm by
P.O. Box 2320 Telephone:
Dallas, Texas 75221-2320 1-800-275-2048
By Hand: By Overnight Courier:
The Chase Manhattan Bank The Chase Manhattan Bank
Corporate Trust-Securities Window Institutional Trust Services
Room 234-North Building 2001 Bryan Street, 9th Floor
Dallas, Texas 75201
55 Water Street Attn: Frank Ivins
New York, New York 10041 Telephone: 1-800-275-2048
Delivery of this Letter of Transmittal to an address other than as
set-forth above, or transmission of this Letter of Transmittal via facsimile
other than as set forth above, will not constitute a valid delivery of this
Letter of Transmittal.
The undersigned acknowledges that he or she has received and reviewed a
prospectus, dated , 2001 (the "Prospectus"), of Avista Corporation, a
Washington corporation (the "Company"), and this letter of transmittal (the
"Letter of Transmittal"), which together constitute the Company's offer (the
"Exchange Offer") to issue an aggregate principal amount of up to $400,000,000
of its 9.75% Senior Notes due June 1, 2008 (the "New Notes"), which have been
registered under the Securities Act of 1933, as amended (the "Securities Act"),
in exchange for a like principal amount of issued and outstanding 9.75% Senior
Notes due June 1, 2008 (the "Old Notes" and, together with the New Notes, the
"Notes"), which were not so registered. Capitalized terms used but not defined
herein have the meanings given to them to the Prospectus.
In order for any Holder of Old Notes to tender all or any portion of such
Old Notes, the Exchange Agent must receive either this Letter of Transmittal
completed by such Holder or an Agent's Message (as hereinafter defined) with
respect to such Holder. Certificates for Old Notes are to be forwarded herewith
or, if a tender of Old Notes is to be made by book-entry transfer, the tender
should be made by book-entry transfer to the account maintained by the Exchange
Agent at The Depository Trust Company ("DTC") pursuant to the procedures set
forth in the Prospectus under "The Exchange Offer-Procedures for
Tendering-Registered Holders and DTC Participants". Holders of Old Notes whose
certificates are not immediately available, or who are unable to deliver their
certificates or confirmation of the book-entry tender of their Old Notes into
the Exchange Agent's account at DTC (a "Book-Entry Confirmation") and all other
documents required by this Letter of Transmittal to the Exchange Agent on or
prior to the Expiration Date, must tender their Old Notes according to the
guaranteed delivery procedures set forth in "The Exchange Offer -Procedures for
Tendering - Registered Holders and DTC Participants" section of the Prospectus.
See Instruction 1. Delivery of documents to DTC does not constitute delivery to
the Exchange Agent.
By causing Old Notes to be credited to the Exchange Agent's account at DTC
in accordance with DTC's procedures for transfer, including the transmission by
DTC of an Agent's Message to the Exchange Agent, the DTC participant will be
deemed to confirm, on behalf of itself and the beneficial owners of such Old
Notes, all provisions of this Letter of Transmittal applicable to it and such
beneficial owners as fully as if it had completed the information required
herein and executed and delivered this Letter of Transmittal to the Exchange
Agent. As used herein, the term "Agent's Message" means a message,
electronically transmitted by DTC to and received by the Exchange Agent, and
forming a part of the Book-Entry Confirmation, which states that DTC has
received an express acknowledgement from a Holder of Old Notes stating that such
Holder has received and agrees to be bound by, and makes each of the
representations and warranties contained in, this Letter of Transmittal and,
further, that such Holder agrees that the Company may enforce this Letter of
Transmittal against such Holder.
The term "Holder", as used in this Letter of Transmittal, means any of (a)
person in whose name Old Notes are registered on the books of the Company, (b)
any other person who has obtained a properly completed bond power from the
registered holder, and (c) any DTC participant whose Old Notes are held of
record by DTC. Holders who wish to tender their Old Notes must complete this
Letter of Transmittal in its entirety or must cause an Agent's Message to be
transmitted.
Any other beneficial owner whose Old Notes are registered in the name of a
broker or other nominee and who wishes to tender should contact such broker or
nominee promptly and instruct such broker or nominee to tender on behalf of the
beneficial owner. If the beneficial owner wishes to tender on its own behalf,
such beneficial owner must, prior to completing and executing this Letter of
Transmittal and delivering its Old Notes, either make appropriate arrangements
to register ownership of the Old Notes in such beneficial owner's name or obtain
a properly completed bond power from the registered Holder of the Old Notes. The
transfer of registered ownership may take considerable time.
2
Complete the appropriate boxes below to indicate the Old Notes to which
this Letter of Transmittal relates and the action the undersigned desires to
take with respect to the Exchange Offer. If the space provided below is
inadequate, the certificate numbers and principal amount of Old Notes should be
listed on a separate signed schedule affixed hereto.
- --------------------------------------- --------------- ---------------- ---------------
DESCRIPTION OF OLD NOTES 1 2 3
- --------------------------------------- --------------- ---------------- ---------------
Name(s) and Address(es) of Registered Aggregate
Holder(s) (Please fill in, if blank) Principal Principal
Certificate Amount of Amount
Number(s)* Old Note(s) Tendered**
- --------------------------------------- --------------- ---------------- ---------------
--------------- ---------------- ---------------
--------------- ---------------- ---------------
--------------- ---------------- ---------------
--------------- ---------------- ---------------
Total
- ----------------------------------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by book-entry transfer.
** Unless otherwise indicated in the column, a holder will be deemed to have tendered
ALL of the Old Notes represented by the Old Notes indicated in column 2. See
Instruction 2. Old Notes tendered hereby must be in denominations of principal amount
of $1,000 and any integral multiple thereof. See Instruction 1.
- ----------------------------------------------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH DTC AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution:
--------------------------------------------------
Account Number:
-----------------------------------------------------------------
Transaction Code Number:
--------------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s):
------------------------------------------------
Window Ticket Number (if any):
--------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
-----------------------------
Name of Institution which guaranteed delivery:
----------------------------------
IF DELIVERY BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number Transaction Code Number
-------------------------- ---------------
Name of Tendering Institution
---------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name:
---------------------------------------------------------------------------
Address:
------------------------------------------------------------------------
------------------------------------------------------------------------
3
TENDER OF OLD NOTES
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Exchange Offer, the
undersigned hereby tenders to the Company the aggregate principal amount of Old
Notes indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Notes tendered hereby, the undersigned hereby sells, assigns
and transfers to, or upon the order of, the Company all right, title and
interest in and to such Old Notes as are being tendered hereby.
The undersigned hereby irrevocably constitutes and appoints the Exchange
Agent its agent and attorney-in-fact with full power of substitution, for
purposes of delivering this Letter of Transmittal and the Old Notes to the
Company. The Power of Attorney granted in this paragraph shall be deemed
irrevocable from and after the Expiration Date and coupled with an interest. The
undersigned hereby acknowledges its full understanding that the Exchange Agent
also performs functions as agent of the Company.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Old Notes
tendered hereby and that the Company will acquire good and unencumbered title
thereto, free and clear of all liens, restrictions, charges and encumbrances and
not subject to any adverse claim when the same are accepted by the Company. The
undersigned hereby further represents and warrants that any New Notes acquired
in exchange for Old Notes tendered hereby will have been acquired in the
ordinary course of business of the person receiving such New Notes, whether or
not such person is the undersigned, that neither the holder of such Old Notes
nor any such other person is engaged or intends to engage in, or has an
arrangement or understanding with any person to participate in, the distribution
(within the meaning of the Securities Act) of such New Notes and that neither
the holder of such Old Notes nor any such other person is an "affiliate," as
defined in Rule 405 under the Securities Act, of the Company.
The undersigned also acknowledges that this Exchange Offer is being made by
the Company in reliance on an interpretation by the staff of the Securities and
Exchange Commission (the "SEC"), as set forth in no-action letters issued to
third parties, that the New Notes issued in exchange for the Old Notes pursuant
to the Exchange Offer may be offered for resale, resold and otherwise
transferred by holders thereof (other than any such holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act), without compliance with the registration and prospectus delivery
provisions of the Securities Act, provided that such New Notes are acquired in
the ordinary course of such holders' business and that such holders have no
arrangement with any person to participate in the distribution (within the
meaning of the Securities Act) of such New Notes. The undersigned represents
that it is not engaged in, and does not intend to engage in, and has no
arrangement or understanding with any person to participate in, a distribution
(within the meaning of the Securities Act) of New Notes. If the undersigned is a
broker-dealer that will receive New Notes for its own account in exchange for
Old Notes that were acquired as a result of market-making activities or other
trading activities, it acknowledges that it will deliver a prospectus meeting
the requirements of the Securities Act in connection with any resale of such New
Notes; however, by so acknowledging and by delivering a prospectus, the
undersigned will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. The undersigned acknowledges that in reliance on
an interpretation by the staff of the SEC, a broker-dealer may fulfill its
prospectus delivery requirements with respect to the New Notes (other than a
resale of New Notes received in exchange for an unsold allotment of Old Notes
purchased directly from the Company) with the Prospectus which constitutes part
of this Exchange Offer.
The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Old Notes
tendered hereby. All authority conferred or agreed to be conferred in this
Letter of Transmittal and every obligation of the undersigned hereunder shall be
binding upon the successors, assigns, heirs, executors, administrators, trustees
in bankruptcy and legal representatives of the undersigned and shall not be
4
affected by, and shall survive, the death or incapacity of the undersigned. This
tender may be withdrawn only in accordance with the procedures set forth in "The
Exchange Offer -- Withdrawal of Tenders of Old Notes" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please issue the New Notes (and, if applicable, substitute
certificates representing Old Notes for any Old Notes not tendered or exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Notes, please credit the account indicated above maintained at DTC. Similarly,
unless otherwise indicated under the box entitled "Special Delivery
Instructions" below, please send the New Notes (and, if applicable, substitute
certificates representing Old Notes for any Old Notes not exchanged) to the
undersigned at the address shown below in the box entitled "Description of Old
Notes."
The Company will be deemed to have accepted validly tendered Old Notes
when, as and if the Company shall have given oral (promptly confirmed in
writing) or written notice of acceptance to the Exchange Agent.
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD NOTES"
ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AS
SET FORTH IN SUCH BOX ABOVE.
5
- ------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates for Old Notes not exchanged
and/or New Notes are to be issued in the name of someone other
than the person or persons whose signature(s) appear(s) below on
this Letter of Transmittal, or if Old Notes delivered by
book-entry transfer which are not accepted for exchange are to
be returned by credit to an account maintained at DTC other than
the account indicated above.
Issue: New Notes and/or Old Notes to:
- ------------------------------------------------------------------
Name(s)
-----------------------------------------------------------
(Please Type or Print)
- ------------------------------------------------------------------
(Please Type or Print)
Address
-----------------------------------------------------------
- ------------------------------------------------------------------
(Zip Code)
(Complete Substitute Form W-9)
[ ] Credit unexchanged Old Notes delivered by book-entry transfer
to the DTC account set forth below.
- ------------------------------------------------------------------
(DTC Account Number,
If Applicable)
- ------------------------------------------------------------------
- ------------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 3 and 4)
To be completed ONLY if certificates for Old Notes not
exchanged and/or New Notes are to be sent to someone other
than the person or persons whose signature(s) appear(s) on
this Letter below or to such person or persons at an address
other than shown in the box entitled "Description of Old
Notes" on this Letter above.
Mail: New Notes and/or Old Notes to:
- ------------------------------------------------------------------
Name(s)
-----------------------------------------------------------
(Please Type or Print)
- ------------------------------------------------------------------
(Please Type or Print)
Address
------------------------------------------------------------
- ------------------------------------------------------------------
(Zip Code)
- ------------------------------------------------------------------
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU
THEREOF (TOGETHER WITH THE CERTIFICATES FOR OLD NOTES OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVERY) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
PLEASE READ THIS ENTIRE LETTER OF TRANSMITTAL
CAREFULLY BEFORE COMPLETING ANY BOX ABOVE
6
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(Complete Accompanying Substitute Form W-9 on reverse side)
Dated:
x , 2001
---------------------------------- -----------------------------
x , 2001
---------------------------------- -----------------------------
Signature(s) of Owner Date
Area Code and Telephone Number
--------------------------------------------
This Letter of Transmittal must be signed by the registered holder(s)
as the name(s) appear(s) on the certificate(s) for the Old Notes hereby tendered
or on a DTC security position listing or by any person(s) authorized to become
registered holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
Name(s):
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(Please Type or Print)
Capacity:
-----------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
(Including Zip Code)
SIGNATURE GUARANTEE
(If required by Instruction 3)
Signature(s) Guaranteed by
an Eligible Institution:
-------------------------------------------------------
(Authorized Signature)
- -------------------------------------------------------------------------------
(Title)
- -------------------------------------------------------------------------------
(Name and Firm)
Dated:
-------------------------------------------------------------------------
- --------------------------------------------------------------------------------
7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES; GUARANTEED DELIVERY
PROCEDURES.
In order for any Holder of Old Notes to tender all or any portion of such
Old Notes, the Exchange Agent must receive either this Letter of Transmittal
completed by such Holder or an Agent's Message (as hereinafter defined) with
respect to such Holder. Certificates for all physically tendered Old Notes, or
Book-Entry Confirmation, as the case may be, as well as a properly completed and
duly executed Letter of Transmittal (or facsimile hereof or Agent's Message in
lieu thereof) and any other documents required by this Letter of Transmittal,
must be received by the Exchange Agent at the address set forth herein prior to
the Expiration Date, or the tendering holder must comply with the guaranteed
delivery procedures set forth below. Old Notes tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
Holders whose certificates for Old Notes are not immediately available or
who cannot deliver their certificates and all other required documents to the
Exchange Agent prior to the Expiration Date, or who cannot complete the
procedure for book-entry tender on a timely basis, may tender their Old Notes
pursuant to the guaranteed delivery procedures set forth in the Prospectus under
"The Exchange Offer-Procedures of Tendering-Registered Holders and DTC
Participants-Registered Holders." Pursuant to such procedures, (1) such tender
must be made through an Eligible Institution, (2) prior to the Expiration Date,
the Exchange Agent must receive from such Eligible Institution a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form provided by the Company (by facsimile transmission, mail or hand delivery),
setting forth the name and address of the holder of Old Notes, the certificate
numbers of such Old Notes (unless tender is to be made by book-entry transfer)
and the principal amount of Old Notes tendered, stating that the tender is being
made thereby and guaranteeing that within five New York Stock Exchange ("NYSE")
trading days after the date of delivery of the Notice of Guaranteed Delivery,
the certificates for all physically tendered Old Notes, or a Book-Entry
Confirmation, together with a properly completed and duly executed Letter of
Transmittal (or facsimile thereof or Agent's Message in lieu thereof), with any
required signature guarantees and any other documents required by the Letter of
Transmittal will be deposited by the Eligible Institution with the Exchange
Agent, and (3) the certificates for all physically tendered Old Notes, in the
proper form for transfer, or Book-Entry Confirmation, as the case may be,
together with a properly completed and duly executed Letter of Transmittal (or
facsimile thereof or Agent's Message in lieu thereof), with any required
signature guarantees and all other documents required by this Letter of
Transmittal, must be received by the Exchange Agent within five NYSE trading
days after the date of execution of the Notice of Guaranteed Delivery.
The method of delivery of Old Notes, this Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the Holder, but the delivery will be deemed made only when actually received by
the Exchange Agent. Instead of delivery by mail, it is recommended that Holders
use an overnight or hand delivery service. In all cases, sufficient time should
be allowed to assure delivery to the Exchange Agent before the Expiration Date.
No Old Notes or Letters of Transmittal should be sent to Avista Corp. Holders
may request their respective brokers, dealers, commercial banks, trust companies
or nominees to effect the above transactions for such Holders.
See the Prospectus under "The Exchange Offer."
8
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the Old Notes evidenced by a submitted certificate are
to be tendered, the tendering holder(s) should fill in the aggregate principal
amount of Old Notes to be tendered in the box above entitled "Description of Old
Notes -- Principal Amount Tendered." A reissued certificate representing the
balance of nontendered Old Notes will be sent to such tendering holder, unless
otherwise provided in the appropriate box on this letter, promptly after the
Expiration Date. All of the Old Notes delivered to the Exchange Agent will be
deemed to have been tendered unless otherwise indicated.
3. SIGNATURES ON THIS LETTER; BOND POWERS AND ENDORSEMENTS; GUARANTEE OF
SIGNATURES.
If this Letter of Transmittal is signed by the Holder of the Old Notes
tendered hereby, the signature must correspond exactly with the name as written
on the face of the certificates or on DTC's security position listing as the
holder of such Old Notes without any change whatsoever.
If any tendered Old Notes are owned of record by two or more joint owners,
all of such owners must sign this Letter.
If any tendered Old Notes are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
copies of this Letter of Transmittal as there are different registrations of
certificates.
If this Letter of Transmittal is signed by the registered holder or holders
of the Old Notes specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the New Notes
are to be issued, or any untendered Old Notes are to be reissued, to a person
other than the registered holder, then endorsements of any certificates
transmitted hereby or separate bond powers are required. Signatures on such
certificate(s) or bond powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder or holders of any certificate(s) specified herein, such
certificate(s) must be endorsed or accompanied by appropriate bond powers, in
either case signed exactly as the name or names of the registered holder or
holders appear(s) on the certificate(s) and signatures on such certificate(s) or
bond powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificates representing Old Notes or
any bond powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and,
unless waived by the Company, proper evidence satisfactory to the Company of
their authority to so act must be submitted.
EXCEPT AS PROVIDED BELOW, ENDORSEMENTS ON CERTIFICATES FOR OLD NOTES OR
SIGNATURES ON BOND POWERS REQUIRED BY THIS INSTRUCTION 3 MUST BE GUARANTEED BY A
FIRM WHICH IS A MEMBER OF A REGISTERED NATIONAL SECURITIES EXCHANGE OR A MEMBER
OF THE NATIONAL ASSOCIATION OF SECURITIES DEALERS, INC. OR BY A COMMERCIAL BANK
OR TRUST COMPANY HAVING AN OFFICE OR CORRESPONDENT IN THE UNITED STATES (AN
"ELIGIBLE INSTITUTION").
SIGNATURES ON THIS LETTER OF TRANSMITTAL NEED NOT BE GUARANTEED BY AN
ELIGIBLE INSTITUTION IF THE OLD NOTES ARE TENDERED: (1) BY A REGISTERED HOLDER
OF OLD NOTES WHO HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE
INSTRUCTIONS" OR "SPECIAL DELIVERY INSTRUCTIONS" OR (2) FOR THE ACCOUNT OF AN
ELIGIBLE INSTITUTION.
9
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTION.
Tendering Holders of Old Notes should indicate in the applicable box the
name and address to which New Notes issued pursuant to the Exchange Offer and/or
substitute certificates evidencing Old Notes not exchanged are to be issued or
sent, if different from the name or address of the person signing this Letter of
Transmittal. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. Holders tendering Old Notes by book-entry transfer may request that
Old Notes not exchanged be credited to such account maintained at DTC as such
Holder may designate hereon. If no such instructions are given, such Old Notes
not exchanged will be returned to the name or address of the person signing this
Letter.
5. TAX IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering holder whose Old
Notes are accepted for exchange must provide the Company (as payor) with such
holder's correct Taxpayer Identification Number ("TIN") on Substitute Form W-9
below, which in the case of a tendering holder who is an individual, is his or
her social security number. If the Company is not provided with the current TIN
or an adequate basis for an exemption, such tendering holder may be subject to a
$50 penalty imposed by the Internal Revenue Service. In addition, delivery to
such tendering holder of New Notes may be subject to backup withholding in an
amount equal to 31% of all reportable payments made after the exchange. If
withholding results in an overpayment for taxes, a refund may be obtained.
Exempt holders of Old Notes (including, among others, all corporations and
certain foreign individuals) are not subject to these backup withholding and
reporting requirements. See the enclosed Guidelines of Certification of Taxpayer
Identification Number on Substitute Form W-9 (the "W-9 Guidelines") for
additional instructions.
To prevent backup withholding, each tendering Holder of Old Notes must
provide its correct TIN by completing the "Substitute Form W-9" set forth below,
certifying that the Holder is a U.S. person (including a U.S. resident alien),
that the TIN provided is correct (or that such Holder is awaiting a TIN) and
that (1) the Holder is exempt from backup withholding, (2) the Holder has not
been notified by the Internal Revenue Service that such Holder is subject to a
backup withholding as a result of a failure to report all interest or dividends
or (3) the Internal Revenue Service has notified the Holder that such Holder is
no longer subject to backup withholding. If the tendering Holder of Old Notes is
a nonresident alien or foreign entity not subject to backup withholding, such
Holder must give the Company a completed Form W-8BEN, Certificate of Foreign
Status of Beneficial Owner for United States Tax Withholding, or if applicable,
Form W-8ECI, Certificate of Foreign Person's Claim for Exemption From
Withholding on Income Effectively Connected with the Conduct of a Trade or
Business in the United States. These forms may be obtained from the Exchange
Agent. If the Old Notes are in more than one name or are not in the name of the
actual owner, such Holder should consult the W-9 Guidelines for information on
which the TIN to report. If such Holder does not have a TIN, such Holder should
consult the W-9 Guidelines for instructions on applying for a TIN, check the box
in Part 2 of the Substitute Form W-9 and write "applied for" in lieu of its TIN.
Note: Checking this box and writing "applied for" on the Form means that such
Holder has already applied for a TIN or that such Holder intends to apply for
one in the near future. If such Holder does not provide its TIN to the Company
within 60 days, backup withholding will begin and continue until such Holder
furnishes its TIN to the Company.
6. TRANSFER TAXES.
The Company will pay all transfer taxes, if any, applicable to the transfer
of Old Notes to it or its order pursuant to the Exchange Offer. If, however, New
Notes and/or substitute Old Notes not exchanged are to be delivered to, or are
10
to be registered or issued in the name of, any person other than the registered
holder of the Old Notes tendered hereby, or if tendered Old Notes are registered
in the name of any person other than the person signing this Letter of
Transmittal, or if a transfer tax is imposed for any reason other than the
transfer of Old Notes to the Company or its order pursuant to the Exchange
Offer, the amount of any such transfer taxes (whether imposed on the registered
holder or any other person) will be payable by the tendering Holder. If
satisfactory evidence of payment of such taxes or exemption therefrom is not
submitted herewith, the amount of such transfer taxes will be billed directly to
such tendering Holder.
7. COMPANY DETERMINATION FINAL; WAIVER OF CONDITIONS.
All questions as to the validity, form eligibility (including time of
receipt), acceptance of tendered Old Notes and withdrawal of tendered Old Notes
will be determined by the Company in its sole discretion, which determination
will be final and binding. The Company reserves the absolute right to reject any
and all Old Notes not properly tendered or any Old Notes the Company's
acceptance of which would, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the right to waive any irregularities or
conditions of tender as to particular Old Notes. The Company's interpretation of
the terms and conditions of the Exchange Offer (including the instructions in
this Letter of Transmittal) shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
must be cured within such time as the Company shall determine. Neither the
Company, the Exchange Agent nor any other person shall be under any duty to give
notification of defects or irregularities with respect to tenders of Old Notes,
nor shall any of them incur any liability for failure to give such notification.
Tenders of Old Notes will not be deemed to have been made until such defects or
irregularities have been cured or waived. Any Old Notes received by the Exchange
Agent that are not properly tendered and as to which the defects or
irregularities have not been cured or waived will be returned by the Exchange
Agent to the tendering Holders of the Old Notes, unless otherwise provided in
this Letter of Transmittal, as soon as practicable following the Expiration
Date.
8. NO CONDITIONAL TENDERS.
No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering Holders of Old Notes, by causing this Letter of
Transmittal or an Agent's Message in lieu thereof to be delivered to the
Exchange Agent, shall waive any right to receive notice of the acceptance of
their Old Notes for exchange.
Neither the Company, the Exchange Agent nor any other person is obligated
to give notice of any defect or irregularity with respect to any tender of Old
Notes nor shall any of them incur any liability for failure to give any such
notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES.
Any Holder whose Old Notes have been mutilated, lost, stolen or destroyed
should contact the Exchange Agent at the addresses indicated above for further
instructions.
10. REQUESTS FOR ADDITIONAL COPIES.
Requests for additional copies of the Prospectus and this Letter of
Transmittal, may be directed to the Exchange Agent, at the addresses and
telephone numbers indicated above.
11
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
- --------------------------------------------------------------------------------------------
SUBSTITUTE PART 1-- PLEASE PROVIDE YOUR TIN TIN: _____________________
Form W-9 IN THE BOX AT RIGHT AND CERTIFY (Social Security Number or
BY SIGNING AND DATING BELOW: Employer Identification Number)
- --------------------------------------------------------------------------------------------
PART 2 -- TIN APPLIED FOR
- ----------------------------------------------------------------------------------------
DEPARTMENT OF PAYOR'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER ("TIN")
THE TREASURY AND CERTIFICATION
INTERNAL REVENUE
SERVICE
CERTIFICATION: UNDER THE PENALTIES OF PERJURY, I CERTIFY THAT
(1) the number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to
be issued to me).
(2) I am not subject to backup withholding either because:
(a) I am exempt from backup withholding, or (b) I have
not been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a
result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding, and
(3) I am a U.S. person (including a U.S. resident alien).
(4) any other information provided on this form is true and
correct.
SIGNATURE DATE
------------------------ --------------------
- --------------------------------------------------------------------------------------------
You must cross out item (2) of the above certification if you have been notified
by the IRS that you are subject to backup withholding because of underreporting
of interest or dividends on your tax return and you have not been notified by
the IRS that you are no longer subject to backup withholding.
- --------------------------------------------------------------------------------------------
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED
THE BOX IN PART 2 OF SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a Taxpayer Identification Number has
not been issued to me, and either (a) I have mailed or delivered an application
to receive a Taxpayer Identification Number to the appropriate Internal Revenue
Service Center or Social Security Administrative Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a Taxpayer Identification Number by the time of the exchange, 31 percent
of all reportable payments made to me thereafter will be withheld until I
provide a number.
- -------------------------------------- -------------------------------
Signature Date
- --------------------------------------------------------------------------------------------
12
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number. You can get these forms from the IRS by calling 1-800-829-3676 or from
the IRS's internet website at www.irs.gov.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
o An organization exempt from tax under section 501(a), or an individual
retirement plan.
o The United States or any agency or instrumentality thereof.
o A State, the District of Columbia, a possession of the United States, or
any subdivision or instrumentality thereof.
o A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof.
o An international organization or any agency, or instrumentality thereof.
Other payees that may be exempt from backup withholding include:
o A corporation.
o A financial institution.
o A registered dealer in securities or commodities registered in the U.S. or
a possession of the U.S.
o A real estate investment trust.
o A common trust fund operated by a bank under section 584(a).
o A trust exempt from tax under section 664 or described in section 4947.
o An entity registered at all times during the tax year under Investment
Company Act of 1940.
o A foreign central bank of issue.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
o Payments to nonresident aliens subject to withholding under section 1441.
o Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident alien partner.
o Payments of patronage dividends where the amount received is not paid in
money.
o Payments made by certain foreign organizations.
Payments of interest not generally subject to backup withholding include the
following:
o Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer.
13
o Payments of tax-exempt interest (including exempt-interest dividends under
section 852).
o Payments described in section 6049(b)(5) to non-resident aliens.
o Payments on tax-free covenant bonds under section 1451.
o Payments made by certain foreign organizations.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, SIGN AND DATE THE
FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NONRESIDENT ALIEN OR A FOREIGN
ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH THE PAYER A COMPLETED
INTERNAL REVENUE SERVICE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends,
that are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under section 6041, 6041(A), 6045,
and 6050A.
Privacy Act Notice.--Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to IRS. IRS uses the numbers for identification
purposes. Payers must be given the numbers whether or not recipients are
required to file tax returns. Payers must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payer. Certain penalties may also apply.
PENALTIES
(1) Penalty for Failure to Furnish Taxpayer Identification Number.--If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
(2) Civil Penalty for False Information With Respect to Withholding.--If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
(3) Criminal Penalty for Falsifying Information.--Willfully falsifying
certifications or affirmations may subject you to criminal penalties fines
and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE INTERNAL REVENUE
SERVICE.
14
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER.--Social Security Numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
- --------------------------------------- ----------------------- ----------------------------------- ---------------------------
GIVE THE GIVE THE EMPLOYER
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY FOR THIS TYPE OF ACCOUNT: IDENTIFICATION NUMBER OF--
NUMBER OF--
- --------------------------------------- ----------------------- ----------------------------------- ---------------------------
1. An individual's account The individual 6. A valid trust, estate, or The legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or trustee
unless the legal entity
itself is not designated in
the account title.(4)
2. Two or more individuals The actual owner of 7. Corporate account The corporation
(joint account) the account or, if
combined funds, the
first individual on
the account(1)
3. Custodian account of a minor The minor(2) 8. Association, club, The organization
(Uniform Gift to Minors Act) religious, charitable,
educational, or other
tax-exempt organization
account
4. a. The usual revocable The grantor-trustee 9. Partnership account held The partnership
savings trust account (1) in the name of the business
(grantor is also trustee)
b. So-called trust account The actual owner(1) 10. A broker or registered The broker or nominee
that is not a legal or nominee
valid trust under State
law
5. Sole proprietorship account The owner(3) 11. Account with the The public entity
Department of Agriculture
in the name of a public
entity (such as a State or
local government, school
district, or prison) that
receives agricultural
program payments
- ------------------------------------------------------------------------------------------------------- ---------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has an SSN, that person's number should
be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your SSN or EIN (if you have
one).
(4) List first and circle the name of the legal trust, estate, or pension
trust.
NOTE: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.
NOTICE OF GUARANTEED DELIVERY FOR
AVISTA CORPORATION
This form or one substantially equivalent hereto must be used to accept the
Exchange Offer of Avista Corporation (the "Company") made pursuant to a
prospectus dated ____________, 2001 (the "Prospectus"), if certificates for Old
Notes of the Company are not immediately available or if the procedure for
book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Company prior to 5:00 p.m., New York
City time, on the Expiration Date of the Exchange Offer. Such form may be
delivered or transmitted by telegram, telex, facsimile transmission, mail or
hand delivery to Chase Manhattan Bank and Trust Company, National Association
(the "Exchange Agent") as set forth below. Capitalized terms not defined herein
are defined in the Prospectus.
THE EXCHANGE AGENT IS:
Chase Manhattan Bank and Trust Company, National Association
By Registered or Certified Mail: By Facsimile:
The Chase Manhattan Bank (214) 468-6494
Institutional Trust Services Confirm by
P.O. Box 2320 Telephone:
Dallas, Texas 75221-2320 1-800-275-2048
By Hand: By Overnight Courier:
The Chase Manhattan Bank The Chase Manhattan Bank
Corporate Trust-Securities Window Institutional Trust Services
Room 234-North Building 2001 Bryan Street, 9th Floor
55 Water Street Dallas, Texas 75201
New York, New York 10041 Attn: Frank Ivins
Telephone: 1-800-275-2048
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF THIS INSTRUMENT VIA FACSIMILE OTHER THAN AS SET FORTH ABOVE,
WILL NOT CONSTITUTE A VALID DELIVERY.
LADIES AND GENTLEMEN:
Upon the terms and conditions set forth in the Prospectus, the undersigned
hereby tenders to the Company the principal amount of Old Notes set forth below,
pursuant to the guaranteed delivery procedure described in the Prospectus under
"The Exchange Offer -- Procedures for Tendering - Registered Holders and DTC
Participants."
Principal Amount of Old Notes Tendered:* If Old Notes will be delivered by
book-entry transfer to The
$_____________________________________ Depository Trust Company,
provide account number.
Certificates Nos. (if available): Account Number ______________________
Total Principal Amount Represented by
Old Notes Certificate(s):
$_____________________________________
* Must be in denominations of principal amount of $1,000 and any integral
multiple thereof. See Instruction 1 in the Letter of Transmittal.
- --------------------------------------------------------------------------------
ALL AUTHORITY HEREIN CONFERRED OR AGREED TO BE CONFERRED SHALL SURVIVE THE DEATH
OR INCAPACITY OF THE UNDERSIGNED AND EVERY OBLIGATION OF THE UNDERSIGNED
HEREUNDER SHALL BE BINDING UPON THE HEIRS, PERSONAL REPRESENTATIVES, SUCCESSORS
AND ASSIGNS OF THE UNDERSIGNED.
- --------------------------------------------------------------------------------
2
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
X
---------------------------------- -----------------------------------
X
---------------------------------- -----------------------------------
Signature(s) of Owner(s) or Date
Authority Signatory
Telephone Number (including area code):
------------------------------------
This Notice of Guaranteed Delivery must be signed by the holder(s) of Old
Notes as their name(s) appear(s) on certificates for Old Notes or on a DTC
security position listing, or by person(s) authorized to become registered
holder(s) by endorsement and documents transmitted with this Notice of
Guaranteed Delivery. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer or other person acting in a fiduciary or
representative capacity, such person must set forth his or her full title below.
Please print name(s) and address(es)
Name(s):
-----------------------------------------------------------------------
-----------------------------------------------------------------------
Capacity:
-----------------------------------------------------------------------
Address:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
-----------------------------------------------------------------------
- --------------------------------------------------------------------------------
GUARANTEE
The undersigned, a member of a registered national securities exchange, or
a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or correspondent in the United
States, hereby guarantees that the certificates representing the principal
amount of Old Notes tendered hereby in proper form for transfer, or timely
confirmation of the book-entry transfer of such Old Notes into the Exchange
Agent's account at The Depository Trust Company pursuant to the procedures set
forth in the Prospectus under "The Exchange Offer -- Procedures for Tendering -
Registered Holders and DTC Participants," together with one or more properly
completed and duly executed Letters of Transmittal (or facsimile thereof or
Agent's Message in lieu thereof) and any other documents required by the Letter
of Transmittal in respect of the Old Notes, will be received by the Exchange
Agent at the Address set forth above, no later than five New York Stock Exchange
trading days after the date of execution hereof.
- --------------------------------- -----------------------------------
Name of Firm Authorized Signature
- --------------------------------- -----------------------------------
Address Title
Name:
- --------------------------------- ------------------------------
Zip Code (Please Type or Print
Area Code and Tel. No. Dated:
----------- -----------------------------
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS FORM. CERTIFICATES FOR
OLD NOTES SHOULD ONLY BE SENT WITH YOUR LETTER OF TRANSMITTAL.
EXHIBIT 5(A)
June 4, 2001
Avista Corporation
1411 East Mission Avenue
Spokane, WA 99202
RE: AVISTA CORPORATION - REGISTRATION STATEMENT ON FORM S-4
9.75% SENIOR NOTES, DUE JUNE 1, 2008 IN AN AGGREGATE PRINCIPAL AMOUNT OF
$400,000,000
Ladies and Gentlemen:
We have acted as counsel to Avista Corporation, a Washington corporation
(the "Company"), in connection with an offer by the Company to issue up to
$400,000,000 in aggregate principal amount of its 9.75% Senior Notes, due June
1, 2008 (registered) (the "Securities"), in exchange for 9.75% Senior Notes, due
June 1, 2008 (unregistered) of the Company, which are currently outstanding in
the same aggregate principal amount, all as described in a Registration
Statement on Form S-4 (the "Registration Statement") of the Company to be filed
under the Securities Act of 1933, as amended (the "Securities Act"), relating to
such exchange offer.
I.
We have assumed the authenticity of all records, documents and instruments
submitted to us as originals, the genuineness of all signatures, the legal
capacity of natural persons and the conformity to the originals of all records,
documents and instruments submitted to us as copies. We have based our opinion
upon our review of the following records, documents, instruments and
certificates and such additional certificates relating to factual matters as we
have deemed necessary or appropriate for our opinion:
(a) the Registration Statement;
(b) the Restated Articles of Incorporation of the Company certified by the
Washington Secretary of State as of May 23, 2001, and certified to us
by an officer of the Company as being complete and in full force and
effect as of the date of this opinion;
(c) the Bylaws, as amended, of the Company certified by an officer of the
Company as being complete and in full force and effect as of the date
of this opinion;
(d) a Certificate of Existence/Authorization relating to the Company and
issued by the Washington Secretary of State, dated May 23, 2001;
Heller Ehrman White & McAuliffe LLP
701 Fifth Avenue, Suite 6100 Seattle, WA 98104-7098 www.hewm.com
- --------------------------------------------------------------------------------
Seattle Portland Anchorage San Francisco Silicon Valley Los Angeles
San Diego New York Washington D.C. Hong Kong Singapore
Affiliated Carnelutti Offices: Milan Rome Paris Padua Naples
Avista Corporation
HELLER EHRMAN June 4, 2001
ATTORNEYS Page 2
(e) records certified to us by an officer of the Company as constituting
all records of proceedings and actions of the Company's board of
directors relating to the transactions contemplated by the
Registration Statement;
(f) Order No. UE-001098, entered August 30, 2000, amended January 11,
2001, in Docket No. UE-001-098 of the Washington Utilities and
Transportation Commission;
(g) Order No. 28670, entered March 14, 2001, Order No. 28610, entered
January 19, 2001, Order No. 28491, entered August 24, 2000, and Order
No. 26644, entered October 21, 1996, in Case No. AVU-U-00-3 of the
Idaho Public Utilities Commission(1);
(h) Order No. 01-220. entered March 9, 2001, Order No. 00-410, entered
July 28, 2000, and Order No. 99-412, entered July 6, 1999, in Docket
No. UF-4166 of the Public Utility Commission of Oregon, together with
staff reports appended thereto which constitute part of the orders;
(i) Decision No. 00-06-064, entered June 22, 2000, of the Public Utilities
Commission of the State of California;
(j) Default Order No. 4535, entered July 2, 1979, in Docket No. 6690 of
the Public Service Commission of the State of Montana(2);
(k) a Certificate of an officer of the Company as to certain factual
matters;
Notwithstanding any provisions of the Securities or any other agreements or
instruments examined for purposes of these opinions to the effect that such
agreement or instrument reflects the entire understanding of the parties with
respect to the matters described therein, the courts of the States of Washington
may consider extrinsic evidence of the circumstances surrounding the entering
into of such agreement to ascertain the intent of the parties in using the
language employed in such agreement, regardless of whether or not the meaning of
the language used in such agreement is plain and unambiguous on its face, and
may determine that additional or supplementary terms can be incorporated into
such agreement. We have not considered parol evidence in connection with the
opinion set forth below.
- ------------------------
(1) We have received and relied upon an officer's certificate certifying
that the Company's senior unsecured debt ratings are within the permitted
tolerances identified by the IPUC in Order No. 28610 at page 3.
(2) We have received and relied upon an officer's certificate certifying
that at no time since the issuance of the MPSC's order have the Company's
electric sales for ultimate use by Montana customers exceeded $5,000,000 or 5%
of the Company's revenue in any year.
Heller Ehrman White & McAuliffe LLP
Avista Corporation
HELLER EHRMAN June 4, 2001
ATTORNEYS Page 3
II.
We have also assumed the following, without making any inquiry into the
reasonableness or validity thereof:
A. The applicable provisions of the Securities Act, the Trust Indenture
Act of 1939, as amended, and the securities or blue sky laws of
various states shall have been complied with.
B. The Securities will be duly executed, authenticated and delivered
prior to their issuance against consideration therefor as set forth in
the Registration Statement and in accordance with the proceedings and
actions of the Company's board of directors relating to the
transactions contemplated by the Registration Statement.
C. There are no facts or circumstances specifically relating to any
parties other than the Company (the "Other Parties") that might
prevent the Other Parties from enforcing any of the rights to which
our opinion relates.
III.
We express no opinion as to:
(a) The applicable choice of law rules that may affect the interpretation
or enforcement of any of the Securities.
(b) Any securities, tax, anti-trust, land use, safety, environmental,
hazardous materials, insurance company or banking laws, rules or
regulations, or any laws, rules or regulations applicable to any of
the Other Parties by virtue of their status as regulated entities, or
whether governmental consents, approvals, authorizations,
registrations, declarations or filings required in connection with
exchange of the Securities will be applied for, received or made.
(c) The enforceability of any provision of the Securities that relates to
the choice of arbitration as a dispute resolution mechanism.
(d) The effect on the obligations of the Company, and the Other Parties'
rights, under the Securities of laws relating to fraudulent transfers
and fraudulent obligations set forth in Sections 544 and 548 of the
federal Bankruptcy Code or applicable state law.
(e) The enforceability of any waiver of immunities contained in the
Securities.
(f) The enforceability of any liquidated damages provisions contained in
the Securities.
Heller Ehrman White & McAuliffe LLP
Avista Corporation
HELLER EHRMAN June 4, 2001
ATTORNEYS Page 4
This opinion is limited to (i) the federal laws of the United States of
America, (ii) the laws of the State of Washington, and (iii) the statutes (and
regulations promulgated thereunder) of the States of California, Idaho, Montana
and Oregon pertaining to the regulation of public utilities in those States. We
disclaim any opinion as to the laws of any other jurisdiction. We further
disclaim any opinion as to any statute, rule, regulation, ordinance, order or
other promulgation of any regional or local governmental body or as to any
related judicial or administrative opinion.
IV.
Based upon the foregoing and our examination of such questions of law as we
have deemed necessary or appropriate for our opinion, and subject to the
limitations and qualifications expressed herein, it is our opinion that the
Securities, when issued and delivered as contemplated in the Registration
Statement, will be legally issued and will be binding obligations of the
Company, subject (i) to bankruptcy, insolvency, reorganization, arrangement,
moratorium and other laws of general applicability relating to or affecting
creditors' rights and (ii) to general principals of equity, whether such
enforceability is considered in a proceeding in equity or at law.
V.
We further advise you that:
A. As noted, the enforceability of the Securities is subject to the
effect of general principles of equity. These principles include,
without limitation, concepts of commercial reasonableness, materiality
and good faith and fair dealing. As applied to the Securities, these
principles will require the Other Parties to act reasonably, in good
faith and in a manner that is not arbitrary or capricious in the
administration and enforcement of the Securities and will preclude the
Other Parties from invoking penalties for defaults that bear no
reasonable relation to the damage suffered or that would otherwise
work a forfeiture.
B. The enforceability of the Securities is subject to the effects of (i)
Section 62A.1-102 of Revised Code of Washington (the "WA Code"), which
provides that obligations of good faith, diligence, reasonableness and
care prescribed by the WA Code may not be disclaimed by agreement,
although the parties may by agreement determine the standards by which
the performance of such obligations is to be measured if those
standards are not manifestly unreasonable, (ii) Section 62A.1-203 of
the WA Code, which imposes an obligation of good faith in the
performance or enforcement of a contract and (iii) legal principles
under which a court may refuse to enforce, or may limit the
enforcement of, a contract or any clause of a contract that a court
finds as a matter of law to have been unconscionable at the time it
was made.
C. The effectiveness of indemnities, rights of contribution, exculpatory
provisions and waivers of the benefits of statutory provisions may be
limited on public policy grounds.
Heller Ehrman White & McAuliffe LLP
Avista Corporation
HELLER EHRMAN June 4, 2001
ATTORNEYS Page 5
D. Pursuant to Section 4.84.330 of the WA Code, any provision in an
agreement requiring a party to pay another party's attorneys' fees and
costs in actions to enforce the provisions of such agreement will be
construed to entitle the prevailing party in any action, whether or
not that party is the specified party, to be awarded its reasonable
attorneys' fees, costs and necessary disbursements.
E. Provisions of any agreement requiring that waivers must be in writing
may not be binding or enforceable if a non-executory oral agreement
has been created modifying any such provision or an implied agreement
by trade practice or course of conduct has given rise to a waiver.
VI.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the references to this firm, as counsel, in the
Registration Statement and in the prospectus contained therein. In giving this
consent, we do not thereby admit that we are within the category of persons
whose consent is required under Section 7 of the Securities Act or the rules and
regulations promulgated thereunder.
VII.
The foregoing opinion is being delivered solely to you in connection with
the filing of the Registration Statement and is solely for your benefit and the
benefit of the holders of the Securities. This opinion may not be relied on by
you for any other purpose or by any other person for any purpose without our
written consent. We disclaim any obligation to advise you of any change of law
that occurs, or any facts of which we become aware, after the date of this
opinion.
Very truly yours,
/s/ HELLER EHRMAN WHITE & McAULIFFE LLP
Heller Ehrman White & McAuliffe LLP
EXHIBIT 5(B) & 8
THELEN REID & PRIEST LLP
NEW YORK ATTORNEYS AT LAW NEW YORK OFFICE
SAN FRANCISCO 40 WEST 57TH STREET DIRECT DIAL NUMBER
WASHINGTON, D.C. NEW YORK, N.Y. 10019-4097
LOS ANGELES TEL (212) 603-2000 FAX (212) 603-2001
SILICON VALLEY www. thelenreid.com
MORRISTOWN, N.J.
New York, New York
June 4, 2001
Avista Corporation
1411 East Mission Avenue
Spokane, WA 99202
Ladies and Gentlemen:
We are acting as counsel to Avista Corporation, a Washington
corporation (the "Company"), in connection with the filing by the Company of a
Registration Statement on Form S-4 (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Act"), relating to the registration of
$400,000,000 in aggregate principal amount of 9.75% Senior Notes Due June 1,
2008 (the "New Notes") of the Company, in connection with an offer by the
Company to issue the New Notes in exchange for 9.75% Senior Notes due June 1,
2008 of the Company, which are currently outstanding in the same aggregate
principal amount, all as described in the Registration Statement.
Subject to the qualifications hereinafter expressed, we are of the
opinion that the New Notes, when issued and delivered as contemplated in the
Registration Statement, will be legally issued and will be binding obligations
of the Company.
We are further of the opinion that the information contained in the
Registration Statement under the caption "Certain U.S. Federal Income Tax
Considerations" constitutes an accurate description, in general terms, of the
indicated federal income tax consequences to holders of the New Notes of the
exchange offer contemplated in the Registration Statement.
To the extent that the opinions relate to or are dependent upon
matters governed by the laws of other States, we have relied the opinion of
Heller Ehrman White & McAuliffe LLP, which is being filed as Exhibit 5(a) to the
Registration Statement.
We hereby consent to the filing of this opinion as Exhibit 5(b) to the
Registration Statement and to the references to our firm, as counsel, in the
Registration Statement and in the prospectus contained therein. In giving the
foregoing consent, we do not admit that we are within the category of persons
whose consent is required under Section 7 of the Act or the rules and
regulations promulgated thereunder.
Very truly yours,
/s/ THELEN REID & PRIEST LLP
THELEN REID & PRIEST LLP
EXHIBIT 25
CONFORMED
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM T-l
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
---------------------------
CHASE MANHATTAN BANK AND TRUST COMPANY, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
CALIFORNIA 94-2926573
(State of incorporation I.R.S. employer
if not a national bank) identification No.)
101 California Street, Suite #2725
San Francisco, California 94111
(Address of principal executive offices) (Zip Code)
---------------------------
Avista Corporation
(Exact name of obligor as specified in its charter)
WASHINGTON 91-0462470
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification No.)
1411 East Mission Avenue
Spokane, Washington 99202
(Address of principal executive offices) (Zip Code)
---------------------------
9.75% Senior Notes due June 1, 2008
(Title of the indenture securities)
----------------------------------
1
GENERAL
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Comptroller of the Currency, Washington, D.C.
Board of Governors of the Federal Reserve System, Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
ITEM 4. TRUSTEESHIPS UNDER OTHER INDENTURES
a) Title of the securities outstanding under each such other indenture.
$66,700,000 City of Forsyth, Montana, Pollution Control Revenue
Refunding Bonds (Avista Corporation Colstrip Project) Series 1999A issued under
Indenture dated as of September 1, 1999.
$17,000,000 City of Forsyth, Montana, Pollution Control Revenue
Refunding Bonds (Avista Corporation Colstrip Project) Series 1999B issued under
Indenture dated as of September 1, 1999.
b) A brief statement of the facts relied upon as a basis for the claim
that no conflicting interest within the meaning of Section 310 (b) (1) of the
Act arises as a result of the trusteeship under any such other indenture,
including a statement as to how the indenture securities will rank as compared
with the securities issued under such other indenture.
The Trustee is not deemed to have a conflicting interest within the
meaning of Section 310 (b) (1) of the Act because the indenture securities
referenced in (a) above (the "Prior Securities") are not in default and rank
equally.
ITEM 16. LIST OF EXHIBITS
List below all exhibits filed as a part of this Statement of
Eligibility.
1. Articles of Association of the Trustee as now in effect (see
Exhibit 1 to Form T-1 filed in connection with Registration Statement No.
333-41329, which is incorporated by reference).
2
2. A copy of the Certificate of Authority of the Trustee to Commence
Business (See Exhibit 2 to Form T-1 filed in connection with Registration
Statement No. 333-41329, which is incorporated by reference).
3. Authorization to exercise corporate trust powers (Contained in
Exhibit 2).
4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to
Form T-1 filed in connection with Registration Statement No. 333-41329, which is
incorporated by reference).
5. Not applicable.
6. The consent of the Trustee required by Section 21(b) of the Act
(See Exhibit 6 to Form T-1 filed in connection with Registration Statement No.
333-41329, which is incorporated by reference).
7. A copy of the latest report of condition of the Trustee, published
pursuant to law or the requirements of its supervising or examining authority.
8. Not applicable.
9. Not applicable.
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Chase Manhattan Bank and Trust Company, National Association, a
corporation organized and existing under the laws of the State of California,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in the City of San Francisco and
State of California, on the 29th day of May, 2001.
CHASE MANHATTAN BANK AND TRUST COMPANY,
NATIONAL ASSOCIATION
By /s/Chii Ling Lei
-------------------------------------
Chii Ling Lei
Assistant Vice President
3
EXHIBIT 7. REPORT OF CONDITION OF THE TRUSTEE.
- --------------------------------------------------------------------------------
CONSOLIDATED REPORT OF CONDITION OF
Chase Manhattan Bank and Trust Company, N. A.
---------------------------------------------
(Legal Title)
LOCATED AT 1800 Century Park East, Ste. 400 Los Angeles, CA 90067
---------------------------------------------------------------------
(Street) (City) (State) (Zip)
AS OF CLOSE OF BUSINESS ON March 31, 2001
---------------------------------------------
================================================================================
ASSETS DOLLAR AMOUNTS IN THOUSANDS
1. Cash and balances due from depository institutions (from Schedule RC-A):
a. Noninterest-bearing balances and currency and coin (1) 2,438
b. Interest bearing balances (2) 0
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) 0
b. Available-for-sale securities (from Schedule RC-B, column D) 671
3. Federal Funds sold and securities purchased agreements to resell 60,850
4. Loans and lease financing receivables (from Schedule RC-C):
a. Loans and leases held for sale 0
b. Loans and leases, net of unearned income 471
c. LESS: Allowance for loan and lease losses 0
d. Loans and leases, net of unearned income and
allowance (item 4.b minus 4.c) 471
5. Trading assets (from Schedule RC-D) N/A
6. Premises and fixed assets (including capitalized leases) 217
7. Other real estate owned (from Schedule RC-M) 0
8. Investments in unconsolidated subsidiaries and associated companies
(from Schedule RC-M) 0
9. Customers' liability to this bank on acceptances outstanding 0
10. Intangible assets
a. Goodwill 21
b. Other intangible assets (from Schedule RC-M) 560
11. Other assets (from Schedule RC-F) 2,460
12. TOTAL ASSETS (sum of items 1 through 11) 67,688
- ---------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
4
LIABILITIES
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from
Schedule RC-E) 33,383
(1) Noninterest-bearing (1) 10,919
(2) Interest-bearing 22,464
b. In foreign offices, Edge and Agreement subsidiaries, and IBF'
(1) Noninterest-bearing N/A
(2) Interest-bearing N/A
14. Federal funds purchased and securities sold under agreements to
repurchase 0
15. Trading liabilities (from Schedule RC-D) 0
16. Other borrowed money (includes mortgage indebtedness and obligations
under capitalized leases) (from Schedule RC-M): 0
17. Not applicable
18. Bank's liability on acceptances executed and outstanding 0
19. Subordinated notes and debentures (2) 0
20. Other liabilities (from Schedule RC-G) 6,303
21. Total liabilities (sum of items 13 through 20) 39,686
22. Minority interest in consolidated subsidiaries 0
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus 0
24. Common stock 600
25. Surplus (exclude all surplus related to preferred stock) 13,169
26. a. Retained earnings 14,233
b. Accumulated other comprehensive income (3) 0
27. Other equity capital components (4) 0
28. Total equity capital (sum of items 23 through 27) 28,002
29. Total liabilities, minority interest, and equity capital
(sum of items 21, 22, and 28) 67,688
MEMORANDUM
To be reported with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below
that best describes the most comprehensive level of auditing work
performed for the bank by independent external auditors as of any date
during 2000 2
- ---------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
(2) Includes limited-life preferred stock and related surplus.
(3) Includes net unrealized holding gains (losses) on available-for-sale
securities, accumulated net gains (losses) on cash flow hedges, and minimum
pension liability adjustments.
(4) Includes treasury stock and unearned Employee Stock Ownership Plan shares.
