As filed with the Securities and Exchange Commission on February 11, 2002
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 4931 91-0462470
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
1411 EAST MISSION AVENUE
SPOKANE, WASHINGTON 99202
(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 99202 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
- ------------------------------------------- ---------------- --------------- ------------------ ----------------
PROPOSED
PROPOSED MAXIMUM
MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER UNIT (1) PRICE (1) FEE
- ------------------------------------------- ---------------- --------------- ------------------ ----------------
First Mortgage Bonds, 7.75% Series due 2007 $150,000,000 100% $150,000,000 $35,850
- ------------------------------------------- ---------------- --------------- ------------------ ----------------
(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.
================================================================================
Subject to completion, dated , 2002
PROSPECTUS
AVISTA CORPORATION
EXCHANGE OFFER
AVISTA CORP. IS OFFERING TO ISSUE ITS
7.75% FIRST MORTGAGE BONDS DUE 2007
(REGISTERED)
IN EXCHANGE FOR ITS
7.75% FIRST MORTGAGE BONDS DUE 2007
(UNREGISTERED)
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.
NEW YORK CITY TIME, , 2002 UNLESS EXTENDED
o The new bonds will:
o bear interest at 7.75% per annum, and
o mature on January 1, 2007.
These terms are the same as the terms of the old bonds. The new bonds 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 bonds that bondholders 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 bonds, the new bonds will be secured by a lien on Avista
Corp.'s facilities for the generation, transmission and distribution of
electric energy and for the storage and distribution of natural gas.
o The exchange offer is not conditioned on the tender of any minimum
principal amount of old bonds.
o There will likely be no public market for the new bonds.
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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.
, 2002
The information provided 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.
TABLE OF CONTENTS
PAGE
Summary.............................................3
Risk Factors.......................................10
Avista Corporation.................................12
Use of Proceeds....................................15
Certain Regulatory Matters.........................15
The Exchange Offer.................................17
Description of the New Bonds.......................25
Bank Credit Agreements.............................36
Certain U.S. Federal Income Tax Considerations.....37
Plan Of Distribution...............................40
Where You Can Find More Information................41
Safe Harbor for Forward-Looking Statements.........42
Legal Matters......................................43
Experts............................................43
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 , 2002, WHICH IS FIVE BUSINESS DAYS BEFORE THE EXPIRATION DATE OF THE
EXCHANGE OFFER ON , 2002.
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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 BONDS AND
IT IS NOT SOLICITING AN OFFER TO EXCHANGE THE NEW BONDS IN ANY JURISDICTION IN
WHICH THE EXCHANGE OFFER IS NOT PERMITTED.
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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 bonds, 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 a decision to participate in the exchange
offer. The terms "we", "us" and "our" refer to Avista Corp. and, when
applicable, its subsidiaries. You should read the entire prospectus carefully,
including the detailed financial and other information incorporated by reference
in this prospectus and the information contained in the section entitled RISK
FACTORS.
AVISTA CORPORATION
GENERAL
Avista Corp., which was incorporated in the State of Washington in
1889, is an energy company involved in the production, transmission and
distribution of energy as well as other energy-related businesses. Avista
Utilities, which is an operating division of Avista Corp. and not a separate
entity, provides electric and natural gas service to customers in four western
states and is subject to state and federal regulation. We also have subsidiaries
involved in energy trading and marketing and information and technology
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.
Avista Utilities provides electricity distribution and transmission
services to a total of approximately 317,000 retail customers in eastern
Washington and northern Idaho, and natural gas distribution service to
approximately 284,000 retail customers in parts of Washington, Idaho, Oregon and
California. Avista Utilities anticipates residential and commercial electric
load growth to average approximately 3.0% annually for the next five years and
natural gas load growth, including transportation volumes, to average for the
next five years approximately 1.6% annually in the Washington and Idaho service
area and approximately 2.5% annually in the Oregon and South Lake Tahoe service
areas. In addition to providing electric transmission and distribution services,
Avista Utilities generates electricity. It owns and operates eight hydroelectric
projects, a wood-waste fueled generating station and two natural gas-fired
combustion turbine generating units. Avista Utilities also owns a 15% share in a
two-unit coal-fired generating facility and leases and operates two additional
natural gas-fired combustion turbine generating units. These facilities have a
maximum capacity of approximately 1,470 megawatts ("MW"), of which 65% is
hydroelectric and 35% is thermal. We also have a 50 percent interest in the 280
MW Coyote Springs 2 project under construction near Boardman, Oregon. See
"--Recent Developments -- Asset Sales". Avista Utilities also engages in
wholesale sales and purchases of electric capacity and energy.
Avista Corp.'s Energy Trading and Marketing line of business excludes
Avista Utilities' regulated utility operations, and is comprised of Avista
Energy, Inc. ("Avista Energy") and Avista Power, LLC ("Avista Power"). Avista
Energy is an electricity and natural gas trading and marketing business. Avista
Power has a 49% ownership interest in a 270 MW natural gas combustion turbine
facility in Rathdrum, Idaho, which commenced commercial operation in September
2001.
RECENT DEVELOPMENTS
RECOVERY OF PURCHASED POWER COSTS
Beginning in the second quarter of 2000, the price of power in western
wholesale markets rose to unprecedented levels and became much more volatile. In
the fourth quarter of 2000 and continuing through the third quarter of 2001, we
were required to purchase above-normal amounts of electric energy in the
wholesale market to meet our retail demand. This was primarily due to reduced
availability of hydroelectric resources due to low streamflow levels. The
combination of high prices and increased amounts purchased caused our purchased
power costs to be far in excess of the levels recovered from retail customers
under current rates.
In August 2000 the Washington Utilities and Transportation Commission
("WUTC") issued an order permitting us to record as an expense on our income
statement only that portion of our purchased power costs which was being
recovered from retail customers under existing rates. Under the WUTC order, we
were permitted to "defer" the recognition on our income statement of the portion
of our purchased power costs which was in excess of the level then being
3
recovered from retail customers. Instead, we were allowed to record these excess
costs as a "regulatory asset" on our balance sheet for possible recovery in the
future. We already had similar authority in Idaho under a previously established
power cost adjustment mechanism.
Our deferral balances have reached levels that made it necessary for
the Company to file for rate increases with the WUTC and the Idaho Public
Utility Commission ("IPUC") as described below.
As of December 31, 2001, the total amount of cash expended for excess
purchased power costs which has been deferred on our balance sheet was $235
million, of which $162 million was attributable to Washington customers and $73
million was attributable to Idaho customers.
REQUESTED ELECTRIC RATE INCREASES
September WUTC Order. In September 2001, the WUTC issued an order
approving a 25% temporary electric surcharge, subject to refund, for all classes
of Washington customers, for a period of 15 months commencing October 2001. The
order also terminated the previously approved deferred accounting mechanism, as
of January 1, 2002. We had requested a 36.9% surcharge over a period of 27
months. The authorized surcharge will not be adequate to offset the entire
Washington portion of our deferred cost balances. The surcharge will allow us to
reduce the deferred cost balance by $125 million. Of this amount, $71 million
will be additional cash revenue and $54 million was a non-cash credit taken on
October 1, 2001 against the deferred cost balance. The amount so credited, which
was previously being amortized to revenue over a period of years, resulted from
an unrelated matter. The surcharge will have no material impact on net income
since the deferred costs are amortized to offset the increase in revenues. The
WUTC ordered us to file a general rate case in December 2001 to determine the
prudency of our purchased power costs as well as to address other matters.
October IPUC Order. In October 2001, the IPUC issued an order approving
a 14.7% power cost adjustment ("PCA") surcharge, and extending an existing 4.7%
PCA surcharge, for all classes of Idaho customers for 12 months commencing
immediately. The surcharge will allow us to reduce the deferred cost balance by
approximately $58 million. Of this amount, approximately $24 million will be
additional cash revenue and approximately $35 million will be an unrelated
non-cash credit for costs being amortized through the end of 2002. The IPUC
indicated that it could, upon further review, authorize extensions of the
surcharges. As in the case of the Washington surcharge, the Idaho PCA surcharge
will have no material impact on net income.
November WUTC Deferred Cost Filing. In November 2001, prior to filing
our general rate case (which generally can take up to 11 months to be resolved),
we filed a request with the WUTC for an expedited procedural schedule to
determine the prudency and recoverability of the Washington portion of our
deferred purchased power costs accrued through September 30, 2001. A procedural
schedule has been set and final legal briefs in this prudence case are due March
22, 2002. This order would not result in any immediate rate changes, but will
determine the definitive amount of deferred power costs that will ultimately be
recovered from retail customers. Any such rate changes would be addressed in the
general rate case.
December WUTC General Rate Filing. On December 3, 2001, we filed a
general rate case with the WUTC requesting, among other things:
o an interim rate increase, subject to refund, of 10% above current
electric prices (including the September 2001 surcharge) to offset
increased costs that are in excess of those being recovered through
existing rates;
o the issuance of an order implementing a temporary deferred accounting
mechanism to run from January 1, 2002 until the conclusion of the
general rate case, to reflect cash spent to cover power supply-related
costs to serve retail customer needs but not yet reflected in rates;
o recovery of costs associated with the addition of the new Coyote
Springs 2 power project and other electric generation projects built
to serve retail customer needs;
o establishment of a PCA mechanism to adjust electric rates up or down
with changes in the market and in hydroelectric conditions, similar to
the existing Idaho PCA mechanism that has been in place since 1989;
and
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o a 12.75% rate of return on common equity.
The net effect of the requested increases, if granted, would be:
o a permanent 22.5% increase over existing rates (excluding the
September 2001 surcharge) which would have a positive impact on net
income; plus
o a temporary 14.9% increase over existing rates (excluding the
September 2001 surcharge), designed to recover the remaining balance
of deferred purchased power costs over a period of 5 years from the
end of the general rate case, which would, like the surcharges
currently in effect, have substantially no impact on net income.
December WUTC Order Granting Accounting Petition. Effective December
28, 2001, the WUTC issued an order authorizing the Company to defer 90% of its
excess power supply-related costs until the conclusion of the general rate case.
Both the prudence of these costs and the ratemaking treatment are subjects of
the general rate case and are subject to final review and approval by the WUTC.
RECENT GAS COST ADJUSTMENTS
On July 6, 2001, we filed requests for purchased gas cost adjustments
("PGA") with the WUTC and the IPUC. A PGA increase of 12.2% was authorized by
the WUTC, effective on August 9, 2001. A PGA increase of 11.5% was authorized by
the IPUC, effective on September 1, 2001. Total deferred purchased gas costs
were approximately $53 million as of December 31, 2001. We estimate that the PGA
rate changes will increase revenues by approximately $25 million per year. Based
on current PGAs in place and current natural gas prices, we expect that the
deferred natural gas cost balance will be fully recovered by December 2002.
However, there will be no material impact on net income as natural gas costs are
amortized to offset the increase in revenues.
ASSET SALES
Coyote Springs 2. On December 12, 2001, we sold 50% of our interest in
the Coyote Springs 2 project, representing 140 MW of a 280 MW combined-cycle
natural gas-fired plant currently under construction near Boardman, Oregon to
Mirant Americas Development, Inc. ("Mirant"). National Energy Production
Corporation ("NEPCO"), a wholly-owned subsidiary of Enron Corporation, is the
contractor responsible for the engineering, procurement and construction of the
Coyote Springs 2 project. The project is planned to begin commercial operation
in the third quarter of 2002. Avista Corp. and Mirant will share equally in the
costs of construction, operation and output from the plant. As of December 12,
2001, we had invested approximately $92.7 million in the project, which has a
total expected cost of $185.4 million.
Combustion Turbines. In November 2001, our subsidiary, Avista Power,
announced its intention to sell three combustion turbine units being
manufactured by General Electric Company. The expected proceeds will be
approximately $46 million in cash over a period commencing November 2001 and
continuing through July 2002. We recorded an $8.2 million pre-tax impairment
charge related to these assets in September 2001.
Avista Communications. In September 2001, we announced our intention to
dispose of our interest in Avista Communications, our telecommunications
affiliate, and thereby exit from the telecommunication service provider
business. To date we have announced dispositions of assets and operations in
Idaho, Montana, Washington and Wyoming. Complete divestiture is expected to be
finalized in mid-2002. As a result of such divestitures, we recorded a $58.4
million pre-tax impairment charge related to these assets in September 2001.
RATINGS DOWNGRADE
On December 11, 2001, Fitch, Inc. downgraded our credit ratings. Among
those ratings downgraded was our senior secured debt, which was downgraded from
BBB with a negative outlook to BBB- with a stable outlook. In October 2001,
Moody's Investor Service and Standard & Poor's downgraded our credit ratings.
Among those ratings downgraded was our senior secured debt, which was downgraded
from Baa1 to Baa3 with a negative outlook by Moody's Investor Service and from
BBB to BBB- with a negative outlook by Standard & Poor's. Also downgraded was
our overall corporate credit rating, which is now rated Ba1 with a negative
outlook by Moody's Investor Service and BB+ with a negative outlook by Standard
& Poor's.
5
ENRON EXPOSURE
Both Avista Energy and Avista Corp. (through the Avista Utilities
division) engage in physical and financial transactions for the purchase and
sale of electric energy and capacity and natural gas. Both companies have done
considerable business with several affiliates of Enron Corporation ("Enron"). We
have both short-term and long-term contracts with the Enron affiliates. Avista
Corp.'s long-term contracts with Enron affiliates have remaining terms ranging
from 1 to 3 years. Avista Energy's long-term contracts with Enron affiliates
have remaining terms ranging from 1 to 9 years. On December 2, 2001, Enron
Corporation and certain of its affiliates (including certain entities with which
we have outstanding transactions) filed for protection under Chapter 11 of the
U.S. Bankruptcy Code. The bankruptcy filing constitutes a default under Avista
Corp.'s and Avista Energy's existing contracts with Enron affiliates, and Avista
Corp. and Avista Energy have terminated substantially all the contracts and have
suspended all trading activities with Enron and its affiliates.
As of December 31, 2001, Avista Corp. and Avista Energy had accounts
receivable from Enron and its affiliates of $3.1 million and $14.1 million,
respectively.
Our contracts with each Enron affiliate provide that, upon termination,
the net settlement of accounts receivable and accounts payable with such entity
will be netted against the mark-to-market value of the terminated forward
contracts with such entity. We currently estimate that, for each of Avista Corp.
and Avista Energy, our net mark-to-market liability to Enron entities in respect
of terminated forward contracts substantially exceeds the total net receivables
from these entities. We further estimate that the net mark-to-market liability
to Enron entities in respect of terminated forward contracts of Avista Corp. and
Avista Energy, taken together, exceeds total net receivables from these entities
by less than $30 million. Any claims by the Enron entities for amounts which we
might owe in respect of the terminated forward contracts would be subject to any
defenses and counterclaims which we may have.
Our estimates of the mark-to-market values of terminated forward
contracts are based on data currently available and on assumptions as to future
market prices and other information. While we believe that our assumptions are
reasonable, they are subject to change and ultimately could be challenged by the
Enron entities or their bankruptcy trustees.
NEPCO, the contractor for the Coyote Springs 2 project, was not
included in the initial bankruptcy filings made by Enron and its affiliates.
However, NEPCO's obligations were guaranteed by Enron, and the bankruptcy filing
by Enron is an event of default under the Coyote Springs 2 construction
contract. NEPCO and Coyote Springs 2, LLC have amended the construction contract
to, among other things, authorize Coyote Springs 2, LLC to make immediate draws
under a letter of credit posted to secure NEPCO's performance and to permit
Coyote Springs 2, LLC to pay third-party subcontractors of NEPCO directly.
Coyote Springs 2, LLC is continuing to assess the ability of NEPCO to perform
its obligations under the construction contract and may need to exercise
additional remedies in the event the impact of the Enron bankruptcy prevents
NEPCO from performing its obligations under the construction contract.
Avista Corp. is party to power exchange arrangements with a remaining
life of 15 years whereby Enron Power Marketing Inc. ("EPMI") (one of the Enron
affiliates which filed for bankruptcy protection) purchases and sells capacity
and energy from and/or to Avista Utilities and Portland General Electric
Company. We cannot predict either (1) what effect, if any, the bankruptcy
proceedings will have upon EPMI's performance of its obligations under these
arrangements or (2) the effect, if any, of nonperformance on our business or
financial condition.
THE EXCHANGE OFFER
GENERAL Avista Corp. is offering to exchange $1,000 in
principal amount of new bonds for each $1,000 in
principal amount of old bonds that bondholders
properly tender and do not withdraw before the
expiration date. Avista Corp. will issue the new
bonds on or promptly after the expiration date.
There is $150,000,000 in aggregate principal
amount of old bonds outstanding. See THE EXCHANGE
OFFER.
EXPIRATION DATE The exchange offer will expire at 5:00 p.m., New
York City time, on , 2002 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 bonds which are properly
tendered in the exchange offer and not withdrawn
before 5:00 p.m., New York City time, on the
expiration date.
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RESALE OF NEW BONDS 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 bonds 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 bonds who offer, resell or otherwise transfer
new bonds in violation of the Securities Act may
incur liability under that Act. Avista Corp. will
not assume or indemnify holders against this
liability.
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 bonds 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 bonds 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 bonds (in book-entry form
if you are a participant in DTC) and any other
required documentation to Citibank, N.A., as
exchange agent.
GUARANTEED DELIVERY If you are a registered holder of old bonds 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 bonds according to special guaranteed delivery
procedures. See THE EXCHANGE OFFER - "Procedures
for Tendering - Registered Holders and DTC
Participants - Registered Holders" on page 22.
WITHDRAWAL RIGHTS You may withdraw tenders of old bonds at any time
before 5:00 p.m., New York City time, on the
expiration date.
CERTAIN FEDERAL INCOME TAX The exchange of new bonds for old bonds will not
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.
7
EFFECT ON HOLDERS OF If you are a holder of old bonds and do not tender
OLD BONDS your old bonds in the exchange offer, you will
continue to hold the old bonds and you will be
entitled to all the rights and limitations
applicable to the old bonds in the mortgage,
except for any rights under the registration
rights agreement that by their terms terminate
upon the consummation of the exchange offer.
CONSEQUENCES OF All untendered old bonds will continue to be
FAILURE TO EXCHANGE subject to the restrictions on transfer provided
for in the old bonds. In general, the old bonds
may not be offered or sold unless registered under
the Securities Act of 1933, except pursuant to an
exemption from, or in a transaction not subject
to, the Securities Act of 1933 and applicable
state securities laws. Other than the new bonds
being registered in connection with the exchange
offer, we do not currently anticipate that we will
register the old bonds under the Securities Act of
1933.
EXCHANGE AGENT Citibank, N.A. is the exchange agent. Its
telephone number is 1-800-422-2066. Its address is
111 Wall Street, 14th Floor/Zone 3, New York, New
York 10043.
THE NEW BONDS
OFFERED SECURITIES $150,000,000 principal amount of 7.75% First
Mortgage Bonds due 2007
MATURITY DATE January 1, 2007
INTEREST PAYMENT DATES January 1 and July 1 of each year, beginning
July 1, 2002
SECURITY; RANKING The new bonds will be issued under Avista Corp.'s
Mortgage and Deed of Trust, dated as of June 1,
1939, as supplemented (the "mortgage") and will be
secured by a lien on Avista Corp.'s facilities for
the generation, transmission and distribution of
electric energy and for the storage and
distribution of natural gas. The new bonds will
rank equally in right of payment with all of
Avista Corp.'s current and future first mortgage
bonds and senior in right of payment to all
current and future unsecured senior indebtedness
and subordinated indebtedness, which as of
December 31, 2001 was $967.2 million. As of
December 31, 2001, Avista Corp. had outstanding
$533.5 million of first mortgage bonds.
ISSUANCE OF ADDITIONAL BONDS Additional bonds may be issued under the mortgage
on the basis of 70% of the cost or fair value to
Avista Corp. (whichever is less) of property
additions or on the basis of retired bonds or cash
deposited with the trustee.
USE OF PROCEEDS The net proceeds from the issuance and sale of the
old bonds are being used to retire maturing
medium-term notes and other short-term
indebtedness. We will not receive any proceeds
from the issuance of the new bonds in the exchange
offer.
RISK FACTORS
You should read the RISK FACTORS section, beginning on page 10 of this
prospectus, so that you understand the risks associated with an investment in
securities of Avista Corp.
8
SUMMARY CONSOLIDATED FINANCIAL DATA
We have selected the historical financial data shown below from the
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 which are incorporated by reference into
this prospectus.
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...... 813 792 1,318 2,266 5,732
Other........................... 145,150 163,598 231,483 122,303 32,937
Intersegment eliminations....... -- (1,149) (7,440) (33,488) (176,744)
---------- ------------ ------------ ------------ ---------------
Total........................... $944,957 $1,301,934 $3,683,307 $7,902,399 $7,905,577
Income (Loss) from Operations
(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) (5,391) (4,979) (8,966) (26,424)
Other........................... 15,355 9,962 12,033 (423) (9,861)
---------- ------------ ------------ ------------ ---------------
Total........................... $186,921 $189,437 $173,033 $35,393 $217,088
Interest Expense ................... $63,255 $66,275 $69,017 $64,747 $68,255
Income from Continuing Operations
Before Income Taxes............... 132,962 175,826 121,746 45,559 178,053
Income from Continuing Operations... 83,453 114,767 78,316 28,662 101,055
Income (Loss) from
Discontinued Operations........... -- 30 (177) (2,631) (9,376)
Net Income.......................... 83,453 114,767 78,316 28,622 101,055
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....... $1,397,876 $1,433,123 $1,470,942 $1,500,837 $1,518,312
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 2,221 2,492 6,312 13,599
Other........................... 254,032 268,703 285,625 114,929 98,212
Discontinued Operations--Avista
Communications................ -- 1,254 4,969 20,067 50,665
---------- ------------ ------------ ------------ ---------------
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 --
Common Equity....................... 710,736 748,812 488,034 393,499 724,224
Other Financial Data:
Earnings Before Interest, Taxes,
Depreciation and Amortization..... $268,314 $311,952 $261,087 $185,615 $318,737
Depreciation and Amortization....... $72,097 $69,851 $70,324 $75,309 $73,429
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 2.87 4.67
Ratio of Consolidated Earnings to
Fixed Charges (3)................. 2.97 3.49 2.66 1.66 3.45
Year to Date September 30,
----------------------------
2000 2001
------------ -------------
(Thousands of Dollars
except Ratios)
Income Statement Data:
Operating Revenues:
Avista Utilities................ $1,014,987 $930,955
Energy Trading and Marketing.... 4,630,646 4,235,536
Information and Technology...... 3,903 10,085
Other........................... 25,046 12,898
Intersegment eliminations....... (78,406) (197,905)
------------ -------------
Total........................... $5,596,176 $4,991,569
Income (Loss) from Operations
(pre-tax):
Avista Utilities................ $(30,817) $95,277
Energy Trading and Marketing.... 132,647 90,995
Information and Technology...... (18,023) (23,232)
Other........................... (4,797) (7,423)
------------ -------------
Total........................... $79,010 $155,617
Interest Expense ................... $49,570 $76,689
Income from Continuing Operations
Before Income Taxes............... 56,995 105,032
Income from Continuing Operations... 30,052 64,212
Income (Loss) from
Discontinued Operations........... (6,479) (44,394)
Net Income.......................... 23,573 19,818
Preferred Stock Dividend
Requirements...................... 23,127(1) 1,824
Common Stock Dividend............... 16,956 17,057
Balance Sheet Data:
Utility Plant in Service--Net....... $1,500,752 $1,563,543
Total Assets:
Avista Utilities................ $1,978,135 $2,430,034
Energy Trading and Marketing.... 4,117,257 2,091,752
Information and Technology...... 32,281 34,427
Other........................... 117,479 85,765
Discontinued Operations--Avista
Communications................ 39,534 25,550
------------ -------------
Total........................... $6,284,686 $4,667,528
Total Debt.......................... $861,247 $1,266,922
Company-Obligated Mandatorily
Redeemable Preferred
Trust Securities.................. 110,000 100,000
Preferred Stock Subject to Mandatory
Redemption........................ 35,000 35,000
Convertible Preferred Stock......... -- --
Common Equity....................... 661,197 734,147
Other Financial Data:
Earnings Before Interest, Taxes,
Depreciation and Amortization..... $161,739 $235,778
Depreciation and Amortization....... $55,174 $54,057
Capital Expenditures................ $113,899 $238,303
Ratio of Earnings Before Interest,
Taxes, Depreciation and
Amortization to Fixed Charges (2) 3.26 3.07
Ratio of Consolidated Earnings to
Fixed Charges (3)................. 2.07 2.30
(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. (See Note 15 of Notes to Financial
Statements in the Form 10-K.)
(2) "Earnings Before Interest, Taxes, Depreciation and Amortization", or
EBITDA, represents income from continuing operations before interest
expense (including related amortization), taxes based on income from
continuing operations, depreciation and 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.
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)
income from continuing operations before the cumulative effect of an
accounting change, (2) taxes based on income from continuing operations,
(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.
9
RISK FACTORS
You should carefully consider the following factors in addition to the
other information contained or incorporated by reference in this prospectus. The
risks described in this section are those that we consider to be most
significant to this exchange offer. If any of the following events occur, our
business, financial condition or results of operation could be materially
harmed.
WE HAVE SIGNIFICANT CASH REQUIREMENTS, SIGNIFICANT INDEBTEDNESS AND LIMITED CASH
AVAILABLE.
Since the fourth quarter of 2000, our cash requirements for purchased
power have been greater than the related amounts paid to us by our retail
customers. In addition to purchased power and operating expenses, we have
continuing commitments for capital expenditures for construction, improvement
and maintenance of facilities. We have incurred substantial levels of
indebtedness, both short and long term, to finance these requirements and to
otherwise maintain adequate levels of working capital. Debt service is another
significant cash requirement. In addition, we have also made significant cash
investments to finance the development of companies in our Information and
Technology line of business. These cash outflows have substantially reduced cash
available for our ordinary operating expenses.
WE NEED TO MAINTAIN ADEQUATE CREDIT WITH BANKS.
We also need to maintain access to adequate levels of credit with our
banks. Cash held by Avista Energy, one of our subsidiaries, is restricted by
that company's credit agreement and is not generally available to Avista Corp.
THE EXTENT TO WHICH THE CURRENT SURCHARGES AND THE PROPOSED WASHINGTON RATE
INCREASE WILL OFFSET OUR DEFERRED ENERGY COST BALANCES WILL DEPEND ON A NUMBER
OF FACTORS BEYOND OUR CONTROL.
The temporary electric rate surcharge approved by the WUTC in September
2001 will allow us to reduce our deferred energy cost balances by an estimated
$125 million through December 31, 2002, and the PCA surcharge approved by the
IPUC will allow us to reduce our deferred energy cost balances by an estimated
additional $58 million through October 11, 2002. For reference, the total
deferred electric energy cost balance at December 31, 2001 was approximately
$235 million. Revenues collected under the Washington surcharge are subject to
refund based on, among other things, whether or not the WUTC determines that the
costs were "prudently" incurred and whether or not Avista Utilities' overall
retail rates, as to be modified, are "just, fair, reasonable and sufficient." If
we are not permitted to recover substantially all our deferred energy costs, our
financial condition will be seriously impaired. The extent to which the amounts
recovered under the surcharges and the proposed rate increase in Washington will
be sufficient to offset the deferred cost balances will depend on a number of
factors beyond our control, including, but not limited to, the availability of
hydroelectric resources, outages of generation units, energy demand, energy
prices in wholesale markets, possible additional rate relief of the type
currently being sought.
WE ARE SUBJECT TO THE RISKS INHERENT IN THE UTILITY BUSINESS AND OUR CASH FLOW
AND EARNINGS COULD CONTINUE TO BE ADVERSELY AFFECTED, BEYOND THE TERM OF ANY
RATE INCREASES, DUE TO POTENTIAL HIGH PRICES AND VOLATILE MARKETS FOR PURCHASED
POWER, INCREASED CUSTOMER DEMAND FOR ENERGY, CONTINUED LOW AVAILABILITY OF OUR
HYDROELECTRIC RESOURCES, OUTAGES OF OUR GENERATING FACILITIES OR A FAILURE TO
DELIVER ON THE PART OF OUR SUPPLIERS.
The utility business involves many operating risks. If Avista
Utilities' operating expenses, including the cost of purchased power,
significantly exceed the levels recovered from retail customers for an extended
period of time, its cash flow and earnings would be negatively affected. Factors
which could cause purchased power costs to be higher than currently anticipated
include, but are not limited to, a return to high prices in Western wholesale
markets and/or high volumes of energy purchased in wholesale markets due to:
o increases in demand due, for example, either to weather or
customer growth;
10
o continued diminished availability of our hydroelectric resources
due to low streamflow conditions;
o outages of any of our thermal or other generating facilities; and
o failure to perform on the part of any party from which we
purchase capacity or energy.
WE ARE SUBJECT TO THE COMMODITY PRICE RISK, CREDIT RISK AND OTHER RISKS
ASSOCIATED WITH ENERGY MARKETS.
In connection with matching loads and resources, Avista Utilities
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 Utilities may also be exposed to
refunds for wholesale power sales depending on the outcome of the FERC's
retroactive price cap proceeding for the Pacific Northwest but would also have
the opportunity to establish offsetting claims.
Our subsidiary, Avista Energy, trades and markets electricity and
natural gas, along with derivative commodity instruments, including futures,
options, swaps and other contractual arrangements. As a result of these trading
and marketing activities, we are subject to various risks, including commodity
price risk and credit risk, as well as possible new risks resulting from the
imposition of market controls by federal and state agencies. The FERC is
conducting separate proceedings related to market controls within California and
within the Pacific Northwest that include proposals by certain parties to
retroactively impose price caps. The retroactive application of price caps could
result in liabilities for refunding revenues recognized in prior periods. Avista
Energy and other parties are vigorously opposing these proposals. If retroactive
price caps were imposed, Avista Energy could develop offsetting claims.
Credit risk includes the risk that counterparties that owe us money or
energy will breach their obligations. Should the counterparties to these
arrangements fail to perform, we may be forced to enter into alternative
arrangements. In that event, our financial results could be adversely affected
and we could incur losses. Although our models take into account the expected
probability of default by counterparties, our actual exposure to a default by a
particular counterparty could be greater than the models predict.
THE BANKRUPTCY OF ENRON CORPORATION AND MANY OF ITS AFFILIATES COULD ADVERSELY
AFFECT, IN GENERAL, THE WHOLESALE MARKETS FOR POWER AND NATURAL GAS AND, IN
PARTICULAR, VARIOUS ASPECTS OF OUR BUSINESS.
The bankruptcy filings by Enron and many of its affiliates could have
an adverse effect generally on wholesale electricity and natural gas markets, in
terms of the disruptive effect of temporary illiquidity and/or volatility, and
could ultimately lead to regulatory changes. We cannot predict the nature or
extent of any such changes or the effect, if any, they may have on us. The
filing could also directly affect the Avista entities, in terms of the matters
discussed under SUMMARY - "Recent Developments - Enron Exposure." As a result of
the filing, Avista entities have been required to find, and enter into contracts
with, new counterparties in the place of the terminated contracts.
11
AVISTA CORPORATION
GENERAL
Avista Corp., which was incorporated in the State of Washington in
1889, is an energy company involved in the production, transmission and
distribution of energy as well as other energy-related businesses. We also have
subsidiaries involved in information and technology 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:
o Avista Utilities;
o Energy Trading and Marketing;
o Information and Technology; and
o Other.
Avista Utilities, which is an operating division of Avista Corp. and
not a separate legal entity, provides electric and natural gas service to
customers in four western states and is subject to state and federal price
regulation. Avista Capital, one of our wholly owned subsidiaries, owns all of
the subsidiary companies engaged in the other lines of business.
BUSINESS STRATEGY
Our strategy is to:
o improve cashflow and continue rebuilding our financial strength
by:
o pursuing a general rate increase in Washington to recover
increased costs and the portion of our deferred power costs not
being recovered by the surcharge in Washington.
o disposing of assets and operations, such as the Avista
Communications line of business, not directly related to our
energy operations.
o being positioned to issue equity securities during 2002, subject
to market and other conditions.
o reducing our ratio of total debt to total capitalization.
o maintain a strong, low-cost, efficient electric and natural gas
utility business in the Northwest.
o position the utility to be "long" production capacity by owning
or controlling generation and natural gas resources exceeding
100% of retail load.
o continue to position Avista Energy as a focused, asset-enabled
energy marketing and trading business.
o find strategic partners for Avista Labs and Avista Advantage.
12
ENERGY BUSINESSES
Avista Utilities
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 830,000. 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 of approximately 525,000. At the end of 2001, retail
electric service was supplied to approximately 317,000 customers in eastern
Washington and northern Idaho; retail natural gas service was supplied to
approximately 284,000 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.
Avista Utilities anticipates residential and commercial electric load
growth to average approximately 3.0% annually for the next five years primarily
due to expected increases in both population and the number of businesses in its
service territory. Avista Utilities expects natural gas load growth, including
transportation volumes, to average for the next five years approximately 1.6%
annually in the Washington and Idaho service area and approximately 2.5%
annually in the Oregon and South Lake Tahoe service areas, in each case due to
expected conversions from electric space and water heating to natural gas, and
increases in both population and the number of businesses in these areas. These
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.
In addition to providing electric transmission and distribution
services, Avista Utilities generates electricity. Avista Utilities owns and
operates eight hydroelectric projects, a wood-waste fueled generating station
and two natural gas-fired combustion turbine 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 combustion turbine generating units. These
facilities have a maximum capacity 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.
Historically, Avista Utilities' electric rates to retail customers have
been among the lowest of all investor-owned utilities in the United States, due
primarily to the large proportion of hydroelectric resources. Retail electric
rates will remain low, on a relative basis, even after the temporary surcharges
which were recently approved in Washington and Idaho, described under CERTAIN
REGULATORY MATTERS.
In February 2000 Avista Utilities received a new 45-year operating
license from the FERC for the Cabinet Gorge and Noxon Rapids Hydroelectric
Generating Stations, which have a combined maximum generating capacity of 794
MW. Of Avista Utilities' remaining 191 MW of hydroelectric resources, 155 MW
represents the maximum capacity of six other plants operated under a FERC
license. This license will have to be renewed in 2007.
On December 12, 2001, we sold 50% of our interest in the Coyote Springs
2 project, representing 140 MW, of a 280 MW combined-cycle natural gas-fired
plant currently under construction near Boardman, Oregon to Mirant. NEPCO, a
wholly-owned subsidiary of Enron Corporation, is the contractor responsible for
the engineering, procurement and construction of the Coyote Springs 2 project.
The project is planned to begin commercial operation in the third quarter of
2002. Avista Corp. and Mirant will share equally in the costs of construction,
operation and output from the plant. As of December 12, 2001, we had invested
approximately $92.7 million in the Coyote Springs 2 project, which has a total
expected cost of $185.4 million.
Dramatic increases in the price of energy in Western wholesale markets
during 2000 and the first part of 2001, compounded by the deterioration of the
availability of hydroelectric resources in 2001 to the lowest level in at least
73 years, have had an adverse effect on Avista Corp.'s financial condition and
results of operations. See RISK FACTORS and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in Avista Corp.'s
13
Annual Report on Form 10-K for the year ended December 31, 2000 and in Avista
Corp.'s Quarterly Report on Form 10-Q for the quarterly period ended September
30, 2001.
Energy Trading and Marketing
Energy Trading and Marketing is comprised of Avista Energy and Avista
Power. Avista Energy is an electricity and natural gas trading and marketing
business. Avista Energy operates in the Western Systems Coordinating Council,
which is comprised of the eleven Western states and parts of Western Canada and
Baja California.
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 a 49% ownership interest in a 270 megawatt natural gas
combustion turbine facility in Rathdrum, Idaho, which commenced commercial
operation in September 2001. All of the output is contracted to Avista Energy
for 25 years. Due to changing market conditions and as part of the Avista Corp's
overall business strategy, Avista Corp. has decided that Avista Power will not
develop any additional non-regulated generating projects.
OTHER BUSINESSES
Information and Technology is comprised of Avista Laboratories, Inc.
("Avista Labs") and Avista Advantage, Inc. ("Avista Advantage").
o Avista Labs is developing both modular Proton Exchange Membrane
fuel cells for power generation at the site of the consumer or
industrial user and fuel cell components including fuel
processors and hydrogen sensors. Avista Labs has recently
initiated commercial sales of its hydrogen-only fuel cell systems
for various applications, primarily back-up power for the
commercial market.
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.
Avista Corp. reached a decision in September 2001 that it would divest
substantially all of the assets of Avista Communications, which provides various
telecommunications services to communities in the Northwest. In October 2001,
the Company announced that minority shareholders of Avista Communications will
acquire ownership of its Montana and Wyoming operations as well as its dial-up
internet access operations in Spokane, Washington and Coeur d'Alene, Idaho. In
November 2001 the Company announced that Avista Communications has agreed to
sell the assets and customer accounts of its Yakima and Bellingham, Washington
operations to Advanced Telcom Group, Inc. In December 2001, Avista
Communications entered into an agreement to transfer its voice and integrated
services facilities in Spokane, Washington and Coeur d' Alene, Idaho to certain
subsidiaries of XO Communications, Inc. The Company is continuing to pursue
divestiture of the remaining portion of the business.
The Other line of business includes several other minor subsidiaries.
This line of business was formed to invest in business opportunities that would
have potential strategic value in Avista Corp.'s other existing lines of
business. Avista Corp. is in the process of phasing out of this line of
business.
14
USE OF PROCEEDS
The net proceeds from the issuance and sale of the old bonds were used
to retire $114 million of medium-term notes maturing between December 2001 and
July 2002, and other short-term indebtedness bearing interest at a weighted
average rate of 7.26% per annum. We will not receive any proceeds from the
issuance of the new bonds in the exchange offer.
CERTAIN REGULATORY MATTERS
ELECTRIC
On August 9, 2000, the WUTC approved Avista Utilities' request for
deferred accounting treatment for certain power costs related to increases in
wholesale electric prices beginning July 1, 2000 through June 30, 2001. The
specific power costs deferred include the changes in power costs to Avista
Utilities from the costs included in base retail rates, resulting from changes
in short-term wholesale market prices, changes in the level of hydroelectric
generation and changes in the level of thermal generation (including changes in
fuel prices). The deferrals each month are calculated as the difference between
the actual costs to Avista Utilities associated with these three power cost
components, and the level of costs included in Avista Utilities' base retail
rates. The power costs deferred relate solely to the operation of Avista
Utilities' system resources to serve its system retail and wholesale load
obligations.
On January 24, 2001, the WUTC approved a modification to the deferral
mechanism to recover power supply costs associated with meeting increased retail
and wholesale system load requirements, effective December 1, 2000. The approval
of the modification was conditioned on Avista Utilities filing by March 20, 2001
a proposal addressing the prudence of the incurred power costs, the optimization
of Company-owned resources to the benefit of retail customers and the
appropriateness of recovery of power costs through a deferral mechanism. This
proposal was also to address cost of capital offsets to recognize the shift in
risk from shareholders to ratepayers and Avista Utilities' plan to mitigate the
deferred power costs.
On May 23, 2001, the WUTC approved a settlement agreement reached among
Avista Corp., the staff of the WUTC and other parties with respect to deferred
power costs. The agreement, among other things, provided 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, at the time of the settlement
agreement, expected to be in a power surplus position by the middle of 2002. The
agreement was based, in part, on the expectation that Avista Utilities' profits
from surplus power sales would offset the power cost deferral balance, reducing
the balance to zero by February 2003 without any price increase to retail
customers. These expectations were based on assumptions as to a number of
variables including, but not limited to, streamflow conditions, thermal plant
performance, level of retail loads, wholesale market prices and the amount of
additional generating resources. Avista Utilities reserved the right to alter,
amend, or terminate the settlement agreement as well as the right to seek
interim rate relief. Since the issuance of the FERC price mitigation plan on
June 18, 2001, wholesale market prices in the West have decreased. The wholesale
market price decrease negatively affected Avista Utilities' plan for recovery of
deferred power costs through future surplus power sales.
During June and the first part of July 2001, Avista Utilities evaluated
the effect of the recent decline in wholesale market prices and the FERC price
mitigation plan on its ability to recover deferred power cost balances under the
settlement agreement approved by the WUTC on May 23, 2001 and the continuing PCA
mechanism for Idaho customers approved by the IPUC. The combination of low
hydroelectric availability, the cost of energy and capacity under forward
contracts entered during a period of high wholesale prices to meet customer
demand for 2001, the decline in forward wholesale prices and the FERC price
mitigation plan increased current and estimated future deferred costs to levels
significantly higher than originally anticipated and significantly reduced the
expected value from future surplus sales of energy. As such, Avista Utilities
determined that the plan for recovery of deferred cost balances, as contemplated
in the May 23, 2001 settlement agreement with the WUTC and the existing PCA with
the IPUC, was not feasible.
15
Accordingly, on July 18, 2001 Avista Utilities filed requests with the
WUTC and IPUC for the approval of an electric energy surcharge of 36.9% in
Washington and a PCA surcharge of 14.7% in Idaho for a 27-month period beginning
in September 2001. As of December 31, 2001, Avista Utilities had deferred $235
million in power costs that have not been recovered in rates.
On September 24, 2001 the WUTC issued an order approving a 25%
temporary electric rate surcharge for the 15-month period from October 1, 2001
to December 31, 2002 that will be applied uniformly across all Washington
electric customer classes. Revenues collected under the surcharge are subject to
refund depending on the determination made in the general rate case referred to
below. It is estimated the order will allow Avista Utilities to reduce the
deferred power cost balance by $125 million. This will include the receipt of
$71 million in additional revenue from the surcharge and the accelerated
amortization of $54 million of a deferred non-cash credit on the Company's
balance sheet. The deferred non-cash credit relates to funds received in
December 1998 for the monetization of a contract in which the Company assigned
and transferred certain rights under a long-term power sales contract with
Portland General Electric to a funding trust. The deferred balance was scheduled
to be amortized into revenues over the 16-year period of the long-term sales
contract. There will be no direct impact on net income from either the surcharge
or accelerated amortization of the deferred non-cash credit; however, the
surcharge revenue will increase cash flows. Total deferred power costs for
Washington customers were $162 million as of December 31, 2001.
As part of the surcharge order, the WUTC ordered Avista Utilities to
file a general rate case by December 2001 as discussed below. The order by the
WUTC also provided for the termination of the accounting mechanism for the
deferral of power costs effective December 31, 2001. The WUTC has subsequently
approved the implementation of a temporary accounting mechanism for deferred
power supply-related costs for the period from January 1, 2002 through the
conclusion of the general rate case. As requested by Avista Utilities, the
deferred accounting mechanism has been modified to reflect the deferral of 90
percent of the difference between actual power supply-related costs and the
amount of power supply-related costs allowed to be recovered in current rates.
On November 13, 2001, Avista Utilities filed a request with the WUTC
for an expedited procedural schedule to address the prudency of the $199.7
million of deferred power costs for Washington customers incurred as of
September 30, 2001. This procedure will determine the definitive amount of
deferred power costs that will ultimately be recovered from retail customers.
The Company made this request due to the fact that uncertainty involving the
recovery of deferred power costs will present financing challenges for the
Company during the first half of 2002. The Company's $220 million committed line
of credit as well as a $125 million (subsequently reduced to $90 million)
accounts receivable financing facility expire in May 2002. It will be difficult
for the Company to renew financing facilities or issue equity securities without
certainty of the recoverability of deferred power costs. Avista Utilities
anticipates receiving a WUTC order by April 2002 with regards to the prudence
and recoverability of deferred power costs incurred prior to September 30, 2001.
This request does not provide for an adjustment to rates or the period over
which deferred power costs will be recovered. These issues, among other things,
were addressed in the general rate case that was filed on December 3, 2001
discussed below.
On December 3, 2001, Avista Utilities filed its rate case and requested
the recovery of additional deferred power costs and sought to demonstrate the
prudence of all power costs which it has incurred. The general rate case
addresses various power supply issues previously raised by the WUTC, a long-term
power cost adjustment mechanism, increased capital costs as well as other issues
customarily addressed in general rate cases, including whether or not the total
rates are just, fair, reasonable and sufficient. General rate cases before the
WUTC have historically taken from ten to twelve months to be resolved. See
SUMMARY -"Recent Developments." Effective December 28, 2001, the WUTC issued a
temporary deferred accounting mechanism to run from January 1, 2002 until the
conclusion of the general rate case.
On October 12, 2001 the IPUC issued an order approving a 14.7% PCA
surcharge for Idaho electric customers. The IPUC also granted an extension of a
4.7% PCA surcharge implemented earlier in 2001 that was set to expire January
31, 2002. Both PCA surcharges will remain in effect until October 11, 2002. The
IPUC directed Avista Utilities to file a status report 60 days before the PCA
surcharge expires. If review of the status report and the actual balance of
deferred power costs support continuation of the PCA surcharge, the IPUC has
indicated that it anticipates the PCA surcharge will be extended for an
additional period. It is currently estimated the IPUC order will allow Avista
Utilities to reduce the deferred power cost balance by approximately $58.2
million. This will include the receipt of $23.6 million in additional revenue
16
from the PCA surcharges and the accelerated amortization of $34.6 million of a
deferred non-cash credit on the Company's balance sheet for the monetization of
the Portland General Electric sale agreement (see description above). There will
be no direct impact on net income from either the PCA surcharges or accelerated
amortization of the deferred non-cash credit; however, the PCA surcharges will
increase cash flows. The current PCA mechanism allows for the deferral of 90% of
the difference between actual net power supply expenses and the authorized level
of net power supply expense approved in the last Idaho general rate case. Total
deferred power costs for Idaho customers were $73 million as of December 31,
2001.
The extent to which the amounts recovered through the electric
surcharge in Washington (as originally authorized or as it may be modified) and
the PCA surcharge in Idaho will be sufficient to offset the deferred power cost
balances will depend not only on the magnitude and duration of the rate
increases granted but also on the ongoing changes in the amount of the balances
throughout the term of the rate increases. The balances will accrue a carrying
charge and will continue to be affected by a variety of market factors beyond
our control including, but not limited to, the availability of hydroelectric
resources, energy demand and energy prices in wholesale markets.
GAS
On July 6, 2001, Avista Utilities filed requests for purchased gas cost
adjustments ("PGA") with the WUTC and the IPUC. The Washington PGA increase of
12.2% approved by the WUTC became effective on August 9, 2001. The Idaho PGA
increase of 11.5% approved by the IPUC became effective on August 28, 2001.
Total deferred purchased gas costs were $53 million as of December 31, 2001.
Avista Utilities estimates the PGA rate changes will increase revenues by $24.6
million per year. Based on current PGAs in place and current natural gas prices,
Avista Utilities expects that the deferred natural gas cost balance will be
fully recovered by December 2002. However, there will be no impact on net income
as deferred natural gas costs are amortized to offset the increase in revenues.
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
Avista Corp. is offering to issue its 7.75% First Mortgage Bonds due
2007, which have been registered under the Securities Act (the "New Bonds"), in
exchange for its 7.75% First Mortgage Bonds due 2007, which have not been so
registered (the "Old Bonds"), as described herein (the "Exchange Offer").
The Old Bonds were sold by Goldman, Sachs & Co., BNY Capital Markets,
Inc., Fleet Securities, Inc. and TD Securities (USA) Inc. (the "Initial
Purchasers") on December 19, 2001 to a limited number of institutional investors
(the "Purchasers"). In connection with the sale of the Old Bonds, Avista Corp.
and the Initial Purchasers entered into an Exchange and Registration Rights
Agreement, dated December 19, 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 Bonds identical in
all material respects to the Old Bonds, 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
Bonds as discussed below, or
(b) to register the Old Bonds 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
Bonds the opportunity to exchange their Old Bonds for a like principal amount of
New Bonds 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
17
respect to the Exchange Offer means any person in whose name Old Bonds 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
Bonds are held of record by DTC. At the date of this prospectus, the sole Holder
of Old Bonds is DTC.
In participating in the Exchange Offer, a Holder is deemed to represent
to Avista Corp., among other things, that
(a) the New Bonds acquired pursuant to the Exchange Offer are
being obtained in the ordinary course of business of the person
receiving such New Bonds, whether or not such person is the Holder,
(b) neither the Holder nor any such other person receiving such
New Bonds is engaging in or intends to engage in a distribution of
such New Bonds,
(c) neither the Holder nor any such other person receiving such
New Bonds has an arrangement or understanding with any person to
participate in the distribution of such New Bonds, and
(d) neither the Holder nor any such other person receiving such
New Bonds 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
Bonds issued pursuant to the Exchange Offer may be offered for resale and resold
or otherwise transferred by any Holder of such New Bonds (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
Bonds 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 Bonds. Any
Holder who tenders in the Exchange Offer for the purpose of participating in a
distribution of the New Bonds 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 Bonds. In the event that Avista Corp.'s belief is not correct, Holders of
the New Bonds who transfer New Bonds 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 Bonds for its own account in
exchange for Old Bonds 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 Bonds. 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
Bonds received in exchange for an unsold allotment of Old Bonds purchased
directly from Avista Corp.
Avista Corp. has not entered into any arrangement or understanding with
any person to distribute the New Bonds 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 Bonds 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.
18
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 Bonds 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 Bonds in exchange for each $1,000 in principal amount of
outstanding Old Bonds surrendered in the Exchange Offer. However, Old Bonds may
be tendered only in integral multiples of $1,000.
The form and terms of the New Bonds will be the same as the form and
terms of the Old Bonds. The New Bonds will evidence the same debt as the Old
Bonds. The New Bonds will be issued under and entitled to the benefits of the
mortgage pursuant to which the Old Bonds were issued. The New Bonds will be
registered under the Securities Act while the Old Bonds were not.
As of the date of this prospectus, $150,000,000 in aggregate principal
amount of the Old Bonds is outstanding. This prospectus, together with the
letter of transmittal, is being sent to all registered Holders of the Old Bonds.
Avista Corp. will be deemed to have accepted validly tendered Old Bonds
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
Bonds from Avista Corp.
Old Bonds 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 mortgage. If any tendered Old Bonds 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 Bonds will be
returned, without expense, to the tendering Holder thereof as promptly as
practicable after the Expiration Date.
Holders who tender Old Bonds 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 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
, 2002, 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 Bonds, 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
19
distributed to the registered Holders of the Old Bonds, 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
Bonds properly tendered and will issue the New Bonds promptly after acceptance
of the Old Bonds. See "--Conditions to the Exchange Offer." For purposes of the
Exchange Offer, Avista Corp. will be deemed to have accepted properly tendered
Old Bonds 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 Bonds for Old Bonds 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 Bonds are not accepted for
any reason set forth in the terms and conditions of the Exchange Offer or if Old
Bonds 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 Bonds 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.
CONDITIONS TO THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, Avista Corp. will
not be required to exchange any New Bonds for any Old Bonds and may terminate
the Exchange Offer before the acceptance of any Old Bonds 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 Bonds and return all tendered Old
Bonds to the tendering Holders,
(d) extend the Exchange Offer and retain all Old Bonds tendered
prior to the expiration of the Exchange Offer, subject, however, to
the rights of Holders who tendered such Old Bonds to withdraw their
tendered Old Bonds, or
(e) waive such unsatisfied conditions with respect to the
Exchange Offer and accept all properly tendered Old Bonds 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
20
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 BONDS, 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 Bonds 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.
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 BONDS, 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 BONDS 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 Bonds tendered pursuant thereto is tendered
(a) by a registered Holder who has not completed the box
entitled "Special Payment Instructions" or "Special Delivery Instruc-
tions" 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").
21
If the letter of transmittal is signed by a person other than the
registered Holder of any Old Bonds listed therein, such Old Bonds 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 Bonds.
If the letter of transmittal or any Old Bonds 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 Bonds and
(a) whose Old Bonds are not immediately available,
(b) who cannot deliver their Old Bonds, the letter of trans-
mittal or any other required documents to the Exchange Agent prior to
Ethe xpiration 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
Bonds (unless tender is to be made by book-entry transfer) and
the principal amount of Old Bonds 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 Bonds, 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 Bonds 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 Bonds by causing DTC to transfer such Old Bonds
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
22
described above must be complied with. The Exchange Agent will make a request to
establish an account with respect to the Old Bonds 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 Bonds 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 Bonds and withdrawal of tendered Old Bonds
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 Bonds not properly tendered or any Old Bonds 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 Bonds. 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 Bonds 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 Bonds, none of Avista
Corp., the Exchange Agent, or any other person shall incur any liability for
failure to give such notification. Tenders of Old Bonds will not be deemed to
have been made until such defects or irregularities have been cured or waived.
Any Old Bonds 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, 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 Bonds, as the
case may be will be deemed to represent to Avista Corp. that, among other
things,
o the New Bonds acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the Person
receiving such New Bonds, 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 Bonds,
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 Bonds pursuant to the Exchange Offer will
be made only after timely receipt by the Exchange Agent of certificates for the
Old Bonds tendered for exchange or a timely Book-Entry Confirmation of such Old
Bonds 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 Bonds are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer or if Old Bonds are submitted for a greater principal amount than the
Holder desires to exchange, such unaccepted or non-exchanged Old Bonds will be
returned without expense to the tendering Holder thereof (or, in the case of Old
Bonds 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 Bonds 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 Bonds 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 Bonds in the open market, in privately negotiated
23
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 BONDS
Except as otherwise provided herein, tenders of Old Bonds 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 Bonds 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
Bonds to be withdrawn (the "Depositor"),
(b) identify the Old Bonds 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 Bonds were
tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee
with respect to the Old Bonds register the transfer of such Old Bonds
in the name of the person withdrawing the tender, and
(d) specify the name in which any such Old Bonds are to be
registered, if different from that of the Depositor. If Old Bonds 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 Bonds, in which case a notice of
withdrawal will be effective 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 Bonds 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 Bonds will be issued
with respect thereto unless the Old Bonds so withdrawn are validly retendered.
Properly withdrawn Old Bonds 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
Citibank, N.A. 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 Bonds should be directed to the Exchange Agent addressed as
follows:
Citibank, N.A.
111 Wall Street
14th Floor/Zone 3
New York, New York 10043
Attention: Global Agency & Trust Services
By Telephone: 1-800-422-2066
By Facsimile: (212) 825-3483
24
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 $125,000. 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 Bonds pursuant to the Exchange Offer. If, however,
certificates representing New Bonds 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 Bonds tendered, or if
tendered Old Bonds 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 Bonds 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.
DESCRIPTION OF THE NEW BONDS
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 Bonds and the New Bonds are
sometimes collectively called the "bonds".
GENERAL
Avista Corp. issued the Old Bonds under its Mortgage and Deed of Trust,
dated as of June 1, 1939, as supplemented, under which Citibank, N.A., is
trustee. The Old Bonds were issued in a private transaction that was not subject
to the registration requirements of the Securities Act. The bonds, together with
all other bonds outstanding under the mortgage, are hereinafter called,
collectively, the first mortgage bonds. The statements herein concerning the
bonds and the mortgage are merely a summary and do not purport to be complete.
Such statements make use of terms defined in the mortgage and are qualified in
their entirety by express reference to the cited sections and articles of the
mortgage. Sections 125 to 150 of the mortgage appear in the first supplemental
mortgage. The terms of the bonds include those stated in the mortgage and those
made part of the mortgage by reference to the Trust Indenture Act.
The following description is a summary of the material provisions of
the mortgage relating to the Old Bonds. It does not restate the mortgage in its
entirety. We urge you to read the mortgage because it, and not this description,
defines your rights as holders of the Old Bonds. Some defined terms used in this
description have the meanings assigned to them in the mortgage.
The registered holder of a bond will be treated as the owner of it for
all purposes. Only registered holders will have rights under the mortgage.
25
PRINCIPAL, MATURITY AND INTEREST
Avista Corp. will issue bonds in denominations of $1,000 and integral
multiples of $1,000. The bonds will mature on January 1, 2007. Interest on the
bonds will accrue at the rate of 7.75% per annum and will be payable
semi-annually in arrears on January 1 and July 1, commencing on July 1, 2002.
Avista Corp. will make each interest payment to the holders of record on the
immediately preceding December 15 and June 15.
Interest on the bonds 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.
Avista Corp. may not redeem the bonds in whole or in part prior to
maturity, and there is no sinking fund for the bonds.
METHODS OF RECEIVING PAYMENTS ON THE BONDS
Interest on each bond payable on each interest payment date will be
paid by check mailed to the registered holder of such bond on the record date
relating to such interest payment date; provided, however, that if such holder
is a securities depositary, such payment may be made by such other means in lieu
of check as shall be agreed upon by Avista Corp., the trustee and such holder;
and provided, further, that interest payable at maturity (whether at stated
maturity, upon redemption or otherwise, hereinafter "Maturity") will be paid to
the person to whom principal is paid.
Principal of and premium, if any, and interest on the bonds due at
Maturity will be payable upon presentation of the bonds at the principal office
of the trustee which has been designated by Avista Corp. as its office or agency
for such payment. Avista Corp. may change such office or agency, and may
designate any additional office or agency, in its discretion.
TRANSFER AND EXCHANGE
The transfer of bonds may be registered, and bonds may be exchanged for
other bonds, upon surrender thereof at the principal office of the trustee which
has been designated by Avista Corp. as its office or agency for such purposes.
Avista Corp. may change such office or agency, and may designate an additional
office or agency, in its discretion. No service charge will be made for any
registration of transfer or exchange of bonds, but Avista Corp. may require
payment of a sum sufficient to cover any tax or other governmental charge
incident thereto. Avista Corp. will not be required to make any transfer or
exchange of any bonds for a period of 10 days next preceding any selection of
bonds for redemption, nor will it be required to make transfers or exchanges of
any bonds which have been selected for redemption in whole or in part or as to
which Avista Corp. shall have received a notice for the redemption thereof in
whole or in part at the option of the owner.
SECURITY
The bonds, together with all other first mortgage bonds now or
hereafter issued under the mortgage, will be secured by the mortgage, which
constitutes a first mortgage lien on Avista Corp.'s facilities for the
generation, transmission and distribution of electric energy and the storage and
distribution of natural gas and substantially all of Avista Corp.'s assets
(except as stated below), subject to
o leases of minor portions of the Company's property to others for
uses that do not interfere with the Company's business;
o leases of certain property of the Company not used in its utility
business;
o excepted encumbrances, as defined in the mortgage; and
26
o encumbrances, defects and irregularities deemed immaterial by the
Company in the operation of the Company's business.
There are excepted from the lien all cash and securities (including
without limitation securities issued by Avista Corp.'s subsidiaries);
merchandise, equipment, materials or supplies held for sale or consumption in
the Company's operations; receivables, contracts, leases and operating
agreements; electric energy, and other material or products (including gas)
generated, manufactured, produced or purchased by the Company, for sale,
distribution or use in the ordinary course of its business. (Mortgage, Granting
Clauses.)
The mortgage contains provisions for subjecting to the lien thereof all
property (other than property of the kinds excepted from such lien) acquired by
the Company after the execution and delivery thereof, subject to purchase money
liens and liens existing thereon at the time of acquisition, and, subject to
limitations in the case of consolidation, merger or sale of substantially all of
the Company's assets. (Mortgage, Granting Clauses and Art. XV.)
The mortgage provides that the trustee shall have a lien upon the
mortgaged property, prior to the bonds, for the payment of its reasonable
compensation and expenses and for indemnity. (Mortgage, Secs. 92 and 97; First
Supplemental, Art. XXV.)
Although its utility operations are conducted directly by Avista Corp.,
all of the other operations of Avista Corp. are conducted through its
subsidiaries. The lien of the mortgage does not cover the assets of the
subsidiaries or the securities of the subsidiaries held by Avista Corp. In
addition, the bonds 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
reorganization (and the consequent right of the holders of the bonds 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. See BANK CREDIT
AGREEMENTS. As of December 31, 2001, Avista Corp.'s subsidiaries had
approximately $22.9 million of indebtedness, $440.4 million of payables and
other liabilities, and $673.8 million of energy commodity liabilities (energy
commodity liabilities are held in a portfolio containing $860.5 million of
energy commodity assets) outstanding.
As of the date of this prospectus, $533.5 million of first mortgage
bonds are outstanding. This amount includes $220 million of non-transferable
first mortgage bonds which were issued in September 2001 to the agent bank under
Avista Corp.'s primary credit facility in order to provide the benefit of the
lien of the mortgage to secure Avista Corp.'s obligations. The indebtedness
under the credit facility (including the collateral bonds) are included in
Avista Corp.'s short-term debt. See BANK CREDIT AGREEMENTS.
MAINTENANCE AND REPLACEMENT FUND
Annual Maintenance and Replacement Fund payments are required to be
made to the trustee in an amount equal to the excess, if any, of the amount
which, in the opinion of an engineer expressed in a certificate delivered to the
trustee, should have been expended during the preceding calendar year for
repairs, maintenance, renewals or replacements of, or substitutions for, the
mortgaged property over the amount actually expended for such purposes. Any
annual requirement may be satisfied (a) in cash or (b) by credit for the amount
of first mortgage bonds that would otherwise be issuable on the basis of either
property additions or of first mortgage bonds or prior lien bonds theretofore
retired; provided, however, that the Company is not permitted to satisfy any
Maintenance and Replacement Fund requirement by the deposit of cash if, at the
time such requirement is to be satisfied, it has unfunded property additions
having a cost or fair value (whichever is less) equal to or greater than 110% of
such requirement. Cash deposited with the trustee pursuant to the Maintenance
and Replacement Fund may, among other things, be applied to the purchase of
first mortgage bonds or to the redemption of first mortgage bonds which are, by
their terms, redeemable before maturity.
27
In every year since the execution and delivery of the mortgage, the
Company has made all necessary expenditures for the aforesaid purposes and an
engineer has so certified, with the result that the Company has never been
required to make any payment to the trustee under the Maintenance and
Replacement Fund.
In addition, the mortgage contains a covenant pursuant to which the
Company is required for each calendar year to expend or accrue for maintenance
or to appropriate for property retirement or for property amortization 13 1/2%
of the gross operating revenues of the Company, as defined therein; provided,
however, that the Company may so expend, accrue or appropriate a lesser amount
if a regulatory authority determines that such lesser amount is adequate. Excess
amounts expended, accrued or appropriated in any year may be credited against
the five succeeding years' requirements. This covenant does not require the
deposit of cash with the trustee.
The Company amended the mortgage, effective as of the Modification
Effective Date referred to below, to eliminate the provisions for property
maintenance and retirement described above. No consent of the holders of the
bonds is required in order for this amendment to become effective. See
"--Modification."
(Mortgage, Sec. 38; First Supplemental, Article XXV; Second
Supplemental, Sec. 9; Eighteenth Supplemental, Sec. 4; Twenty-sixth
Supplemental, Sec. 2; Twenty-ninth Supplemental, Art. II.)
SPECIAL PROVISIONS FOR RETIREMENT OF BONDS
If, during any 12-month period, any of the mortgaged property is taken
by eminent domain and/or sold to any governmental, authority and/or sold
pursuant to an order of a governmental authority, with the result that the
Company receives $15,000,000 or more in cash or in principal amount of purchase
money obligations, the Company is required to apply such cash and the proceeds
of such obligations (subject to certain conditions and deductions, and to the
extent not otherwise applied) to the redemption of first mortgage bonds which
are, by their, terms, redeemable before maturity by the application of such cash
and proceeds. (Mortgage, Sec. 64; Tenth Supplemental, Sec. 4.)
ISSUANCE OF ADDITIONAL BONDS
The present maximum principal amount of first mortgage bonds which may
be outstanding under the mortgage is $10,000,000,000. However, the Company has
reserved the right to amend the mortgage (without any consent of or other action
of holders of any bonds now or hereafter outstanding) to remove this limitation.
First mortgage bonds of any series may be issued from time to time on
the basis of:
(1) 60% of cost or fair value of property additions (whichever is less)
after adjustments to offset retirements;
(2) retirement of first mortgage bonds; and
(3) deposit of cash.
The Old Bonds were issued upon the basis of unfunded property additions
and retired first mortgage bonds and New Bonds will only be issued in exchange
for a like principal amount of Old Bonds tendered in the Exchange Offer.
The Company has amended the mortgage, effective as of the Modification
Effective Date referred to below, to (x) change 60% in the preceding sentence to
70% and (y) make correlative changes in provisions relating to, among other
things, the release of property from the lien of the mortgage and the withdrawal
of cash held by the trustee. No consent of the holders of the bonds is required
in order for this amendment to become effective.
See "--Modification."
No first mortgage bonds may be issued as described in clause (1) or (3)
in the preceding paragraph unless net earnings for 12 consecutive months out of
the preceding 15 calendar months (before income taxes, depreciation and
amortization of property, property losses and interest on any indebtedness and
amortization of debt discount and expense) are at least twice the annual
28
interest requirements on all first mortgage bonds at the time outstanding,
including the additional issue, and on all indebtedness of prior rank. Such net
earnings test generally need not be satisfied prior to the issuance of first
mortgage bonds as described in clause (2) in the preceding paragraph unless (x)
the annual requirements on the retired first mortgage bonds on the basis of
which the bonds are to be issued have been excluded from a net earnings
certificate delivered to the trustee since the retirement of such first mortgage
bonds or (y)(i) the retired first mortgage bonds on the basis of which the bonds
are to be issued mature by their terms at a date more than two years after the
date for authentication and delivery of such bonds and (ii) the bonds bear
interest at a higher rate than such retired first mortgage bonds.
The Company has amended the mortgage, effective as of the Modification
Effective Date referred to below:
o to modify the net earnings test described in the preceding
paragraph to, among other things:
o provide that the period over which net earnings is computed
shall be 12 out of the preceding 18 months;
o specifically permit the inclusion in net earnings of
revenues collected or accrued subject to possible refund;
specifically permit the inclusion in net earnings of any
portion of the allowance for funds used during construction,
and any portion of the allowance for funds used to conserve
energy (or any analogous amount), which is not included in
"other income" (or any analogous item) in the Company's
books of account;
o provide that, in calculating net earnings, no deduction from
revenues or other income shall be made for (1) expenses or
provisions for any non-recurring charge to income of
whatever kind or nature (including without limitation the
recognition of expense due to the non-recoverability of
investment) or (2) provisions for any refund of revenues
previously collected or accrued subject to possible refund,
and
o provide that, in calculating annual interest requirements,
(1) if any first mortgage bonds or prior ranking
indebtedness bears interest at a variable rate, the annual
interest requirements thereon shall be determined by
reference to the rate or rates in effect on the date next
preceding the date of the new issue of first mortgage bonds
and (2) if the new issue of first mortgage bonds is to bear
interest at a variable rate or rates, the annual interest
requirements thereon shall be determined by reference to the
rate or rates to be in effect at the time of the initial
issuance thereof.
No consent of the holders of the bonds is required in order for this
amendment to become effective. See "--Modification."
Property additions generally include electric, natural gas, steam or
water property acquired after May 31, 1939, but may not include property used
principally for the production or gathering of natural gas. Any such property
additions may be used if their ownership and operation is within the corporate
purposes of the Company regardless of whether or not the Company has all
necessary permission it may need at any time from governmental authorities to
operate such property additions.
The holders of the bonds will be deemed to have consented to an
amendment to the provision of the mortgage which requires that Avista Corp.
deliver an opinion of counsel as to the status of the lien of the mortgage on
Property Additions being certified to the Trustee. The amendment permits us to
deliver to the Trustee, in lieu of such opinion, title insurance with respect to
such Property Additions in an amount not less than 35% of the cost or fair value
to Avista Corp. (whichever is less) of such Property Additions. Such amendment
could not be made without the requisite consent of the holders of outstanding
bonds as described under "--Modification."
No first mortgage bonds may be issued on the basis of property
additions subject to prior liens, unless the prior lien bonds secured thereby
have been qualified by being deducted from the first mortgage bonds otherwise
29
issuable and do not exceed 50% of such property additions, and unless the first
mortgage bonds then to be outstanding which have been issued against property
subject to continuing prior liens and certain other items would not exceed 15%
of the first mortgage bonds outstanding. The Company has amended the mortgage,
effective as of the Modification Effective Date referred to below, to change 50%
in the foregoing sentence to 70%. No consent of the holders of the bonds is
required in order for this amendment to become effective. See "--Modification."
The amount of prior liens on mortgaged property acquired after the date
of delivery of the mortgage may be increased subsequent to the acquisition of
such property provided that, if any property subject to such prior lien shall
have been made the basis of any application under the mortgage, all the
additional obligation are deposited with the trustee or other holder of a prior
lien.
(Mortgage, Secs. 4 to 8, 20 to 30 and 46; First Supplemental, Sec. 2;
Eleventh Supplemental, Sec. 5; Twelfth Supplemental, Sec. 1; Fourteenth
Supplemental, Sec. 4; Seventeenth Supplemental, Sec. 3; Eighteenth Supplemental,
Secs. 1, 2 and 6; Twenty-sixth Supplemental, Sec. 2; Twenty-ninth Supplemental,
Art. II.)
RELEASE AND SUBSTITUTION OF PROPERTY
Property may be released from the lien of the mortgage upon the basis
of (1) deposit of cash or, to a limited amount, purchase money mortgages, (2)
property additions and (3) waiver of the right to issue first mortgage bonds.
Cash may be withdrawn upon the bases stated in clauses (2) and (3) above. When
property released has not been made the basis of any application under the
mortgage, the property additions used to effect the release may again, in
certain cases, become available as credits under the mortgage, and the waiver of
the right to issue first mortgage bonds, to effect the release made in certain
cases, cease to be effective as such a waiver. Similar provisions are in effect
as to cash proceeds of such property. The mortgage contains special provisions
with respect to prior lien bonds pledged, and disposition of moneys received on
pledged bonds secured by prior lien. (Mortgage, Secs. 5; 31, 32, 46 to 50, 59,
60, 61, 118 and 134.)
MODIFICATION
In general, the mortgage, the rights and obligations of the Company and
the rights of the bondholders may be modified with the consent of 75% in
principal amount of the first mortgage bonds outstanding, and, if less than all
series of first mortgage bonds are affected, the consent also of 75% in
principal amount of the first mortgage bonds of each series affected. However,
no modification of the terms of payment of principal or interest, and no
modification affecting the lien or reducing the percentage required for
modification, is effective against any bondholder without his consent. The
Company has the right to make certain specific amendments and amendments
necessary from time to time to qualify the mortgage under the Trust Indenture
Act of 1939 as in force on the date of such amendments without the consent of
bondholders. (Mortgage, Art. XVIII, Secs. 120 and 149; First Supplemental, Sec.
10.)
The Company has amended the mortgage, effective as of the Modification
Effective Date referred to below, so as to provide that the mortgage, the rights
and obligations of the Company and the rights of the bondholders may be modified
with the consent of 60% in principal amount of the first mortgage bonds
outstanding or, if less than all series of first mortgage bonds are affected,
then the consent only, of 60% in principal amount of the first mortgage bonds
outstanding of the series so affected, considered as one class. (Twenty-sixth
Supplemental, Sec. 2; Twenty-ninth Supplemental, Art. II.) No consent of the
holders of the bonds is required in order for these amendments to become
effective.
In addition to all other amendments to the mortgage described above
which will become effective as of the Modification Effective Date referred to
below, the Company has amended the mortgage, effective as of the Modification
Effective Date referred to below, in the following respects:
o to specifically provide that no reduction in the book value of
property recorded in the plant account of the Company shall
constitute a property retirement, otherwise than in connection
with physical retirements of property abandoned, destroyed or
disposed of, and otherwise than in connection with the removal of
such property in its entirety from the plant account;
30
o to provide that the lien of the mortgage shall not automatically
attach to the properties of another corporation which shall have
consolidated or merged with the Company in a transaction in which
the Company shall be the surviving or resulting corporation;
o to provide that if the Company shall have appointed a successor
trustee, meeting the requirements therefor set forth in the
mortgage, which shall have accepted such appointment, the trustee
shall be deemed to have resigned; and
o to specifically provide that the mortgage may be amended without
the consent of the holders of the first mortgage bonds:
o to evidence the succession of a successor trustee;
o to add additional covenants of the Company and additional
defaults, which may be applicable only to the first mortgage
bonds of specified series;
o to correct the description of property subject to the lien
of the mortgage or to subject additional property to such
lien;
o to change or eliminate any provision of the mortgage or to
add any new provision to the mortgage; provided, that no
such change, elimination or addition shall adversely affect
the interests of the holders of first mortgage bonds of any
series in any material respect;
o to establish the form or terms of first mortgage bonds of
any series;
o to provide for procedures to utilize a non-certificated
system of registration for all or any series of first
mortgage bonds;
o to change any place or places for payment, registration of
transfer or exchange, or notices to and demands upon the
Company, with respect to all or any series of first mortgage
bonds;
o to increase or decrease the maximum principal amount of
bonds issuable under the mortgage; to make any other changes
which do not adversely affect the interests of the holders
of first mortgage bonds of any series in any material
respect;
o or to evidence any change required or permitted under the
Trust Indenture Act of 1939, as amended.
(Twenty-sixth Supplemental, Sec. 2; Twenty-ninth Supplemental, Art. II)
No consent of the holders of the bonds is required in order for these
amendments to become effective.
As used herein, the term "Modification Effective Date" means the first
time at which certain first mortgage bonds which mature May 29, 2002 are no
longer outstanding (unless the holders of such first mortgage bonds consent to
the foregoing amendments).
COMPLETED DEFAULTS; REMEDIES
Completed Defaults include default in payment of principal; default for
60 days in payment of interest; default in payment of interest or principal of
qualified prior lien bonds continued beyond any grace period; certain events in
bankruptcy, insolvency or reorganization; and default in complying with other
covenants for 90 days after notice. The trustee may withhold notice of default
(except in payment of principal, interest or funds for retirement of first
31
mortgage bonds) if it determines that it is in the interest of the bondholders.
(Mortgage, Secs. 44, 65 and 135.)
The mortgage provides that, upon the occurrence of a Completed Default,
the trustee may, and upon written request of the holders of a majority in
principal amount of first mortgage bonds then outstanding shall, declare the
principal of and accrued interest on all outstanding bonds immediately due and
payable; provided, however, that if, before any sale of the mortgaged property,
all defaults have been cured, the holders of a majority in principal amount of
outstanding first mortgage bonds may annul such declaration. (Mortgage, Sec.
65.)
No holder of first mortgage bonds may enforce the lien of the mortgage
unless such holder shall have given the trustee written notice of a default and
unless the holders of 25% in principal amount of the first mortgage bonds have
requested the trustee in writing to act and have offered the trustee adequate
security and indemnity and a reasonable opportunity to act. Holders of a
majority in principal amount of the first mortgage bonds may direct the time,
method and place of conducting any proceedings for any remedy available to the
trustee, or exercising any trust or power conferred upon the trustee, or may
direct the trustee to take certain action. (Mortgage, Secs. 65, 68, 69, 79, 92
and 138(d) and Art. XXV.)
Notwithstanding any other provision of the mortgage, the right of any
holder of any bond to receive payment of the principal of and interest on such
bond, or to institute suit for the enforcement of any such payment, shall not be
impaired or affected without the consent of such holder. (Mortgage, Sec. 148).
The laws of the various states in which the property subject to the
lien of the mortgage is located may limit or deny the ability of the trustee
and/or the bondholders to enforce certain rights and remedies provided in the
mortgage in accordance with their terms.
CONCERNING THE TRUSTEE
The Trustee has, and is subject to, all the duties and responsibilities
specified with respect to an indenture trustee under the Trust Indenture Act of
1939, as amended. Subject to such provisions, the Trustee is not under any
obligation to take any action in respect of any default or otherwise, or toward
the execution or enforcement of any of the trusts created by the mortgage, or to
institute, appear in or defend any suit or other proceeding in connection
therewith, unless requested in writing so to do by the holders of a majority in
principal amount of the bonds then outstanding. Anything in the mortgage to the
contrary notwithstanding, the Trustee is under no obligation or duty to perform
any act thereunder (other than the delivery of notices) or to institute or
defend any suit in respect hereof, unless properly indemnified to its
satisfaction. (Mortgage, Sec. 92).
The Trustee may at any time resign and be discharged of the trusts
created by the mortgage by giving written notice to the Company and thereafter
publishing notice thereof, specifying a date when such resignation shall take
effect, as provided in the mortgage, and such resignation shall take effect upon
the day specified in such notice unless previously a successor trustee shall
have been appointed by the bondholders or the Company. The Trustee may be
removed at any time by the holders of a majority in principal amount of the
bonds then outstanding. (Mortgage, Secs. 100 and 101).
EVIDENCE OF COMPLIANCE WITH MORTGAGE PROVISIONS
Compliance with mortgage provisions is evidenced by written statements
of the Company's officers or persons selected or paid by the Company. In certain
major matters the accountant or engineer must be independent. Various
certificates and other papers are required to be filed annually and upon the
happening of certain events, including an annual certificate with reference to
compliance with the terms of the mortgage and absence of Defaults.
32
REPORTS
Whether or not required by the rules and regulations of the SEC, so
long as any bonds are outstanding, Avista Corp. will furnish to the holders of
bonds, 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 bonds 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.
BOOK-ENTRY, DELIVERY AND FORM
The New Bonds initially will be represented by one or more bonds in
registered, global form without interest coupons (collectively, the "Global
Bonds"). Upon issuance, the Global Bonds will be deposited 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 Bonds 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 Bonds may not be exchanged
for bonds in certificated form except in the limited circumstances described
below. See "--Exchange of Global Bonds for Certificated Bonds." Except in the
limited circumstances described below, owners of beneficial interests in the
Global Bonds will not be entitled to receive physical delivery of bonds in
certificated form. In addition, transfers of beneficial interests in the Global
Bonds will be subject to the applicable rules and procedures of DTC and its
direct or indirect participants (including, if applicable, those of Euroclear
and 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").
33
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:
(1) upon deposit of the Global Bonds representing the Old Bonds,
DTC credited the accounts of Participants designated by the initial purchasers
of the Old Bonds with portions of the principal amount of the Global Bonds; and
(2) ownership of these interests in the Global Bonds are, and
ownership of interests in New Bonds 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
Bonds).
Investors in the Global Bonds who are Participants in DTC's system may
hold their interests therein directly through DTC. Investors in the Global Bonds
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 the Global Bonds
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 Bond, 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 Bond 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 Bond 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 BONDS WILL
NOT HAVE BONDS REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
BONDS IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
"HOLDERS" THEREOF UNDER THE MORTGAGE OR THE BONDS FOR ANY PURPOSE.
Payments in respect of the principal of, and interest and premium, if
any, on a Global Bond registered in the name of DTC or its nominee will be
payable to DTC in its capacity as the registered Holder under the mortgage.
Under the terms of the mortgage, Avista Corp. and the trustee will treat the
Persons in whose names the bonds, including the Global Bonds, 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 Bonds 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 Bonds; 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 such as the bonds (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 bonds
34
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 bonds, 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.
DTC has 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 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 Bond 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 bonds only at the direction of one or more Participants
to whose account DTC has credited the interests in the Global Bonds and only in
respect of such portion of the aggregate principal amount of the bonds as to
which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the bonds, DTC reserves the right
to exchange the Global Bonds for legended bonds in certificated form, and to
distribute such bonds to its Participants.
Although DTC, Euroclear and Clearstream have agreed to the foregoing
procedures to facilitate transfers of interests in the Global Bonds 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 BONDS FOR CERTIFICATED BONDS
A Global Bond is exchangeable for definitive bonds in registered
certificated form ("Certificated Bonds") if:
(1) DTC (a) notifies Avista Corp. that it is unwilling or unable
to continue as depositary for the Global Bonds 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; or
(2) Avista Corp., at its option, notifies the trustee in writing
that it elects to cause the issuance of the Certificated Bonds.
Certificated Bonds delivered in exchange for any Global Bond or
beneficial interests in Global Bonds will be registered in the names, and issued
in any approved denominations, requested by or on behalf of the depositary (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 Bond.
35
SAME DAY SETTLEMENT AND PAYMENT
Avista Corp. will make payments in respect of the bonds represented by
the Global Bonds (including principal, premium, if any, and interest) by wire
transfer of immediately available funds to the accounts specified by the Global
Bond Holder. Avista Corp. or its paying agent will make all payments of
principal, interest and premium with respect to Certificated Bonds 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 bonds represented by the Global Bonds are
expected to trade in DTC's Same-Day Funds Settlement System, and any permitted
secondary market trading activity in such bonds will, therefore, be required by
DTC to be settled in immediately available funds. Avista Corp. expects that
secondary trading in any Certificated Bonds 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 Bond 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 Bond 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.
BANK CREDIT AGREEMENTS
AVISTA CORP.
Avista Corp. has a $220 million line of credit with various banks under
a credit agreement that expires May 29, 2002. We have pledged our shares of
common stock of Avista Capital as security for our indebtedness under this
agreement. As of December 31, 2001, $55 million was outstanding under this line
of credit. This agreement contains customary covenants and default provisions,
including covenants not to permit (1) the ratio of "consolidated total debt" (as
defined in the Avista Corp. credit agreement) to "consolidated total
capitalization" (as defined in the Avista Corp. credit agreement) of Avista
Corp. to be, at the end of any fiscal quarter, greater than certain specified
ratios; and (2) the ratio of "consolidated cash flow" (as defined in the Avista
Corp. credit agreement) to "consolidated fixed charges" (as defined in the
Avista Corp. credit agreement) of Avista Corp. or Avista Utilities for any
four-fiscal-quarter period ending on any date set forth below to be less than
certain specified ratios.
In August 2001 we determined that we would not comply with the fixed
charge coverage covenant with respect to Avista Corp. described above for the
four-fiscal-quarter period ending September 30, 2001 or for any subsequent
period through the expiration date of the agreement. Accordingly, Avista Corp.
requested, and obtained, a waiver of this covenant. The failure to comply with
the covenant for these periods will not constitute an event of default under the
agreement. In connection with this waiver, on September 21, 2001 Avista Corp.
issued to the agent bank $220 million in principal amount of non-transferable
first mortgage bonds under the mortgage in order to provide the benefit of the
lien of the mortgage to secure Avista Corp.'s obligations under the credit
agreement.
AVISTA ENERGY
Avista Energy and its subsidiary, Avista Energy Canada, Ltd., as
co-borrowers, have a credit agreement with various banks in the aggregate amount
of $135 million expiring June 28, 2002. The credit agreement may be terminated
by the banks at any time and all extensions of credit under the agreement are
payable upon demand, in either case at the lenders' sole discretion. The
agreement also provides, on an uncommitted basis, for the issuance of letters of
credit to secure contractual obligations to counterparties. The facility is
guaranteed by Avista Capital and is secured by substantially all of Avista
Energy's assets. The maximum amount of credit extended by the lenders for cash
advances is $30 million. At December 31, 2001, there were no cash advances
(demand notes payable) outstanding, and letters of credit outstanding totaled
approximately $40 million.
36
The Avista Energy agreement contains customary covenants and default
provisions, including covenants to maintain "minimum net working capital" and
"minimum net worth" (as defined in the Avista Energy credit agreement) and a
covenant limiting the amount of indebtedness which the co-borrowers may incur.
In addition, the agreement contains certain restricted payment provisions
generally prohibiting distributions.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
This section describes the material United States federal income tax
consequences of exchanging the Old Bonds for New Bonds and of owning and
disposing of bonds. 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 Bonds in the offering at the offering price and you hold your bonds 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 bonds that are a hedge or that are hedged against
interest rate risks,
o a person that owns bonds 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 bonds 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 Treasury regulations, published
rulings and court decisions, all as currently in effect. These authorities are
subject to change, possibly on a retroactive basis. This section does not
discuss all aspects of taxation that may be relevant to you. Accordingly, you
should consult your tax advisor as to the application and effect of state and
local taxes, foreign taxes and other tax laws.
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 bond
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.
37
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 Bonds for New Bonds
An exchange of Old Bonds for New Bonds will not be a taxable event for
federal income tax purposes. Rather, the New Bonds will be treated as a
continuation of the Old Bonds 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 Bonds for New Bonds, and you will have the same
tax basis and holding period in the New Bonds as you had in the Old Bonds.
Payments of Interest
You will be taxed on interest on your bonds 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 Bonds
Your tax basis in your Old Bonds generally will be their cost, and your
tax basis in any New Bonds acquired in the Exchange Offer will be equal to your
tax basis in the Old Bonds surrendered. You will generally recognize capital
gain or loss on the sale or retirement of bonds 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 bonds.
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 bond 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.
If you are a United States holder, this section does not apply to you.
An exchange of Old Bonds for New Bonds will not constitute a taxable
event for federal income tax purposes. Rather, the New Bonds will be treated as
a continuation of the Old Bonds 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 Bonds for New Bonds, and you will have the same
tax basis and holding period in the New Bonds as you had in the Old Bonds.
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 bond:
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:
38
(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, and
(3) either (1) 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 (2) 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. You should consult your tax advisor regarding this
requirement. 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
bond, including the exchange of Old Bonds for New Bonds.
If you are engaged in a trade or business within the United States and
the interest on the bond is effectively connected with your United States
business, the interest and any gain on the bond 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 bond 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, many tax treaties with the United States provide that interest and
gain from United States sources are not taxable in the United States, unless
such amounts are attributable to a permanent establishment in the United States.
If you are entitled to the benefits of a treaty with the United States that
provides these benefits, then interest and gain from the bond 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 bond 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 bond would not have been effectively connected with
a United States trade or business of the decedent at the same time.
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 bond and the amount of any proceeds from the sale or exchange
of your bond. 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 bond. In addition, we and other
39
payors are required to report to the Internal Revenue Service any payment of
proceeds of the sale of your bond before maturity within the United States.
Additionally, backup withholding at a rate of 30% (subject to phase-in rate
reductions until the rate equals 28% for payments after 2005) 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.
We and other payors are required to report payments of interest on your
bonds on Internal Revenue Service Form 1042-S even if the payments are not
otherwise subject to information reporting requirements.
In general, proceeds of your sale of a bond 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 (1) a United States
person as defined in the Internal Revenue Code, (2) a foreign person
that derived 50% or more of its gross income for certain periods from
the conduct of a trade or business in the United States, (3) a
controlled foreign corporation as defined in the Internal Revenue Code,
or (4) a foreign partnership with certain U.S. connections.
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 Bonds issued pursuant to the Exchange Offer may be
offered for resale and resold or otherwise transferred by any Holder of such New
Bonds (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 Bonds are acquired in the ordinary course of
40
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 Bonds.
Each broker-dealer that receives New Bonds for its own account in
exchange for Old Bonds 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 Bonds. 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 Bonds received in exchange
for Old Bonds where such Old Bonds were acquired as a result of market-making
activities or other trading activities. Avista Corp. will for a period of 180
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.
New Bonds 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 Bonds 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 Bonds. Any broker-dealer
that resells New Bonds 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 Bonds may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Bonds 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 Bonds received in
exchange for an unsold allotment of Old Bonds purchased directly from Avista
Corp.
Avista Corp. will not receive any proceeds from the issuance of the New
Bonds pursuant to the Exchange Offer or from any subsequent sale of the New
Bonds. 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 Bonds and will indemnify the
holders of the New Bonds (including any broker-dealers) against certain
liabilities, including liabilities under the Securities Act.
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 quarters ended March 31, June 30
and September 30, 2001.
o Current Reports on Form 8-K filed May 2, July 23, September 27,
October 22, October 31 and December 11, 2001.
41
These documents, as well as any other documents subsequently filed with
the SEC before the termination of the offering of the New Bonds, 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.
SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS
We are including the following cautionary statements in this prospectus
to make applicable and to take advantage of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 for any forward-looking
statements made by, or on behalf of, Avista Corp. Forward-looking statements
include statements concerning plans, objectives, goals, strategies, projections
of future events or performance, and underlying assumptions (many of which are
based, in turn, upon further assumptions) and are all statements which are not
statements of historical fact. Forward-looking statements include statements
that are identified by the use of the words such as, but not limited to, "will,"
"anticipates," "seeks to," "estimates," "expects," "intends," "plans,"
"predicts," and similar expressions. From time to time, we may publish or
otherwise make available forward-looking statements of this nature. All such
subsequent forward-looking statements, whether written or oral and whether made
by or on behalf of Avista Corp., are also expressly qualified by these
cautionary statements.
Forward-looking statements involve risks and uncertainties which could
cause actual results or outcomes to differ materially from those expressed. Our
expectations, beliefs and projections are expressed in good faith and are
believed by us to have a reasonable basis, including without limitation
management's examination of historical operating trends, data contained in our
records and other data available from third parties, but there can be no
assurance that our expectations, beliefs or projections will be achieved or
accomplished. Furthermore, any forward-looking statement speaks only as of the
date on which such statement is made, and we undertake no obligation to update
or revise any forward-looking statement or statements to reflect any change in
our expectations or any change in events, conditions or circumstances on which
any such statement is based or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not possible for
management to predict all of such factors, nor can it assess the impact of each
such factor on Avista Corp.'s business or the extent to which any such factor,
or combination of factors, may cause actual results to differ materially from
those contained in any forward-looking statement. In addition to other factors
and matters discussed elsewhere in this offering circular, the following are
some important factors that could cause actual results or outcomes from our
operations to differ materially from the forward-looking statements.
AVISTA UTILITIES' OPERATIONS
Important factors relating to Avista Utilities' operations include
continuing legislative developments, governmental policies and regulatory
actions with respect to allowed rates of return, financings, or industry and
rate structures (including the outcome of the general rate case filed in the
state of Washington to address, among other things, the prudence and recovery of
significant deferred power costs); weather conditions and future streamflow
conditions and their impact on the availability of hydroelectric resources;
outages of any of our thermal or other generating facilities; changes in demand
for energy due to weather conditions, customer growth and other factors;
wholesale and retail competition (including but not limited to electric retail
wheeling and transmission cost); availability of economic supplies of purchased
power and natural gas; competition in present or future natural gas distribution
or transmission (including but not limited to prices of alternative fuels and
system deliverability costs); the availability and costs of electric capacity
and energy and natural gas in wholesale markets as well as volatility and
illiquidity in these markets and the ability to recover purchased power and
purchased gas costs; the ability to make profitable sales of any surplus
electric capacity or energy in wholesale markets; present or prospective
generation, operations and construction of plant facilities; and acquisition and
disposal of assets or facilities.
ENERGY TRADING AND MARKETING OPERATIONS
Energy Trading and Marketing includes the operations of Avista Energy
and Avista Power. Important factors relating to our Energy Trading and Marketing
operations include further industry restructuring evolving from federal and/or
state legislation; federal and state regulatory and legislative actions;
governmental controls on market operations and prices (including FERC price
controls and possible retroactive price caps and resulting refunds); demand for
42
and availability of energy throughout the country; wholesale competition;
availability of economic supplies of natural gas; margins on purchased power;
changes in market factors; the formation of additional alliances or entities;
the availability of economically feasible generating projects; and the
availability of funding for new generating assets.
INFORMATION AND TECHNOLOGY, AND OTHER OPERATIONS
Important factors relating to the remaining Avista Corp. subsidiaries'
operations include competition from other companies and other technologies;
obsolescence of technologies; the inability to reduce costs of the technologies
down to economic levels; the inability to obtain new customers and loss of
significant customers or suppliers; reliability of customer orders; business
acquisitions; disposal of assets; the availability of funding from other
sources; research and development findings; and the availability of economic
expansion or development opportunities.
FACTORS COMMON TO ALL OPERATIONS
The business and profitability of Avista Corp. are also influenced by,
among other things, economic risks; changes in and compliance with environmental
and safety laws and policies; weather conditions; population growth rates and
demographic patterns; market demand for energy from plants or facilities;
changes in tax rates or policies; unanticipated project delays or changes in
project costs; unanticipated changes in operating expenses or capital
expenditures; labor negotiations or disputes; changes in credit ratings or
capital market conditions; inflation rates; inability of the various
counterparties to meet their obligations with respect to financial instruments;
failure to deliver on the part of any parties from which Avista Corp. purchases
capacity or energy; Avista Corp.'s ability to obtain debt or equity financing;
changes in accounting principles and/or the application of such principles to
Avista Corp.; changes in technology; changes in economic, business or political
conditions, including the continuing impact on the economy of the September 11,
2001 terrorist attacks; and legal proceedings.
LEGAL MATTERS
The validity of the New Bonds 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 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 report of such firm given upon their authority
as experts in accounting and auditing.
43
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-5 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,
II-1
each 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 Jon E. Eliassen and each Agent for
Service named in this registration statement, and each of them severally, 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 Jon E. Eliassen and
each such Agent for Service, and each of them severally, 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 11th day of February, 2002.
AVISTA CORPORATION
/s/ Jon E. Eliassen
---------------------------
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 February 11, 2002
(Director, President and Chief Principal Executive
Executive Officer) Officer
/s/ Jon E. Eliassen
- --------------------------------
Jon E. Eliassen Principal Financial February 11, 2002
(Senior Vice President and Chief and Accounting
Financial Officer) Officer
/s/ Erik. J. Anderson
- --------------------------------
Erik. J. Anderson Director February 11, 2002
II-3
/s/ Kristianne Blake
- --------------------------------
Kristianne Blake Director February 11, 2002
/s/ David A. Clack
- --------------------------------
David A. Clack Director February 11, 2002
/s/ Sarah M. R. (Sally) Jewell
- --------------------------------
Sarah M. R. (Sally) Jewell Director February 11, 2002
/s/ John F. Kelly
- --------------------------------
John F. Kelly Director February 11, 2002
/s/ Jessie J. Knight, Jr.
- --------------------------------
Jessie J. Knight, Jr. Director February 11, 2002
/s/ Eugene W. Meyer
- --------------------------------
Eugene W. Meyer Director February 11, 2002
/s/ Bobby Schmidt
- --------------------------------
Bobby Schmidt Director February 11, 2002
/s/ R. John Taylor
- --------------------------------
R. John Taylor Director February 11, 2002
/s/ Daniel J. Zaloudek
- --------------------------------
Daniel J. Zaloudek Director February 11, 2002
II-4
EXHIBIT INDEX
Exhibit No. Description of Exhibit
4(a) - Mortgage and Deed of Trust dated as of June 1, 1939, by
and among Avista Corporation and Citibank, N.A., as
Trustee (filed with registration number 2-4077 B-3).
4(b) - Twenty-ninth Supplemental Indenture to the Mortgage, dated
as of December 1, 2001.
4(c) - Exchange and Registration Rights Agreement among Avista
Corporation and the Initial Purchasers.
4(d) - Form of Letter of Transmittal.
4(e) - Form of New Bond.
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.
24 - Power of Attorney (contained on page II-3).
25 - Statement of Eligibility of Trustee on Form T-1 of
Citibank, N.A.
II-5
EXHIBIT 4(b)
================================================================================
AVISTA CORPORATION
TO
CITIBANK, N.A.
As Successor Trustee under
Mortgage and Deed of Trust,
dated as of June 1, 1939
------------------------
TWENTY-NINTH SUPPLEMENTAL INDENTURE
Providing among other things for a series of bonds designated
"First Mortgage Bonds, 7.75% Series due 2007"
Due January 1, 2007, and for certain amendments to
such Mortgage and Deed of Trust
------------------------
Dated as of December 1, 2001
================================================================================
TWENTY-NINTH SUPPLEMENTAL INDENTURE
THIS INDENTURE, dated as of the 1st day of December 2001, between
AVISTA CORPORATION (formerly known as The Washington Water Power Company), a
corporation of the State of Washington, whose post office address is 1411 East
Mission Avenue, Spokane, Washington 99202 (the "Company"), and CITIBANK, N.A.,
formerly First National City Bank (successor by merger to First National City
Trust Company, formerly City Bank Farmers Trust Company), a national banking
association incorporated and existing under the laws of the United States of
America, whose post office address is 111 Wall Street, New York, New York 10043
(the "Trustee"), as Trustee under the Mortgage and Deed of Trust, dated as of
June 1, 1939 (the "Original Mortgage"), executed and delivered by the Company to
secure the payment of bonds issued or to be issued under and in accordance with
the provisions thereof, this indenture (the "Twenty-ninth Supplemental
Indenture") being supplemental to the Original Mortgage, as heretofore
supplemented and amended.
WHEREAS pursuant to a written request of the Company made in accordance
with Section 103 of the Original Mortgage, Francis M. Pitt (then Individual
Trustee under the Mortgage, as supplemented) ceased to be a trustee thereunder
on July 23, 1969, and all of his powers as Individual Trustee have devolved upon
the Trustee and its successors alone; and
WHEREAS by the Original Mortgage the Company covenanted that it would
execute and deliver such further instruments and do such further acts as might
be necessary or proper to carry out more effectually the purposes of the
Original Mortgage and to make subject to the lien of the Original Mortgage any
property thereafter acquired intended to be subject to the lien thereof; and
WHEREAS the Company has heretofore executed and delivered, in addition
to the Original Mortgage, the indentures supplemental thereto, and has issued
the series of bonds, set forth in Exhibit A hereto (the Mortgage, as
supplemented and amended by the First through Twenty-eighth Supplemental
Indentures being herein sometimes called collectively, the "Mortgage"); and
WHEREAS the Original Mortgage and the First through Twenty-seventh
Supplemental Indentures have been appropriately filed or recorded in various
official records in the States of Washington, California, Idaho, Montana and
Oregon, as set forth in the First through Twenty-eighth Supplemental Indentures;
and
WHEREAS the Twenty-eighth Supplemental Indenture, dated as of September
1, 2001, has been appropriately filed or recorded in the various official
records in the States of Washington, California, Idaho, Montana and Oregon set
forth in Exhibit B hereto; and
WHEREAS for the purpose of confirming or perfecting the lien of the
Mortgage on certain of its properties, the Company has heretofore executed and
delivered a Short Form Mortgage and Security Agreement, in multiple counterparts
dated as of various dates in 1992, and such instrument has been appropriately
filed or recorded in the various official records in the States of California,
Montana and Oregon; and
2
WHEREAS in addition to the property described in the Mortgage the
Company has acquired certain other property, rights and interests in property;
and
WHEREAS the Company now desires to create a new series of bonds; and
WHEREAS Section 8 of the Original Mortgage provides that the form of
each series of bonds (other than the First Series) issued thereunder and of the
coupons to be attached to coupon bonds of such series shall be established by
Resolution of the Board of Directors of the Company; that the form of such
series, as established by said Board of Directors, shall specify the descriptive
title of the bonds and various other terms thereof; and that such series may
also contain such provisions not inconsistent with the provisions of the
Mortgage as the Board of Directors may, in its discretion, cause to be inserted
therein expressing or referring to the terms and conditions upon which such
bonds are to be issued and/or secured under the Mortgage; and
WHEREAS Section 120 of the Original Mortgage provides, among other
things, that any power, privilege or right expressly or impliedly reserved to or
in any way conferred upon the Company by any provision of the Mortgage, whether
such power, privilege or right is in any way restricted or is unrestricted, may
be in whole or in part waived or surrendered or subjected to any restriction if
at the time unrestricted or to additional restriction if already restricted, and
the Company may enter into any further covenants, limitations or restrictions
for the benefit of any one or more series of bonds issued thereunder, or the
Company may cure any ambiguity contained therein, or in any supplemental
indenture, by an instrument in writing executed and acknowledged by the Company
in such manner as would be necessary to entitle a conveyance of real estate to
record in all of the states in which any property at the time subject to the
lien of the Mortgage shall be situated; and
WHEREAS, in Article III, Section 3, and Article IV, Section 5, of the
Fourteenth Supplemental Indenture, dated as of April 1, 1990, the Company
reserved the right to make specified amendments to the Mortgage without any
consent or other action by the holders of the bonds of the Twelfth Series or any
subsequently created series; and
WHEREAS, in Article II, Section 2, of the Twenty-sixth Supplemental
Indenture, dated as of April 1, 1993, the Company reserved the right to make
specified amendments to the Mortgage without any consent or other action by the
holders of the bonds of the Twenty-fourth Series; in Article II, Section 2 of
the Twenty-seventh Supplemental Indenture, dated as of January 1, 1994, the
Company reserved the right to make such amendments to the Mortgage without any
consent or other action by the holders of the bonds of the Twenty-fifth Series;
and in Section 1 of Article II, of the Twenty-eighth Supplemental Indenture,
dated as of September 1, 2001, the Company reserved the right to make such
amendments to the Mortgage without any consent or other action by the holders of
the bonds of the Twenty-sixth Series (so long as such amendments do not become
effective while any bonds of such Series remain Outstanding); and
WHEREAS, as shown on Exhibit A hereto, only bonds of the Twenty-fourth,
Twenty-fifth and Twenty-sixth Series are now Outstanding under the Mortgage; and
the Company now desires to make all the foregoing amendments to the Mortgage, as
evidenced by the adoption by the Board of Directors of Resolutions approving
such amendments and authorizing the execution and delivery by the Company of
3
this Twenty-ninth Supplemental Indenture in order, among other things, to
evidence the same; and
WHEREAS the execution and delivery by the Company of this Twenty-ninth
Supplemental Indenture, the terms of the bonds of the Twenty-seventh Series
referred to below and the amendments to the Mortgage referred to above have been
duly authorized by the Board of Directors of the Company by appropriate
Resolutions of said Board of Directors; and all things necessary to make this
Twenty-ninth Supplemental Indenture a valid, binding and legal instrument have
been performed;
NOW, THEREFORE, THIS INDENTURE WITNESSETH: That the Company, in
consideration of the premises and of other good and valuable consideration, the
receipt and sufficiency whereof are hereby acknowledged, hereby confirms the
estate, title and rights of the Trustee (including without limitation the lien
of the Mortgage on the property of the Company subjected thereto, whether now
owned or hereafter acquired) held as security for the payment of both the
principal of and interest and premium, if any, on the bonds from time to time
issued under the Mortgage according to their tenor and effect and the
performance of all the provisions of the Mortgage and of such bonds, and,
without limiting the generality of the foregoing, hereby confirms the grant,
bargain, sale, release, conveyance, assignment, transfer, mortgage, pledge,
setting over and confirmation unto the Trustee, contained in the Mortgage, of
all the following described properties of the Company, whether now owned or
hereafter acquired, namely:
All of the property, real, personal and mixed, of every character
and wheresoever situated (except any hereinafter or in the Mortgage
expressly excepted) which the Company now owns or, subject to the
provisions of Section 87 of the Mortgage, may hereafter acquire prior
to the satisfaction and discharge of the Mortgage, as fully and
completely as if herein or in the Mortgage specifically described, and
including (without in anywise limiting or impairing by the enumeration
of the same the scope and intent of the foregoing or of any general
description contained in Mortgage) all lands, real estate, easements,
servitudes, rights of way and leasehold and other interests in real
estate; all rights to the use or appropriation of water, flowage
rights, water storage rights, flooding rights, and other rights in
respect of or relating to water; all plants for the generation of
electricity, power houses, dams, dam sites, reservoirs, flumes,
raceways, diversion works, head works, waterways, water works, water
systems, gas plants, steam heat plants, hot water plants, ice or
refrigeration plants, stations, substations, offices, buildings and
other works and structures and the equipment thereof and all
improvements, extensions and additions thereto; all generators,
machinery, engines, turbines, boilers, dynamos, transformers, motors,
electric machines, switchboards, regulators, meters, electrical and
mechanical appliances, conduits, cables, pipes and mains; all lines
and systems for the transmission and distribution of electric current,
gas, steam heat or water for any purpose; all towers, mains, pipes,
poles, pole lines, conduits, cables, wires, switch racks, insulators,
compressors, pumps, fittings, valves and connections; all motor
vehicles and automobiles; all tools, implements, apparatus, furniture,
stores, supplies and equipment; all franchises (except the Company's
franchise to be a corporation), licenses, permits, rights, powers and
privileges; and (except as hereinafter or in the Mortgage expressly
4
excepted) all the right, title and interest of the Company in and to
all other property of any kind or nature.
TOGETHER WITH all and singular the tenements, hereditaments and
appurtenances belonging or in anywise appertaining to the aforesaid property or
any part thereof, with the reversion and reversions, remainder and remainders
and (subject to the provisions of Section 57 of the Original Mortgage) the
tolls, rents, revenues, issues, earnings, income, product and profits thereof,
and all the estate, right, title and interest and claim whatsoever, at law as
well as in equity, which the Company now has or may hereafter acquire in and to
the aforesaid property and franchises and every part and parcel thereof.
THE COMPANY HEREBY CONFIRMS that, subject to the provisions of Section
87 of the Original Mortgage, all the property, rights, and franchises acquired
by the Company after the date thereof (except any hereinbefore or hereinafter or
in the Mortgage expressly excepted) are and shall be as fully embraced within
the lien of the Mortgage as if such property, rights and franchises had been
owned by the Company at the date of the Original Mortgage and had been
specifically described therein.
PROVIDED THAT the following were not and were not intended to be then
or now or hereafter granted, bargained, sold, released, conveyed, assigned,
transferred, mortgaged, pledged, set over or confirmed under the Mortgage and
were, are and shall be expressly excepted from the lien and operation namely:
(l) cash, shares of stock and obligations (including bonds, notes and other
securities) not hereafter specifically pledged, paid, deposited or delivered
under the Mortgage or covenanted so to be; (2) merchandise, equipment, materials
or supplies held for the purpose of sale in the usual course of business or for
consumption in the operation of any properties of the Company; (3) bills, notes
and accounts receivable, and all contracts, leases and operating agreements not
specifically pledged under the Mortgage or covenanted so to be; (4) electric
energy and other materials or products generated, manufactured, produced or
purchased by the Company for sale, distribution or use in the ordinary course of
its business; and (5) any property heretofore released pursuant to any
provisions of the Mortgage and not heretofore disposed of by the Company;
provided, however, that the property and rights expressly excepted from the lien
and operation of the Mortgage in the above subdivisions (2) and (3) shall (to
the extent permitted by law) cease to be so excepted in the event that the
Trustee or a receiver or trustee shall enter upon and take possession of the
Mortgaged and Pledged Property in the manner provided in Article XII of the
Original Mortgage by reason of the occurrence of a Completed Default as defined
in said Article XII.
TO HAVE AND TO HOLD all such properties, real, personal and mixed,
granted, bargained, sold, released, conveyed, assigned, transferred, mortgaged,
pledged, set over or confirmed by the Company in the Mortgage as aforesaid, or
intended so to be, unto the Trustee, and its successors, heirs and assigns
forever.
IN TRUST NEVERTHELESS, for the same purposes and upon the same terms,
trusts and conditions and subject to and with the same provisos and covenants as
set forth in the Mortgage, this Twenty-ninth Supplemental Indenture being
supplemental to the Mortgage.
5
AND IT IS HEREBY FURTHER CONFIRMED by the Company that all the terms,
conditions, provisos, covenants and provisions contained in the Mortgage shall
affect and apply to the property in the Mortgage described and conveyed, and to
the estates, rights, obligations and duties of the Company and the Trustee and
the beneficiaries of the trust with respect to said property, and to the Trustee
and its successors in the trust, in the same manner and with the same effect as
if the said property had been owned by the Company at the time of the execution
of the Original Mortgage, and had been specifically and at length described in
and conveyed to said Trustee by the Original Mortgage as a part of the property
therein stated to be conveyed.
The Company further covenants and agrees to and with the Trustee and
its successor or successors in such trust under the Mortgage, as follows:
TWENTY-SEVENTH SERIES OF BONDS
(I) There shall be a series of bonds designated "First Mortgage Bonds,
7.75% Series due 2007" (herein sometimes referred to as the "bonds of the
Twenty-seventh Series" or the "Bonds"), and the form thereof, which has been
established by Resolution of the Board of Directors of the Company, is set forth
on Exhibit C hereto. The bonds of the Twenty-seventh Series shall be issued as
fully registered bonds in denominations of One Thousand Dollars and, at the
option of the Company, any amount in excess thereof (the exercise of such option
to be evidenced by the execution and delivery thereof) and shall be dated as in
Section 10 of the Mortgage provided.
(II) The Bonds of the Twenty-seventh Series shall mature, shall bear
interest and shall be payable as set forth below:
the principal of bonds of the Twenty-seventh Series shall (unless theretofor
paid) be payable on the Stated Maturity Date (as hereinafter defined);
the Bonds of the Twenty-seventh Series shall bear interest at the rate of seven
and seventy-five one-hundredths per centum (7.75%) per annum; interest on such
bonds shall accrue from and including the date of the initial authentication and
delivery thereof, except as otherwise provided in the form of bond attached
hereto as Exhibit C; interest on such bonds shall be payable on each Interest
Payment Date and at Maturity (as each of such terms is hereafter defined); and
interest on such bonds during any period for which payment is made shall be
computed on the basis of a 360-day year consisting of twelve 30-days months;
the principal of and premium, if any, and interest on each bond of the
Twenty-seventh Series payable at Maturity shall be payable upon presentation
thereof at the office or agency of the Company in the Borough of Manhattan, The
City of New York, in such coin or currency as at the time of payment is legal
tender for public and private debts. The interest on each bond of the
Twenty-seventh Series (other than interest payable at Maturity) shall be payable
by check, in similar coin or currency, mailed to the registered owner thereof as
of the close of business on the Record Date next preceding each Interest Payment
Date; provided, however, that if such registered owner shall be a securities
depositary, such payment may be made by such other
6
means in lieu of check as shall be agreed upon by the Company, the Trustee and
such registered owner.
(III) The bonds of the Twenty-seventh Series shall not be subject to
redemption prior to the Stated Maturity Date.
(IV) (a) At the option of the registered owner, any bonds of the
Twenty-seventh Series, upon surrender thereof for cancellation at the office or
agency of the Company in the Borough of Manhattan, The City of New York, shall
be exchangeable for a like aggregate principal amount of bonds of the same
series of other authorized denominations.
The bonds of the Twenty-seventh Series shall be transferable, upon the
surrender thereof for cancellation, together with a written instrument of
transfer in form approved by the registrar duly executed by the registered owner
or by his duly authorized attorney, at the office or agency of the Company in
the Borough of Manhattan, The City of New York.
Notwithstanding the foregoing, if any bond to be transferred in whole
or in part is a Restricted Definitive Bond, or is a Regulation S Definitive Bond
and the transfer is to occur during the Restricted Period, then such transfer
may be effect only if the Trustee and the Company shall have received from the
transferor (1) a Restricted Securities Certificate, satisfactory to the Company
and duly executed by the registered holder or his attorney duly authorized in
writing, in which case the transferee shall take delivery in the form of a
Restricted Bond or (2) a Regulation S Certificate, satisfactory to the Company
and duly executed by the registered holder or his attorney duly authorized in
writing, in which case the transferee shall take delivery in the form of a
Regulation S Bond.
Terms used in this Article which have not been heretofore defined or
are not defined in this Article are defined in Article III.
Upon any exchange or transfer of bonds of the Twenty-seventh Series,
the Company may make a charge therefor sufficient to reimburse it for any tax or
taxes or other governmental charge, as provided in Section 12 of the Mortgage,
but the Company hereby waives any right to make a charge in addition thereto or
any exchange or transfer of bonds of the Twenty-seventh Series; provided,
however, that the Company shall not be required to make any transfer or exchange
of any bonds of the Twenty-seventh Series for a period of 10 days next preceding
any selection of such bonds for redemption, nor shall it be required to make
transfers or exchange of any bonds of the Twenty-seventh Series which shall have
been selected for redemption in whole or in part or as to which the Company
shall have received a notice for the redemption thereof in whole or in part at
the option of the registered owner.
(b) The bonds of the Twenty-seventh Series are initially to be issued
in global form, registered in the name of Cede & Co., as nominee for The
Depository Trust Company (the "Depositary"), as provided in Article III hereof.
Notwithstanding the provisions of subdivision (a) above, such bonds shall not be
transferable, nor shall any purported transfer be registered, except as follows:
(i) such bonds may be transferred in whole, and appropriate
registration of transfer effected, to the Depositary, or by the
Depositary to another nominee thereof, or by any nominee of the
7
Depositary to any other nominee thereof, or by the Depositary or any
nominee thereof to any successor securities depositary or any nominee
thereof;
(ii) such bonds may be transferred in whole, and appropriate
registration of transfer effected, to the beneficial holders thereof,
and thereafter shall be transferable subject to subsection (c) below,
if:
(A) The Depositary, or any successor securities depositary,
shall have notified the Company and the Trustee that (I) it is
unwilling or unable to continue to act as securities depositary
with respect to such bonds or (II) it is no longer a clearing
agency registered under the Securities Exchange Act of 1934, as
amended, and, in either case, the Trustee shall not have been
notified by the Company within one hundred twenty (120) days of
the identity of a successor securities depositary with respect to
such bonds; or
(B) the Company shall have delivered to the Trustee a
written order to the effect that such bonds shall be so
transferable on and after a date specified therein.
The bonds of the Twenty-seventh Series, when in global form,
shall bear a legend as to such global form and the foregoing restrictions on
transfer substantially as set forth below:
This global bond is held by Cede & Co., as nominee for The
Depository Trust Company (the "Depositary") for the benefit of
the beneficial owners hereof. This bond may not be
transferred, nor may any purported transfer be registered,
except that (i) this bond may be transferred in whole, and
appropriate registration of transfer effected, if such
transfer is by Cede & Co., as nominee for the Depositary, to
the Depositary, or by the Depositary to another nominee
thereof, or by any nominee of the Depositary to any other
nominee thereof, or by the Depositary or any nominee thereof
to any successor bonds depositary or any nominee thereof; and
(ii) this bond may be transferred, and appropriate
registration of transfer effected, to the beneficial holders
hereof, and thereafter shall be transferable without
restrictions (except as provided in the preceding paragraph)
if: (A) the Depositary, or any successor securities
depositary, shall have notified the Company and the Trustee
that (I) it is unwilling or unable to continue to act as
securities depositary with respect to the bonds or (II) it is
no longer a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and, in either case, the
Trustee shall not have been notified by the Company within one
hundred twenty (120) days of the identity of a successor
securities depositary with respect to the bonds; or (B) the
Company shall have delivered to the Trustee a written order to
the effect that the bonds shall be so transferable on and
after a date specified therein.
Any certificated Bond issued in exchange for an interest in a
Global Bond will bear the legend restricting transfers that is borne by such
Global Bond.
8
(c) Unless and until the Company shall have delivered to the Trustee
a written order to the contrary in accordance with this Twenty-ninth
Supplemental Indenture, each global bond of the Twenty-seventh Series shall bear
a legend to the effect of clause (b) above, and each bond of such series shall
bear a further legend as follows:
(i) in the case of a bond offered and sold in reliance on
Rule 144A,
"The bonds evidenced hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act")
and may not be offered, sold, pledged or otherwise transferred
except (1) to a person whom the seller reasonably believes is
a qualified institutional buyer within the meaning of Rule
144A under Securities Act purchasing for its own account or
for the account of a qualified institutional buyer in a
transaction meeting the requirements of Rule 144A, (2) in an
offshore transaction complying with Rule 903 or Rule 904 of
Regulation S under the Securities Act or (3) pursuant to an
exemption from registration under the Securities Act provided
by Rule 144 thereunder (if available), in each case, in
accordance with all applicable securities laws of the states
of the Untied States."
(ii) in the case of a bond offered and sold in reliance on
Regulation S,
"The bonds evidenced hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act")
and may not be offered, sold or delivered in the United States
or to, or for the account or benefit of, any U.S. person,
unless the bonds are registered under the Securities Act or an
exemption from the registration requirements of the Securities
Act is available."
(V) For all purposes of this Twenty-ninth Supplemental
Indenture, except as otherwise expressly provided or unless the context
otherwise requires, the terms and with respect to the bonds of the
Twenty-seventh Series listed below shall have the meanings specified:
"Interest Payment Date" means January 1 and July 1 in each
year, commencing July 1, 2002.
"Maturity" means the date on which the principal of the bonds
of the Twenty-seventh Series becomes due and payable, whether at the
Stated Maturity Date, upon redemption or acceleration, or otherwise.
"Record Date", with respect to any Interest Payment Date,
means the December 15 or June 15, as the case may be, next preceding
such Interest Payment Date.
"Stated Maturity Date" means January 1, 2007.
(VI) The bonds of the Twenty-seventh Series shall have such
further terms as are set forth in Exhibit C hereto. If there shall be a conflict
9
between the terms of the form of bond and the provisions of the Mortgage, the
provisions of the Mortgage shall control to the extent permitted by law.
(VII) Prior, and as a condition, to the authentication and
delivery by the Trustee of the bonds of the Twenty-seventh Series, the Company
shall have delivered to the Trustee a policy of title insurance on the Mortgaged
and Pledged Property in the face amount of $150,000,000. The Trustee shall hold
such policy, as part of the Mortgaged and Pledged Property, for the benefit of
the holders from time to time of the bonds Outstanding under the Mortgage. The
proceeds of such insurance shall be applied as provided in clause (3) or (4) of
Section 61 of the Original Mortgage or, if all bonds shall have been declared
immediately due and payable pursuant to Section 65 of the Original Mortgage
following the occurrence of a Completed Default, as provided in clauses second
and third of Section 75 of the Original Mortgage.
(VIII) Upon the delivery of this Twenty-ninth Supplemental
Indenture, bonds of the Twenty-seventh Series in an aggregate principal amount
initially not to exceed $150,000,000 are to be issued and will be Outstanding,
in addition to $423,500,000 aggregate principal amount of bonds of prior series
Outstanding at the date of delivery of this Twenty-ninth Supplemental Indenture.
AMENDMENTS TO THE MORTGAGE
Article XVIII of the Original Mortgage is hereby amended to read as set
forth in Article III, Section 3 of the Fourteenth Supplemental Indenture.
Sections 108, 110, 112, 113 and 116 of the Original Mortgage are hereby further
amended to read as set forth in the Twenty-sixth Supplemental Indenture. Article
XVIII of the Original Mortgage, comprising Sections 107 through 116, as so
amended, is set forth, for convenience of reference, in Exhibit F hereto.
As contemplated in Section 5, Article IV, of the Fourteenth
Supplemental Indenture, Section 39 of the Original Mortgage is hereby eliminated
and all references in the Mortgage to Section 39 are hereby eliminated. Upon the
effectiveness of this amendment, Funded Property shall not include Property
Additions that have at any time been made the basis of a credit under the
provisions of Section 39 or substituted for other Property Additions that have
so been made the basis of a credit under the provisions of Section 39.
(a) Section 5 of the Original Mortgage is hereby amended as set
forth in paragraph (1) of Exhibit C to the Twenty-sixth Supplemental Indenture;
Section 7 of the Original Mortgage is hereby amended as set
forth in paragraph (2) of Exhibit C to the Twenty-sixth Supplemental Indenture;
(i) Section 25 of the Original Mortgage is hereby amended as
set forth in paragraph (3)(a) of Exhibit C to the Twenty-sixth Supplemental
Indenture.
Section 26 of the Original Mortgage is hereby amended as
set forth in paragraph (3)(b) of Exhibit C to the Twenty-sixth Supplemental
Indenture.
10
Section 59 of the Original Mortgage is hereby amended as
set forth in paragraph (3)(d) of Exhibit C to the Twenty-sixth Supplemental
Indenture.
Section 61 of the Original Mortgage is hereby amended as
set forth in paragraph (3)(e) of Exhibit C to the Twenty-sixth Supplemental
Indenture.
i) Section 38 of the Original Mortgage is hereby amended as
set forth in paragraph (4) of Exhibit C to the Twenty-sixth Supplemental
Indenture. Upon the effectiveness of this amendment, among other things, Funded
Property shall not include any Property Additions that have at any time been
deemed to have been made the basis of a credit under the provisions of Section
38, as in effect prior to this amendment, or substituted for other Property
Additions that have been so deemed to have been made the basis of such a credit.
ii) (i) Section 85 of the Original Mortgage is hereby
amended as set forth in paragraph (5)(a) of Exhibit C to the Twenty-sixth
Supplemental Indenture.
Section 87 of the Original Mortgage is hereby amended as
set forth in paragraph (5)(b) of Exhibit C to the Twenty-sixth Supplemental
Indenture.
iii) Section 102 of the Original Mortgage is hereby amended
as set forth in paragraph (6) of Exhibit C to the Twenty-sixth Supplemental
Indenture.
iv) Section 120 of the Original Mortgage is hereby amended
as set forth in paragraph (8) of Exhibit C to the Twenty-sixth Supplemental
Indenture.
v) The amendments made in this Section 3 are set forth, for
convenience of reference, in Exhibit G hereto.
As contemplated in Section 3, Article III of the Twentieth Supplemental
Indenture, Section 100 of the Original Mortgage is hereby amended as set forth
in said Section 3, Article III of the Twentieth Supplemental Indenture. The
amendments made in this Section 4 are set forth, for convenience of reference,
in Exhibit H hereto.
As contemplated in Section 4, Article III of the Twentieth Supplemental
Indenture, Section 102 of the Original Mortgage is hereby amended as set forth
in said Section 4, Article III of the Twentieth Supplemental Indenture. The
amendments made in this Section 4 are set forth, for convenience of reference,
in Exhibit H hereto.
Anything herein to the contrary notwithstanding, (a) no amendment to
the Mortgage contemplated in Section 1 or 3 of this Article II shall become
effective while any bonds of the Twenty-sixth Series remain Outstanding unless
registered owner thereof shall have consented to such amendment and (b) all such
amendments shall become effective, without further act, at the first time at
which no such bonds shall remain Outstanding.
The Trustee hereby assents to all of the foregoing amendments to the
Original Mortgage (to the extent, if any, that such assent is necessary under
the provisions of Section 114 of the Original Mortgage).
11
b) The owners of the bonds of the Twenty-seventh Series shall be
deemed to have consented to the amendment of Section 28 of the Original Mortgage
to add at the end thereof a new paragraph reading as follows:
Notwithstanding the foregoing, any Opinion of Counsel
delivered pursuant to subdivision (7) of this Section 28, or pursuant
to any other provision of this Indenture by reference to this Section
28, may, at the election of the Company, omit any or all of the
statements contained in clause (a) of subdivision (7) if there shall
have been delivered to the Trustee a policy of title insurance issued
by a nationally recognized title insurance company, in an amount not
less than thirty-five percent (35%)1 of the cost or fair value to the
Company (whichever is less) of the Property Additions made the basis of
such application, insuring, in customary terms, against risk of loss
sustained or incurred by the Trustee by reason of any circumstances or
conditions by virtue of which the statements omitted from clause (a) of
such Opinion of Counsel would not have been accurate if made.
GLOBAL BONDS; BENEFICIAL INTERESTS
(a) Global Bonds. Each Global Bond issued hereunder shall represent
such of the outstanding Bonds as shall be specified therein and each shall
provide that it shall represent the aggregate principal amount of outstanding
Bonds from time to time endorsed thereon and that the aggregate principal amount
of outstanding Bonds represented thereby may from time to time be reduced or
increased, as appropriate, to reflect exchanges and redemptions. Any endorsement
of a Global Bond to reflect the amount of any increase or decrease in the
aggregate principal amount of outstanding Bonds represented thereby shall be
made by the Trustee or the Custodian, at the direction of the Trustee, in
accordance with instructions given by the holder thereof as required by Section
2 of this Article III. The aggregate principal amount of the Global Bonds may
from time to time be increased or decreased by adjustments made on the records
of the Custodian and the Depositary or its nominee, as the case may be, in
connection with transfers of interest as hereinafter provided.
(b) 144A Global Bonds. Bonds offered and sold to QIBs in reliance on
Rule 144A shall be issued initially in the form of one or more Global Bonds in
definitive fully registered form with the Global Bonds Legend and the Private
Placement Legend endorsed thereon, which shall be registered in the name of Cede
& Co., as nominee for the Depositary, as aforesaid, and deposited with the
Custodian on behalf of the Depositary.
(c) Regulation S Global Bonds. Bonds offered and sold in reliance on
Regulation S shall be issued initially in the form of one or more Global Bonds
in definitive fully registered form with the Global Bonds Legend and the
Regulation S Legend endorsed thereon, which shall be registered in the name of
Cede & Co., as nominee for the Depositary, as aforesaid, and deposited with the
Custodian on behalf of the Depositary.
- ------------------------
1 The owners of the bonds of the Twenty-seventh series shall be deemed to
have consented to the amendment contained in this Section 8, either with
the percentage shown above or with any higher percentage.
12
(d) Euroclear and Clearstream Accounts. The Company shall use
commercially reasonable efforts to cause the Depositary to agree that beneficial
interests in the Regulation S Global Bonds shall be credited to or through
accounts maintained by designated agents holding on behalf of Euroclear or
Clearstream through and including the 40th day after the later of the
commencement of the offering of the Bonds and the closing of the offering of the
Bonds (such period through and including such 40th day, the "Restricted
Period"), and no person shall be entitled to effect any transfer or exchange
that would result in any such interest being held otherwise than in or through
such an account; provided that this clause shall not prohibit any transfer or
exchange of such an interest in accordance with Section 2(b) below. Termination
of the Restricted Period shall be evidenced to the Trustee by an Officer's
Certificate, unless transferred to a person that takes delivery through a 144A
Global Bond in accordance with the transfer and certification requirements set
for in this Indenture.
(e) Euroclear and Clearstream Procedures. It is contemplated that
transfers of beneficial interests in the Regulation S Global Bonds that are held
by participants through Euroclear or Clearstream will be subject to the
Applicable Procedures of such organizations, as in effect from time to time.
(a) 144A Global Bond to Regulation S Global Bond. If the owner of a
beneficial interest in the 144A Global Bond wishes at any time to transfer such
interest to a Person who wishes to acquire the same in the form of a beneficial
interest in the Regulation S Global Bond, such transfer may be effected only in
accordance with the provisions of this subsection (a) and subject to the
Applicable Procedures. Upon receipt by the Custodian and the Company of (i) an
order given by the Depositary or its authorized representative directing that a
beneficial interest in such 144A Global Bond in a specified principal amount be
debited from a specified Agent Member's account and that a beneficial interest
in the corresponding Regulation S Global Bond in an equal principal amount be
credited to another specified Agent Member's account and (ii) a Regulation S
Certificate (in the form of Exhibit D hereto), satisfactory to the Company and
duly executed by the owner of such beneficial interest in the 144A Global Bond
or his attorney duly authorized in writing, then the Custodian shall reduce the
principal amount of such 144A Global Bond and increase the principal amount of
the corresponding Regulation S Global Bond by such specified principal amount.
(b) Regulation S Global Bond to 144A Global Bond. If the owner of a
beneficial interest in the Regulation S Global Bond wishes at any time to
transfer such interest to a Person who wishes to acquire the same in the form of
a beneficial interest in the corresponding 144A Global Bond, such transfer may
be effected only in accordance with this subsection (b) and subject to the
Applicable Procedures. Upon receipt by the Custodian and the Company of (i) an
order given by the Depositary or its authorized representative directing that a
beneficial interest in such Regulation S Global Bond in a specified principal
amount be debited from a specified Agent Member's account and that a beneficial
interest in the corresponding 144A Global Bond in an equal principal amount be
credited to another specified Agent Member's account and (ii) if such transfer
is to occur during the Restricted Period, a Restricted Securities Certificate
(in the form of Exhibit E hereto), satisfactory to the Company and duly executed
by the owner of such beneficial interest in such Regulation S Global Bond or his
attorney duly authorized in writing, then the Custodian shall reduce the
principal amount of such Regulation S Global Bond and
13
increase the principal amount of the corresponding 144A Global Bond by such
specified principal amount.
(c) Exchange Offer. Upon the consummation of the Exchange Offer, the
Company shall execute and deliver, and the Trustee shall authenticate (i) one or
more Global Bonds which bear neither the Private Placement Legend nor the
Regulation S Legend in an aggregate principal amount equal to the principal
amount of the beneficial interests in the 144A Global Bonds and the Regulation S
Global Bonds validly tendered and accepted for exchange in accordance with the
terms of the Exchange Offer or (ii) Definitive Bonds which bear neither the
Private Placement Legend nor the Regulation S Legend in an aggregate principal
amount equal to the principal amount of the Restricted Definitive Bonds and the
Regulation S Definitive Bonds validly tendered and accepted for exchange in
accordance with the terms of the Exchange Offer. Concurrently with the issuance
of such Bonds, the Trustee shall cause the aggregate principal amount of the
applicable 144A Global Bonds and the Regulation S Global Bonds to be reduced
accordingly.
For all purposes of this Twenty-ninth Supplemental Indenture, the terms
listed below shall have the meanings indicated, unless otherwise expressly
provided or unless the context otherwise requires:
"144A Global Bond" means a global bond substantially in the form of
Exhibit C hereto bearing the Global Bond Legend and the Private Placement Legend
and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Bonds initially sold in reliance on Rule
144A.
"Agent Member" means a member of, or a participant in, the Depositary.
"Applicable Procedures" means, with respect to any transfer or exchange
of or for beneficial interests in any Global Bond, the rules and procedures of
the Depositary, Euroclear and Clearstream that apply to such transfer or
exchange.
"Clearstream" means Clearstream Banking, societe anonyme.
"Custodian" means the Trustee, in its capacity as custodian for the
Depositary with respect to the Bonds in global form, or any successor entity
thereto.
"Definitive Bond" means a certificated Bond registered in the name of
the registered holder thereof, substantially in the form of Exhibit C hereto
except that such Bond shall not bear the Global Bond Legend and shall not have
the "Schedule of Exchanges of Interests in the Global Bond" attached thereto.
"Euroclear" means Euroclear Bank S.A., N.V., as operator of the
Euroclear system.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement, dated December 19, 2001, between the Company and Goldman, Sachs & Co.
14
"Global Bonds" means, individually and collectively, each of the global
bonds, substantially in the form of Exhibit C hereto.
"Global Bond Legend" means the legend as to the global nature of a bond
as set forth in Section 1(IV)(b) of Article I, which is required to be placed on
all Global Bonds issued under this Indenture.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization, limited
liability company, government, governmental subdivision or other entity.
"Private Placement Legend" means the legend set forth in Section
1(IV)(c)(i) of Article I hereof to be placed on all Bonds offered and sold in
reliance on Rule 144A except where otherwise permitted by the provisions of this
Supplemental Indenture.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Bond" means a Definitive Bond bearing the Regulation S
Legend or a Regulation S Global Bond.
"Regulation S Certificate" means a certificate substantially in the
form set forth in Exhibit D.
"Regulation S Definitive Bond" means a Definitive Bond bearing the
Regulation S Legend.
"Regulation S Global Bond" means a global Bond substantially in the
form of Exhibit C hereto bearing the Global Bond Legend and the Regulation S
Legend and deposited with or on behalf of, and registered in the name of, the
Depositary or its nominee that will be issued in a denomination equal to the
outstanding principal amount of the Bonds sold in reliance on Regulation S.
"Regulation S Legend" means the legend set forth in Section
1(IV)(c)(ii) of Article I hereof to be placed on all Bonds offered and sold in
reliance on Regulation S except where otherwise permitted by the provisions of
this Supplemental Indenture.
"Restricted Bond" means a Definitive Bond bearing the Private Placement
Legend or a 144A Global Bond.
"Restricted Definitive Bond" means a Definitive Bond bearing the
Private Placement Legend.
"Restricted Period" has the meaning set forth in Section 1(d) of
Article III.
"Restricted Securities Certificate" means a certificate substantially
in the form set forth in Exhibit E.
15
"Rule 144" means Rule 144 promulgated under the Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended.
MISCELLANEOUS PROVISIONS
The terms defined in the Original Mortgage shall, for all purposes of
this Twenty-ninth Supplemental Indenture, have the meanings specified in the
Original Mortgage.
The Trustee hereby confirms its acceptance of the trusts in the
Original Mortgage declared, provided, created or supplemented and agrees to
perform the same upon the terms and conditions in the Original Mortgage set
forth, including the following:
The Trustee shall not be responsible in any manner whatsoever
for or in respect of the validity or sufficiency of this Twenty-ninth
Supplemental Indenture or for or in respect of the recitals contained herein,
all of which recitals are made by the Company solely. Each and every term and
condition contained in Article XVI of the Original Mortgage, shall apply to and
form part of this Twenty-ninth Supplemental Indenture with the same force and
effect as if the same were herein set forth in full, with such omissions,
variations and insertions, if any, as may be appropriate to make the same
conform to the provisions of this Twenty-ninth Supplemental Indenture.
c) Whenever in this Twenty-ninth Supplemental Indenture either of
the parties hereto is named or referred to, this shall, subject to the
provisions of Articles XV and XVI of the Original Mortgage be deemed to include
the successors and assigns of such party, and all the covenants and agreements
in this Twenty-ninth Supplemental Indenture contained by or on behalf of the
Company, or by or on behalf of the Trustee, or either of them, shall, subject as
aforesaid, bind and inure to the respective benefits of the respective
successors and assigns of such parties, whether so expressed or not.
Nothing in this Twenty-ninth Supplemental Indenture, expressed or
implied, is intended, or shall be construed, to confer upon, or to give to, any
person, firm or corporation, other than the parties hereto and the holders of
the bonds and coupons Outstanding under the Mortgage, any right, remedy or claim
under or by reason of this Twenty-ninth Supplemental Indenture or any covenant,
condition, stipulation, promise or agreement hereof, and all the covenants,
conditions, stipulations, promises and agreements in this Twenty-ninth
Supplemental Indenture contained by or on behalf of the Company shall be for the
sole and exclusive benefit of the parties hereto, and of the holders of the
bonds and of the coupons Outstanding under the Mortgage.
16
This Twenty-ninth Supplemental Indenture shall be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
The titles of the several Articles of this Twenty-ninth Supplemental
Indenture shall not be deemed to be any part thereof.
------------------------
17
IN WITNESS WHEREOF, on the 13th day of December 2001, AVISTA
CORPORATION has caused its corporate name to be hereunto affixed, and this
instrument to be signed and sealed by its President or one of its Vice
Presidents, and its corporate seal to be attested by its Corporate Secretary or
one of its Assistant Corporate Secretaries for and in its behalf, all in The
City of Spokane, Washington, as of the day and year first above written; and on
the 13th day of December 2001, CITIBANK, N.A., has caused its corporate name to
be hereunto affixed, and this instrument to be signed and sealed by its
President or one of its Vice Presidents or one of its Senior Trust Officers or
one of its Trust Officers and its corporate seal to be attested by one of its
Vice Presidents or one of its Trust Officers, all in The City of New York, New
York, as of the day and year first above written.
AVISTA CORPORATION
By /s/ Ronald R. Petersen
----------------------------------
Vice President
Attest:
/s/ Terry. L. Syms
- ------------------------------------
Corporate Secretary
Executed, sealed and delivered
by AVISTA CORPORATION
in the presence of:
/s/ Sue Miner
- ------------------------------------
/s/ Diane C. Thoren
- ------------------------------------
18
CITIBANK, N.A., AS TRUSTEE
By /s/ Wafaa Orfy
----------------------------------
Wafaa Orfy, Assistant Vice
President
Attest:
/s/ Cindy Tsang
- --------------------------------------------
Cindy Tsang, Assistant Vice President
Executed, sealed and delivered
by CITIBANK, N.A.,
as trustee. in the presence of:
/s/ Nancy Forte
- --------------------------------------------
/s/ John J. Byrnes
- --------------------------------------------
19
STATE OF WASHINGTON )
) ss.:
COUNTY OF SPOKANE )
On the 13th day of December 2001, before me personally appeared Ronald
R. Peterson, to me known to be a Vice President of AVISTA CORPORATION, one of
the corporations that executed the within and foregoing instrument, and
acknowledged said instrument to be the free and voluntary act and deed of said
Corporation for the uses and purposes therein mentioned and on oath stated that
he was authorized to execute said instrument and that the seal affixed is the
corporate seal of said Corporation.
On the 13th day of December 2001, before me, a Notary Public in and for
the State and County aforesaid, personally appeared Ronald R. Peterson, known to
me to be a Vice President of AVISTA CORPORATION, one of the corporations that
executed the within and foregoing instrument and acknowledged to me that such
Corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
/s/ Sue Miner
-----------------------
Notary Public
20
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 14th day of December 2001, before me personally appeared Wafaa
Orfy, to me known to be an Assistant Vice President of CITIBANK, N.A., one of
the corporations that executed the within and foregoing instrument, and
acknowledged said instrument to be the free and voluntary act and deed of said
Corporation for the uses and purposes therein mentioned and on oath stated that
he was authorized to execute said instrument and that the seal affixed is the
corporate seal of said Corporation.
On the 14th day of December 2001, before me, a Notary Public in and for
the State and County aforesaid, personally appeared Wafaa Orfy, known to me to
be an Assistant Vice President of CITIBANK, N.A., one of the corporations that
executed the within and foregoing instrument and acknowledged to me that such
Corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal the day and year first above written.
/s/ Peter M. Pavlyshin
------------------------------------------
Notary Public
PETER M. PAVLYSHIN
Notary Public, State of New York
No. 41-4991297
Qualified in Queens County
Certificate Filed in New York County
Commission Expires January 27, 2002
21
EXHIBIT A
MORTGAGE, SUPPLEMENTAL INDENTURES
AND SERIES OF BONDS
MORTGAGE OR SERIES PRINCIPAL PRINCIPAL
SUPPLEMENTAL AMOUNT AMOUNT
INDENTURE DATED AS OF NO. DESIGNATION ISSUED OUTSTANDING
--------- ----------- --- ----------- ------ -----------
Original June 1, 1939 1 3-1/2% Series due 1964 $22,000,000 None
First October 1, 1952 2 3-3/4% Series due 1982 30,000,000 None
Second May 1, 1953 3 3-7/8% Series due 1983 10,000,000 None
Third December 1, 1955 None
Fourth March 15, 1957 None
Fifth July 1, 1957 4 4-7/8% Series due 1987 30,000,000 None
Sixth January 1, 1958 5 4-1/8% Series due 1988 20,000,000 None
Seventh August 1, 1958 6 4-3/8% Series due 1988 15,000,000 None
Eighth January 1, 1959 7 4-3/4% Series due 1989 15,000,000 None
Ninth January 1, 1960 8 5-3/8% Series due 1990 10,000,000 None
Tenth April 1, 1964 9 4-5/8% Series due 1994 30,000,000 None
Eleventh March 1,1965 10 4-5/8% Series due 1995 10,000,000 None
Twelfth May 1, 1966 None
Thirteenth August 1, 1966 11 6 % Series due 1996 20,000,000 None
Fourteenth April 1, 1970 12 9-1/4% Series due 2000 20,000,000 None
Fifteenth May 1, 1973 13 7-7/8% Series due 2003 20,000,000 None
Sixteenth February 1, 1975 14 9-3/8% Series due 2005 25,000,000 None
Seventeenth November 1, 1976 15 8-3/4% Series due 2006 30,000,000 None
Eighteenth June 1, 1980 None
Nineteenth January 1, 1981 16 14-1/8% Series due 1991 40,000,000 None
Twentieth August 1, 1982 17 15-3/4% Series due 60,000,000 None
1990-1992
Twenty-First September 1, 1983 18 13-1/2% Series due 2013 60,000,000 None
Twenty-Second March 1, 1984 19 13-1/4% Series due 1994 60,000,000 None
Twenty-Third December 1, 1986 20 9-1/4% Series due 2016 80,000,000 None
Twenty-Fourth January 1, 1988 21 10-3/8% Series due 2018 50,000,000 None
Twenty-Fifth October 1, 1989 22 7-1/8% Series due 2013 66,700,000 None
23 7-2/5% Series due 2016 17,000,000 None
Twenty-Sixth April 1, 1993 24 Secured Medium-Term 250,000,000 $129,500,000
Notes, Series A
($250,000,000
authorized)
Twenty-Seventh January 1, 1994 25 Secured Medium-Term 161,000,000 74,000,000
Notes, Series B
($250,000,000
authorized)
Twenty-Eighth September 1, 2001 26 Collateral Series due 220,000,000 220,000,000
2002
A-1
EXHIBIT B
FILING AND RECORDING OF
TWENTY-EIGHTH SUPPLEMENTAL INDENTURE
FILING IN STATE OFFICES
FINANCING STATEMENT
STATE OFFICE OF DATE DOCUMENT NUMBER
----- --------- ---- ---------------
Washington Secretary of State 10/18/01 2001-306-6692-7
Idaho Secretary of State 10/09/01 B2001-0909765-4
Montana Secretary of State 10/16/01 435875
Oregon Secretary of State 10/09/01 S67453
California Secretary of State 10/10/01 0128560259
- --------------------------------------------------------------------------------------------------------------------
RECORDING IN COUNTY OFFICES
- --------------------------------------------------------------------------------------------------------------------
COUNTY OFFICE OF FINANCING
REAL ESTATE MORTGAGE RECORDS STATEMENT
DOCUMENT
NUMBER
- --------------------------------------------------------------------------------------------------------------------
DATE DOCUMENT NUMBER BOOK PAGE
-------------------------------------------------------------------------------------------------------------------
Washington
- ----------
Adams Auditor 10/10/01 262400 N/A N/A N/A
Asotin Auditor 10/10/01 255818 N/A N/A N/A
Benton Auditor 10/17/01 2001-032378 N/A N/A N/A
Douglas Auditor 10/11/01 3042520 N/A N/A N/A
Ferry Auditor 10/10/01 250874 N/A N/A N/A
Franklin Auditor 10/11/01 1596289 N/A N/A N/A
Garfield Auditor 10/11/01 6781 N/A N/A N/A
Grant Auditor 10/11/01 1090810 N/A N/A N/A
Grays Harbor Auditor 10/11/01 2001-10110013 N/A N/A N/A
Klickitat Auditor 10/12/01 1026261 N/A N/A N/A
Lewis Auditor 10/11/01 3123293 N/A N/A N/A
Lincoln Auditor 10/10/01 20010422840 77 2357 N/A
Pend Oreille Auditor 10/10/01 20010260070 N/A N/A N/A
Skamania Auditor 10/15/01 142596 215 715 N/A
Spokane Auditor 10/19/01 4643814 N/A N/A N/A
Stevens Auditor 10/30/01 20010010965 265 576 N/A
Thurston Auditor 10/25/01 3387657 N/A N/A N/A
Whitman Auditor 10/19/01 632046 N/A N/A N/A
California 10/22/01 2001-0067116-00 N/A N/A N/A
- ----------
El Dorado Recorder
Idaho
- -----
Benewah Recorder 10/09/01 224569 N/A N/A N/A
Bonner Recorder 10/10/01 589247 N/A N/A N/A
Boundary Recorder 10/16/01 203667 N/A N/A N/A
B-1
- --------------------------------------------------------------------------------------------------------------------
RECORDING IN COUNTY OFFICES
- --------------------------------------------------------------------------------------------------------------------
COUNTY OFFICE OF FINANCING
REAL ESTATE MORTGAGE RECORDS STATEMENT
DOCUMENT
NUMBER
- --------------------------------------------------------------------------------------------------------------------
DATE DOCUMENT NUMBER BOOK PAGE
- --------------------------------------------------------------------------------------------------------------------
Clearwater Recorder 10/09/01 187844 N/A N/A N/A
Idaho Recorder 10/09/01 419193 N/A N/A N/A
Kootenai Recorder 10/10/01 1699539 N/A N/A N/A
Latah Recorder 10/09/01 460435 N/A N/A N/A
Lewis Recorder 10/09/01 125235 N/A N/A N/A
Nez Perce Recorder 10/09/01 667966 N/A N/A N/A
Shoshone Recorder 10/09/01 400399 N/A N/A N/A
Montana
- -------
Big Horn Clerk & Recorder 10/12/01 325775 61 133 N/A
Broadwater Clerk & Recorder 10/12/01 142471 59 57 N/A
Golden Valley Clerk & Recorder 10/15/01 75281 M 9438 N/A
Meagher Clerk & Recorder 10/12/01 110967 F53 82 N/A
Mineral Clerk & Recorder 10/12/01 90830 Drawer 3 Card 7379 N/A
Rosebud Clerk & Recorder 10/15/01 90615 98MG 922 N/A
Sanders Clerk & Recorder 10/12/01 35390 N/A N/A N/A
Stillwater Clerk & Recorder 10/12/01 304963 N/A N/A N/A
Treasure Clerk & Recorder 10/12/01 77482 15 767 N/A
Wheatland Clerk & Recorder 10/12/01 100927 M 12802 N/A
Yellowstone Clerk & Recorder 10/12/01 3148865 N/A N/A N/A
Oregon
- ------
Douglas Recorder 10/10/01 2001-23649 1803 794 N/A
Jackson Recorder 10/11/01 01-48511 N/A N/A N/A
Josephine Recorder 10/23/01 01-20503 N/A N/A N/A
Klamath Recorder 10/10/01 N/A M01 51586 N/A
Union Recorder 10/09/01 2001-14548 N/A N/A N/A
Wallowa Recorder 10/09/01 44096 N/A N/A N/A
B-2
EXHIBIT C
(FORM OF BOND)
THIS BOND IS SUBJECT TO RESTRICTIONS ON TRANSFER,
AS HEREINAFTER SET FORTH.
AVISTA CORPORATION
First Mortgage Bond,
7.75% Series due 2007
REGISTERED REGISTERED
NO. _________________ $___________________
AVISTA CORPORATION, a corporation of the State of Washington
(hereinafter called the Company), for value received, hereby promises to pay to
or registered assigns, on January 1, 2007,
DOLLARS
or such other principal amount as is set forth in the Schedule of Exchanges of
Interests in the Global Bond attached hereto, and to pay the registered owner
hereof interest thereon from December 19, 2001 semi-annually in arrears on
January 1 and July 1 in each year (each such date being hereinafter called an
"Interest Payment Date"), commencing July 1, 2002, and at Maturity (as
hereinafter defined), at the rate of seven and seventy-five one-hundredths per
centum (7.75%) per annum, computed on the basis of a 360-day year consisting of
twelve 30-day months, until the Company's obligation with respect to the payment
of such principal shall have been discharged. The principal of and premium, if
any, and interest on this bond payable at Maturity shall be paid upon
presentation hereof at the office or agency of the Company in the Borough of
Manhattan, The City of New York, in such coin or currency of the United States
of America as at the time of payment is legal tender for public and private
debts. The interest on this bond (other than interest payable at Maturity) shall
be paid by check, in the similar coin or currency, mailed to the registered
owner hereof as of the close of business on the December 15 or June 15, as the
case may be, next preceding each Interest Payment Date (each such date being
herein called a "Record Date"); provided, however, that if such registered owner
shall be a securities depositary, such payment shall be made by such other means
in lieu of check as shall be agreed upon by the Company, the Trustee and such
registered owner. Interest payable at Maturity shall be paid to the person to
whom principal shall be paid. As used herein, the term "Maturity" shall mean the
date on which the principal of this bond becomes due and payable, whether at
stated maturity, upon redemption or acceleration, or otherwise.
C-1
This bond is one of an issue of bonds of the Company issuable in series
and is one of a series known as its First Mortgage Bonds, 7.75% Series due 2007,
all bonds of all such issue of series being issued and issuable under and
equally secured (except insofar as any sinking or other fund, established in
accordance with the provisions of the Mortgage hereinafter mentioned, may afford
additional security for the bonds of any particular series) by a Mortgage and
Deed of Trust, dated as of June 1, 1939, executed by the Company (formerly known
as The Washington Water Power Company) to City Bank Farmers Trust Company and
Ralph E. Morton, as Trustees (Citibank, N.A., successor Trustee to both said
Trustees). Such mortgage and deed of trust has been amended and supplemented by
various supplemental indentures, including the Twenty-ninth Supplemental
Indenture, dated as of December 1, 2001 (the "Twenty-ninth Supplemental
Indenture") and, as so amended and supplemented, is herein called the
"Mortgage". Reference is made to the Mortgage for a description of the property
mortgaged and pledged, the nature and extent of the security, the rights of the
holders of the bonds and of the Trustee in respect thereof, the duties and
immunities of the Trustee and the terms and conditions upon which the bonds are
and are to be secured and the circumstances under which additional bonds may be
issued. If there shall be a conflict between the terms of this bond and the
provisions of the Mortgage, the provisions of the Mortgage shall control to the
extent permitted by law. The holder of this bond, by its acceptance hereof,
shall be deemed to have consented and agreed to all terms and provisions of the
Mortgage and, further, in the event that such holder shall not be the sole
beneficial owner of this bond, shall be deemed to have agreed to use all
commercially reasonable efforts to cause all direct and indirect beneficial
owners of this bond to have knowledge of the terms and provisions of the
Mortgage and of this bond and to comply therewith, including particularly, but
without limitation, any provisions or restrictions in the Mortgage regarding the
transfer or exchange of such beneficial interests and any legend set forth on
this bond.
With the consent of the Company and to the extent permitted by and as
provided in the Mortgage, the rights and obligations of the Company and/or the
rights of the holders of the bonds and/or coupons and/or the terms and
provisions of the Mortgage may be modified or altered by affirmative vote of the
holders of at least 75% in principal amount of the bonds then outstanding under
the Mortgage and, if the rights of one or more, but less than all, series of
bonds then outstanding are to be affected, then also by affirmative vote of the
holders of at least 75% in principal amount of the series of bonds so to be
affected (excluding in any case bonds challenged and disqualified from voting by
reason of the Company's interest therein as provided in the Mortgage). The
Company has amended the Mortgage, effective as of the Modification Effective
Date (as defined in the Twenty-ninth Supplemental Indenture), to provide that
the Mortgage may be modified or altered by affirmative vote of the holders of at
least 60% in principal amount of the bonds outstanding under the Mortgage,
considered as one class, or, if the rights of one or more, but less than all,
series of bonds then outstanding are to be affected, then such modification or
alteration may be effected with the affirmative vote only of 60% in principal
amount of the bonds outstanding of the series so to be affected, considered as
one class, and, furthermore, to provide that, for limited purposes, the Mortgage
may be modified or altered without any consent or other action of holders of any
series of bonds. No modification or alteration shall, however, permit an
extension of the Maturity of the principal of, or interest on, this bond or a
reduction in such principal or the rate of interest hereon or any other
modification in the terms of payment of such principal or interest or the
creation of any lien equal or prior to the lien of the Mortgage or deprive the
holder of a lien on the mortgaged and pledged property without the consent of
the holder hereof.
C-2
The principal hereof may be declared or may become due prior to the
stated maturity date on the conditions, in the manner and at the time set forth
in the Mortgage, upon the occurrence of a completed default as in the Mortgage
provided.
In the manner prescribed in the Mortgage, this bond is transferable by
the registered owner hereof in person, or by his duly authorized attorney, at
the office or agency of the Company in the Borough of Manhattan, The City of New
York, upon surrender and cancellation of this bond, together with a written
instrument of transfer whenever required by the Company duly executed by the
registered owner or by its duly authorized attorney, and, thereupon, a new fully
registered bond of the same series for a like principal amount will be issued to
the transferee in exchange herefor as provided in the Mortgage. The Company and
the Trustee may deem and treat the person in whose name this bond is registered
as the absolute owner hereof for the purpose of receiving payment and for all
other purposes.
In the manner prescribed in the Mortgage, any bonds of this series,
upon surrender thereof for cancellation at the office or agency of the Company
in the Borough of Manhattan, The City of New York, are exchangeable for a like
aggregate principal amount of bonds of the same series of other authorized
denominations.
The bonds of this series are not subject to redemption prior to the
stated maturity date thereof.
No recourse shall be had for the payment of the principal of or
interest on this bond against any incorporator or any past, present or future
subscriber to the capital stock, stockholder, officer or director of the Company
or of any predecessor or successor corporation, as such, either directly or
through the Company or any predecessor or successor corporation, under any rule
of law, statute or constitution or by the enforcement of any assessment or
otherwise, all such liability of incorporators, subscribers, stockholders,
officers and directors being released by the holder or owner hereof by the
acceptance of this bond and being likewise waived and released by the terms of
the Mortgage.
This bond shall not become obligatory until Citibank, N.A., the Trustee
under the Mortgage, or its successor thereunder, shall have signed the form of
certificate endorsed hereon.
IN WITNESS WHEREOF, AVISTA CORPORATION has caused this bond to be
signed in its corporate name by its President or one of its Vice Presidents by
his signature or a facsimile thereof, and its corporate seal to be impressed or
imprinted hereon and attested by its Corporate Secretary or one of its Assistant
Corporate Secretaries by his signature or a facsimile thereof.
Dated: AVISTA CORPORATION
By:_______________________
ATTEST:_________________________
C-3
TRUSTEE'S CERTIFICATE
This bond is one of the bonds, of the series herein designated,
described or provided for in the within-mentioned Mortgage.
CITIBANK, N.A.
Trustee
By____________________________
Authorized Officer
C-4
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL BOND*
The following exchanges of a part of this Global Bond for an interest
in another Global Bond or for a Definitive Bond, or exchanges of a part of
another Global Bond or Definitive Bond for an interest in this Global Bond, have
been made:
Amount of decrease Amount of Principal Amount of Signature of
in Principal increase in this Global Bond authorized
Amount of this Principal Amount following such officer of
Date of Exchange Global Bond of this Global Bond decrease or increase Custodian
- ---------------- ----------- ------------------- -------------------- ---------
- ------------------------
*This schedule should be included only if the Bond is issued in global form.
C-5
[THE BONDS EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED,
SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 903 OR RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT OR (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), IN EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF
THE STATES OF THE UNTIED STATES.]
[THE BONDS EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED,
SOLD OR DELIVERED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF,
ANY U.S. PERSON, UNLESS THE BONDS ARE REGISTERED UNDER THE SECURITIES ACT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT IS
AVAILABLE.]
THIS GLOBAL BOND IS HELD BY CEDE & CO., AS NOMINEE FOR THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") FOR THE BENEFIT OF THE BENEFICIAL OWNERS
HEREOF. THIS BOND MAY NOT BE TRANSFERRED, NOR MAY ANY PURPORTED TRANSFER BE
REGISTERED, EXCEPT THAT (I) THIS BOND MAY BE TRANSFERRED IN WHOLE, AND
APPROPRIATE REGISTRATION OF TRANSFER EFFECTED, IF SUCH TRANSFER IS BY CEDE &
CO., AS NOMINEE FOR THE DEPOSITARY, TO THE DEPOSITARY, OR BY THE DEPOSITARY TO
ANOTHER NOMINEE THEREOF, OR BY ANY NOMINEE OF THE DEPOSITARY TO ANY OTHER
NOMINEE THEREOF, OR BY THE DEPOSITARY OR ANY NOMINEE THEREOF TO ANY SUCCESSOR
BONDS DEPOSITARY OR ANY NOMINEE THEREOF; AND (II) THIS BOND MAY BE TRANSFERRED,
AND APPROPRIATE REGISTRATION OF TRANSFER EFFECTED, TO THE BENEFICIAL HOLDERS
HEREOF, AND THEREAFTER SHALL BE TRANSFERABLE WITHOUT RESTRICTIONS (EXCEPT AS
PROVIDED IN THE PRECEDING PARAGRAPH) IF: (A) THE DEPOSITARY, OR ANY SUCCESSOR
SECURITIES DEPOSITARY, SHALL HAVE NOTIFIED THE COMPANY AND THE TRUSTEE THAT (I)
IT IS UNWILLING OR UNABLE TO CONTINUE TO ACT AS SECURITIES DEPOSITARY WITH
RESPECT TO THE BONDS OR (II) IT IS NO LONGER A CLEARING AGENCY REGISTERED UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND, IN EITHER CASE, THE
TRUSTEE SHALL NOT HAVE BEEN NOTIFIED BY THE COMPANY WITHIN ONE HUNDRED TWENTY
(120) DAYS OF THE IDENTITY OF A SUCCESSOR SECURITIES DEPOSITARY WITH RESPECT TO
THE BONDS; OR (B) THE COMPANY SHALL HAVE DELIVERED TO THE TRUSTEE A WRITTEN
ORDER TO THE EFFECT THAT THE BONDS SHALL BE SO TRANSFERABLE ON AND AFTER A DATE
SPECIFIED THEREIN.
C-6
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
_______________________________________________
[please insert social security or other identifying number of assignee]
_______________________________________________
[please print or typewrite name and address of assignee]
_______________________________________________
the within bond of AVISTA CORPORATION and does hereby irrevocably constitute and
appoint ___________________________________________, Attorney, to transfer said
bond on the books of the within-mentioned Company, will full power of
substitution in the premises.
Dated:_________________________
_________________________
Notice: The signature to this assignment must correspond with the name as
written upon the face of the bond in every particular without alteration or
enlargement or any change whatsoever.
C-7
EXHIBIT D
Form of Regulation S Certificate
REGULATION S CERTIFICATE
(For transfers pursuant to Section 1(IV)(a) of Article I
and Section 2(a) of Article III
of the Twenty-ninth Supplemental Indenture)
Citibank, N.A.,
as Custodian
111 Wall Street, 5th Floor Zone 2
New York, New York 10043
Attention: Agency of Trust Services
Re: Avista Corporation
7.75% First Mortgage Bonds Due 2007 (the "Bonds")
Reference is made to the Mortgage and Deed of Trust, dated as of June 1, 1939,
between Avista Corporation (the "Company") and Citibank, N.A., successor
Trustee, as amended and supplemented (the "Mortgage"). Terms used herein and
defined in the Mortgage or in Regulation S or Rule 144 under the U.S. Securities
Act of 1933, as amended (the "Securities Act") are used herein as so defined.
This certificate relates to U.S. $_____________ principal amount of Bonds, which
are evidenced by the following certificate(s) (the "Specified Bonds"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Bonds or (ii) it is acting on behalf of all the beneficial
owners of the Specified Bonds and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner."
If the Specified Bonds are represented by a Global Bond, they are held through
the Depositary or an Agent Member in the name of the Undersigned, as or on
behalf of the Owner. If the Specified Bonds are not represented by a Global
Bond, they are registered in the name of the Undersigned, as or on behalf of the
Owner.
The Owner has requested that the Specified Bonds be transferred to a person (the
"Transferee") who will take delivery in the form of a Regulation S Bond. In
connection with such transfer, the Owner hereby certifies that, unless such
transfer is being effected pursuant to an effective registration statement under
the Securities Act, it is being effected in accordance with Rule 904 or Rule 144
under the Securities Act and with all applicable securities laws of the states
of the United States and other jurisdictions. Accordingly, the Owner hereby
further certifies as follows:
(1) Rule 904 Transfers. If the transfer is being effected in
accordance with Rule 904:
D-1
(A) the Owner is not a distributor of the Bonds, an affiliate of
the Company or any such distributor or a person acting on behalf of
any of the foregoing;
(B) the offer of the Specified Bonds was not made to a person in
the United States;
(C) either: (i) at the time the buy order was originated, the
Transferee was outside the United States or the Owner and any person
acting on its behalf reasonably believed that the Transferee was
outside the United States, or (ii)the transaction is being executed
in, on or through the facilities of the Eurobond market, as regulated
by the Association of International Bond Dealers, or another
designated offshore securities market and neither the Owner nor any
person acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States;
(D) no directed selling efforts have been made in the United
States by or on behalf of the Owner or any affiliate thereof;
(E) if the Owner is a dealer in securities or has received a
selling concession, fee or other remuneration in respect of the
Specified Bonds, and the transfer is to occur during the Restricted
Period, then the requirements of Rule 904(c)(1) have been satisfied;
and
(F) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
(2) Rule 144 Transfers. If the transfer is being effected pursuant to
Rule 144:
(A) the transfer is occurring after a holding period of at least
one year (computed in accordance with paragraph (d) of Rule 144) has
elapsed since the Specified Bonds were last acquired from the Company
or from an affiliate of the Company, whichever is later, and is being
effected in accordance with the applicable amount, manner of sale and
notice requirements of Rule 144; or
(B) the transfer is occurring after a holding period of at least
two years has elapsed since the Specified Bonds were last acquired
from the Company or from an affiliate of the Company, whichever is
later, and the Owner is not, and during the preceding three months has
not been, an affiliate of the Company.
Dated:
(Print the name of the Undersigned, as such term is defined in the second
paragraph of this certificate.)
By:______________________________________
Name:
Title:
D-2
(If the Undersigned is a corporation, partnership or fiduciary, the title of the
person signing on behalf of the Undersigned must be stated.)
D-3
EXHIBIT E
Form of Restricted Securities Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Section 1(IV)(a) of Article I
and Section 2(a) of Article III
of the Twenty-ninth Supplemental Indenture)
Citibank, N.A.,
as Custodian
111 Wall Street, 5th Floor Zone 2
New York, New York 10043
Attention: Agency of Trust Services
Re: Avista Corporation
7.75% First Mortgage Bonds Due 2007 (the "Bonds")
Reference is made to the Mortgage and Deed of Trust, dated as of June 1, 1939,
between Avista Corporation (the "Company") and Citibank, N.A., successor
Trustee, as amended and supplemented (the "Mortgage"). Terms used herein and
defined in the Mortgage or in Regulation S or Rule 144 under the U.S. Securities
Act of 1933, as amended (the "Securities Act") are used herein as so defined.
This certificate relates to U.S. $_____________ principal amount of Securities,
which are evidenced by the following certificate(s) (the "Specified Bonds"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the
"Undersigned") hereby certifies that either (i) it is the sole beneficial owner
of the Specified Bonds or (ii) it is acting on behalf of all the beneficial
owners of the Specified Bonds and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner."
If the Specified Securities are represented by a Global Bond, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Bonds are not represented by a Global
Bond, they are registered in the name of the Undersigned, as or on behalf of the
Owner.
The Owner has requested that the Specified Bonds be transferred to a person (the
"Transferee") who will take delivery in the form of a Restricted Bond. In
connection with such transfer, the Owner hereby certifies that, unless such
transfer is being effected pursuant to an effective registration statement under
the Securities Act, it is being effected in accordance with Rule 144A or Rule
144 under the Securities Act and all applicable securities laws of the states of
the United States and other jurisdictions. Accordingly, the Owner hereby further
certifies as follows:
(1) Rule 144A Transfers. If the transfer is being effected in
accordance with Rule 144A:
E-1
(A) the Specified Bonds are being transferred to a person that
the Owner and any person acting on its behalf reasonably believe is a
"qualified institutional buyer" within the meaning of Rule 144A,
acquiring for its own account or for the account of a qualified
institutional buyer; and
(B) the Owner and any person acting on its behalf have taken
reasonable steps to ensure that the Transferee is aware that the Owner
may be relying on Rule 144A in connection with the transfer.
(2) Rule 144 Transfers. If the transfer is being effected pursuant to
Rule 144:
(A) the transfer is occurring after a holding period of at least
one year (computed in accordance with paragraph (d) of Rule 144) has
elapsed since the Specified Bonds were last acquired from the Company
or from an affiliate of the Company, whichever is later, and is being
effected in accordance with the applicable amount, manner of sale and
notice requirements of Rule 144; or
(B) the transfer is occurring after a holding period of at least
two years has elapsed since the Specified Bonds were last acquired
from the Company or from an affiliate of the Company, whichever is
later, and the Owner is not, and during the preceding three months has
not been, an affiliate of the Company.
Dated:
(Print the name of the Undersigned, as such term is defined in the second
paragraph of this certificate.)
By:______________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or fiduciary, the title of the
person signing on behalf of the Undersigned must be stated.)
E-2
EXHIBIT F
AMENDMENTS TO MORTGAGE
(1) The amendment of Article XVIII of the Original Mortgage to read as
follows:
ARTICLE XVIII.
MEETINGS AND CONSENTS OF BONDHOLDERS.
SECTION 107. Modifications and alterations of this Indenture and/or of
any indenture supplemental hereto and/or of the rights and obligations of the
Company and/or of the rights of the holders of bonds and coupons issued
hereunder may be made as provided in this Article XVIII.
SECTION 108. The Corporate Trustee may at any time call a meeting of
the holders of bonds of one or more, or all, series and it shall call such a
meeting on written request of the Company, given pursuant to a Resolution of its
Board of Directors, or a resolution of the holders of a majority or more in
principal amount of the bonds of such series Outstanding hereunder, considered
as one class, at the time of such request. In the event of the Corporate
Trustee's failing for ten (10) days to call a meeting after being thereunto
requested by the Company or bondholders as above set forth, holders of
Outstanding bonds in the amount above specified in this Section or the Company,
pursuant to Resolution of its Board of Directors, may call such meeting. Every
such meeting called by and at the instance of the Corporate Trustee shall be
held in the Borough of Manhattan, The City of New York, or with the written
approval of the Company, at any other place in the United States of America, and
written notice thereof, stating the place and time thereof and in general terms
the business to be submitted, shall be mailed by the Corporate Trustee not less
than thirty (30) days before such meeting (a) to each registered holder of bonds
of the series in respect of which such meeting is being called, then Outstanding
hereunder addressed to him at his address appearing on the registry books, (b)
to all other holders of bonds of such series then Outstanding hereunder the
names and addresses of whom are preserved by the Corporate Trustee as required
by the provisions of Section 132 hereof and (c) to the Company addressed to it
at Spokane, Washington (or at such other address as may be designated by the
Company from time to time), and, if any bonds of such series shall not be in
fully registered form, shall be published by the Corporate Trustee at least once
a week for four (4) successive calendar weeks immediately preceding the meeting,
upon any secular day of each such calendar week, which need not be the same day
of each week, in a Daily Newspaper, printed in the English language, and
published and of general circulation in The City of New York; provided, however,
that, if such notice by publication shall have been given, the mailing of such
notice to any bondholders shall in no case be a condition precedent to the
validity of any action taken at such meeting. Any meeting of holders of the
bonds of one or more, or all, series shall be valid without notice if the
holders of all bonds of such series then Outstanding hereunder are present in
person or by proxy and if the Company and the Corporate Trustee are present by
duly authorized representatives, or if notice is waived in writing before or
after the meeting by the Company, the holders of all bonds of such series
Outstanding hereunder and by the Corporate Trustee, or by such of them as are
not present in person or by proxy.
SECTION 109. Officers and nominees of the Corporate Trustee and of the
Company may attend such meeting, but shall not as such be entitled to vote
thereat. Attendance by bondholders may be in person or by proxy. In order that
the holder of any bond payable to bearer and his proxy may attend and vote
without producing his bond, the Corporate Trustee, with respect to any such
meeting, may make and from time to time vary such regulations as it shall think
fit for deposit of bonds with, (i) any bank or trust or insurance company, or
(ii) any trustee, secretary, administrator or other proper officer of any
pension, welfare, hospitalization, or similar fund or funds, or (iii) the United
States of America, any Territory thereof, the District of Columbia, any State of
the United States, any municipality in any State of the United States or any
public instrumentality of the United States, or of any State or of any
Territory, or (iv) any other person or corporation satisfactory to the Corporate
Trustee, and for the issue to the persons depositing the same of certificates by
such depositaries entitling the holders thereof to be present and vote at any
such meeting and to appoint proxies to represent them and vote for them at any
such meeting in the same way as if the persons so present and voting, either
personally or by proxy, were the actual bearers of the bonds in respect of which
such certificate shall have been issued and any regulations so made shall be
binding and effective. A bondholder in any of the foregoing categories may sign
such a certificate in his own behalf. In lieu of or in addition to providing for
such deposit, the Corporate Trustee may, in its discretion, permit such
institutions to issue certificates which shall entitle the holders thereof to
vote at any meeting only if the bonds with respect to which they are issued are
not produced at the meeting by any other person and are not at the time of the
meeting registered in the name of any other person. Each such certificate shall
state the date on which the bond or bonds in respect of which such certificate
shall have been issued were deposited with or exhibited to such institution and
the series, maturities and serial numbers of such bonds. A bondholder in any of
the foregoing categories may sign such a certificate in his own behalf. In the
event that two or more such certificates shall be issued with respect to any
bond or bonds, the certificate bearing the latest date shall be recognized and
be deemed to supersede any certificate or certificates previously issued with
respect to such bond or bonds. If any such meeting shall have been called by
bondholders or by the Company as aforesaid upon failure of the Corporate Trustee
to call the same after having been so requested under the provisions of Section
108 hereof, regulations to like effect for such deposit of bonds and the issue
of certificates by (i) any bank or trust or insurance company organized under
the laws of the United States of America or of any state thereof, or (ii) any
trustee, secretary, administrator or other proper officer of any pension,
welfare, hospitalization, or similar fund or funds, or (iii) the United States
of America, any Territory thereof, the District of Columbia, any State of the
United States, any municipality in any State of the United States or any public
instrumentality of the United States, or of any State or of any Territory, shall
be similarly binding and effective for all purposes hereof if adopted or
approved by the bondholders calling such meeting or by the Board of Directors of
the Company, if such meeting shall have been called by the Company, provided
that in either such case copies of such regulations shall be filed with the
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Corporate Trustee. A bondholder in any of the foregoing categories may sign such
a certificate in his own behalf.
SECTION 110. Subject to the restrictions specified in Sections 109 and
113 hereof, any registered holder of bonds Outstanding hereunder and any holder
of a certificate provided for in Section 109 hereof relating to bonds
Outstanding hereunder, in either case of the series in respect of which a
meeting shall have been called, shall be entitled in person or by proxy to
attend and vote at such meeting as a holder of the bonds registered or certified
in the name of such holder without producing such bonds. All others seeking to
attend or vote at such meeting in person or by proxy must, if required by any
authorized representative of the Corporate Trustee or the Company or by any
other bondholder, produce the bonds claimed to be owned or represented at such
meeting and every one seeking to attend or vote shall, if required as aforesaid,
produce such further proof of bond ownership or personal identity as shall be
satisfactory to the authorized representative of the Corporate Trustee, or if
none be present then to the Inspectors of Votes hereinafter provided for.
Proxies shall be witnessed or in the alternative may (a) have the signature
guaranteed by a bank or trust company or a registered dealer in securities, (b)
be acknowledged before a Notary Public or other officer authorized to take
acknowledgements, or (c) have their genuineness otherwise established to the
satisfaction of the Inspector of Votes. All proxies and certificates presented
at any meeting shall be delivered to said Inspectors of Votes and filed with the
Corporate Trustee.
SECTION 111. Persons nominated by the Corporate Trustee if it is
represented at the meeting shall act as temporary Chairman and Secretary,
respectively, of the meeting, but if the Corporate Trustee shall not be
represented or shall fail to nominate such persons or if any person so nominated
shall not be present, the bondholders and proxies present shall by a majority
vote, irrespective of the amount of their holdings, elect another person or
other persons from those present to act as temporary Chairman and/or Secretary.
A permanent Chairman and a permanent Secretary of such meeting shall be elected
from those present by the bondholders and proxies present by a majority vote
irrespective of the amount of their holdings. The Corporate Trustee, if
represented at the meeting, shall appoint two Inspectors of Votes who shall
decide as to the right of anyone to vote and shall count all votes cast at such
meeting, except votes on the election of a Chairman and Secretary, both
temporary and permanent, as aforesaid, and who shall make and file with the
permanent Secretary of the meeting their verified written report in duplicate of
all such votes so cast at said meeting. If the Corporate Trustee shall not be
represented at the meeting or shall fail to nominate such Inspectors of Votes or
if either Inspector of Votes fails to attend the meeting, the vacancy shall be
filled by appointment by the permanent Chairman of the meeting.
SECTION 112. The holders of a majority in aggregate principal amount of
the bonds Outstanding hereunder of the series with respect to which a meeting
shall have been called as hereinbefore provided, considered as one class, shall
constitute a quorum for a meeting of holders of bonds of such series; provided,
however, that if any action is to be taken at such meeting which this Indenture
expressly provides may be taken by the holders of not less than sixty per centum
(60%) in principal amount of the bonds of such series Outstanding hereunder,
considered as one class, the holders of such percentage in principal amount of
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the bonds of such series Outstanding hereunder, considered as one class, shall
constitute a quorum; and provided, further, that if any action is to be taken at
such meeting which this Indenture expressly provides may be taken by the holders
of a specified percentage which is less than a majority in principal amount of
the bonds of such series Outstanding hereunder, considered as one class, the
holders of such specified percentage in principal amount of the bonds of such
series Outstanding hereunder, considered as one class, shall constitute a
quorum. In the absence of a quorum within one hour of the time appointed for any
such meeting, the meeting shall, if convened at the request of holders of bonds
of such series, be dissolved. In any other case the meeting may be adjourned for
such period or periods as may be determined by the chairman of the meeting prior
to the adjournment thereof.
SECTION 113. Any modification or alteration of this Indenture and/or of
any indenture supplemental hereto and/or of the rights and obligations of the
Company and/or the rights of the holders of bonds and/or coupons issued
hereunder in any particular may be made at a meeting of bondholders duly
convened and held in accordance with the provisions of this Article, but only by
resolution duly adopted by the affirmative vote of the holders of sixty per
centum (60%) or more in principal amount of the bonds Outstanding hereunder,
considered as one class (or, if such modification or alteration shall directly
affect the holders of bonds of one or more, but less than all, series then
Outstanding hereunder, then the affirmative vote only of the holders of sixty
per centum (60%) or more in aggregate principal amount of the bonds of the
series so directly affected then Outstanding hereunder, considered as one
class), when such meeting is held, and in every case approved by Resolution of
the Board of Directors of the Company as hereinafter specified; provided,
however, that no such modification or alteration shall, without the consent of
the holder of any bond issued hereunder affected thereby, permit (1) the
extension of the maturity of the principal of, or interest on, such bonds, or
(2) the reduction in such principal or the rate of interest thereon or any other
modification in the terms of payment of such principal or interest, or (3) the
creation of any lien ranking prior to, or on a parity with, the Lien of this
Indenture with respect to any of the Mortgaged and Pledged Property, or (4) the
deprivation of any non-assenting bondholder of a lien upon the Mortgaged and
Pledged Property for the security of his bonds (subject only to Excepted
Encumbrances) or (5) the reduction of the percentage required by the provisions
of this Section for the taking of any action under this Section with respect to
any bond Outstanding hereunder. For all purposes of this Article, the Trustees
shall be entitled to rely upon an Opinion of Counsel with respect to the extent,
if any, as to which any action taken at such meeting affects the rights under
this Indenture or under any indenture supplemental hereto of any holders of
bonds then Outstanding hereunder.
Bonds owned and/or held by and/or for account of and/or for the benefit
or interest of the Company, or any corporation of which the Company shall own
twenty-five per centum (25 %) or more of the outstanding voting stock, shall not
be deemed Outstanding for the purpose of any vote or of any calculation of bonds
Outstanding in Article XVI hereof or in this Article XVIII or for the purpose of
the quorum provided for in Section 112 of this Article; provided, however, that
bonds so owned or held which have been pledged in good faith may be regarded as
Outstanding for purposes of this paragraph if the pledgee establishes to the
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satisfaction of the Corporate Trustee the pledgee's right to vote or give
consents with respect to such bonds and that the pledgee is not the Company or a
corporation of which the Company shall own twenty-five per centum (25 %) or more
of the outstanding voting stock. For all purposes of this Indenture, the
Corporate Trustee, the Chairman and Secretary of any meeting held pursuant to
the provisions of this Article XVIII and the Inspectors of Votes at any such
meeting shall (unless the fact is challenged at such meeting by any holder of
bonds Outstanding hereunder entitled to vote at such meeting and a contrary fact
is established) be entitled conclusively to rely upon a notification in writing
by the Company, specifying the principal amount of bonds Outstanding hereunder
owned by or held by or for the account of or for the benefit or interest of the
Company or any corporation of which the Company shall own twenty-five per centum
(25 %) or more of the outstanding voting stock, or stating that no such bonds
are so owned or held. In case the meeting shall have been called otherwise than
on the written request of the Company, the Corporate Trustee shall be entitled
conclusively to assume that none of the bonds Outstanding hereunder is so owned
or held unless a notification by the Company is furnished as in this paragraph
provided or unless the fact is challenged at such meeting by any holder of bonds
Outstanding hereunder and a contrary fact is established.
SECTION 114. A record in duplicate of the proceedings of each meeting
of bondholders shall be prepared by the permanent Secretary of the meeting and
shall have attached thereto the original reports of the Inspectors of Votes, and
affidavits by one or more persons having knowledge of the facts showing a copy
of the notice of the meeting, and showing that said notice was mailed and
published as provided in Section 108 hereof. Such record shall be signed and
verified by the affidavits of the permanent Chairman and the permanent Secretary
of the meeting, and one duplicate thereof shall be delivered to the Company and
the other to the Corporate Trustee for preservation by the Corporate Trustee.
Any record so signed and verified shall be proof of the matters therein stated,
and if such record shall also be signed and verified by the affidavit of a duly
authorized representative of the Corporate Trustee, such meeting shall be deemed
conclusively to have been duly convened and held and such record shall be
conclusive, and any resolution or proceeding stated in such record to have been
adopted or taken, shall be deemed conclusively to have been duly adopted or
taken by such meeting. A true copy of any resolution adopted by such meeting
shall be mailed by the Corporate Trustee to each registered holder of bonds
Outstanding hereunder addressed to him at his address appearing on the registry
books and to each holder of any such bond then Outstanding hereunder payable to
bearer whose name and address appear upon the last list of bondholders furnished
to the Corporate Trustee by the Company pursuant to the provisions of Section 43
hereof, addressed to him at such address, and proof of such mailing by the
affidavit of some person having knowledge of the fact shall be filed with the
Corporate Trustee, but failure to mail copies of such resolution as aforesaid
shall not affect the validity thereof. No such resolution shall be binding until
and unless such resolution is approved by Resolution of the Board of Directors
of the Company, of which such Resolution of approval, if any, it shall be the
duty of the Company to file a copy certified by the Secretary or an Assistant
Secretary of the Company with the Corporate Trustee, but if such Resolution of
the Board of Directors of the Company is adopted and a certified copy thereof is
filed with the Corporate Trustee, the resolution so adopted by such meeting
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shall be deemed conclusively to be binding upon the Company, the Corporate
Trustee and the holders of all bonds and coupons issued hereunder, at the
expiration of sixty (60) days after such filing, except in the event of a final
decree of a court of competent jurisdiction setting aside such resolution, or
annulling the action taken thereby in a legal action or equitable proceeding for
such purposes commenced within such sixty (60) day period; provided, however,
that no such resolution of the bondholders, or of the Company, shall in any
manner be so construed as to change or modify any of the rights, immunities, or
obligations of the Corporate Trustee without its written assent thereto.
SECTION 115. Bonds authenticated and delivered after the date of any
bondholders' meeting may bear a notation in form approved by the Corporate
Trustee as to the action taken at meetings of bondholders theretofore held, and
upon demand of the holder of any bond Outstanding at the date of any such
meeting and presentation of his bond for the purpose at the principal office of
the Corporate Trustee, the Company shall cause suitable notation to be made on
such bond by endorsement or otherwise as to any action taken at any meeting of
bondholders theretofore held. If the Company or the Corporate Trustee shall so
determine, new bonds so modified as in the opinion of the Corporate Trustee and
the Board of Directors of the Company to conform to such bondholders' resolution
shall be prepared, authenticated and delivered, and upon demand of the holder of
any bond then Outstanding and affected thereby shall be exchanged without cost
to such bondholder for bonds then Outstanding hereunder upon surrender of such
bonds with all unmatured coupons, if any, appertaining thereto. The Company or
the Corporate Trustee may require bonds Outstanding to be presented for notation
or exchange as aforesaid if either shall see fit to do so. Instruments
supplemental to this Indenture embodying any modification or alteration of this
Indenture or of any indenture supplemental hereto made at any bondholders'
meeting and approved by Resolution of the Board of Directors of the Company, as
aforesaid, may be executed by the Corporate Trustee and the Company and upon
demand of the Corporate Trustee, or if so specified in any resolution adopted by
any such bondholders' meeting, shall be executed by the Company and the
Corporate Trustee.
SECTION 116. (A) Anything in this Article XVIII contained to the
contrary notwithstanding, the Corporate Trustee shall receive the written
consent (in any number of instruments of similar tenor executed by bondholders
or by their attorneys appointed in writing) of the holders of sixty per centum
(60%) or more in principal amount of the bonds Outstanding hereunder, considered
as one class (or, if any action proposed to be taken shall directly affect the
holders of bonds of one or more, but less than all, series then Outstanding
hereunder, then the consent only of the holders of sixty per centum (60%) or
more in aggregate principal amount of bonds of the series so directly affected
then Outstanding hereunder, considered as one class), at the time the last such
needed consent is delivered to the Corporate Trustee, in lieu of the holding of
a meeting pursuant to this Article XVIII and in lieu of all action at such a
meeting and with the same force and effect as a resolution duly adopted in
accordance with the provisions of Section 113 hereof.
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(B) Instruments of consent shall be witnessed or in the alternative may
(a) have the signature guaranteed by a bank or trust company or a registered
dealer in securities, (b) be acknowledged before a Notary Public or other
officer authorized to take acknowledgments, or (c) have their genuineness
otherwise established to the satisfaction of the Corporate Trustee.
The amount of bonds payable to bearer, and the series and serial
numbers thereof, held by a person executing an instrument of consent (or whose
attorney has executed an instrument of consent in his behalf), and the date of
his holding the same, may be proved by exhibiting the bonds to and obtaining a
certificate executed by (i) any bank or trust or insurance company organized
under the laws of the United States of America or of any State thereof, or (ii)
any trustee, secretary, administrator or other proper officer of any pension,
welfare, hospitalization or similar fund or funds, or (iii) the United States of
America, any Territory thereof, the District of Columbia, any State of the
United States, any municipality in any State of the United States or any public
instrumentality of the United States, or of any State or of any Territory, or
(iv) any other person or corporation satisfactory to the Corporate Trustee. A
bondholder in any of the foregoing categories may sign a certificate in his own
behalf.
Each such certificate shall be dated and shall state in effect that as
of the date thereof a coupon bond or bonds bearing a specified serial number or
numbers was exhibited to the signer of such certificate. The holding by the
person named in any such certificate of any bonds specified therein shall be
presumed to continue unless (1) any certificate bearing a later date issued in
respect of the same bond shall be produced, (2) the bond specified in such
certificate (or any bond or bonds issued in exchange or substitution for such
bond) shall be produced, or (3) the bond specified in such certificate shall be
registered as to principal in the name of another holder or shall have been
surrendered in exchange or a fully registered bond registered in the name of
another holder. The Corporate Trustee may nevertheless in its discretion require
further proof in cases where it deems further proof desirable. The ownership of
registered bonds shall be proved by the registry books.
(C) Until such time as the Corporate Trustee shall receive the written
consent of the necessary per centum in principal amount of the bonds required by
the provisions of subsection (A) above for action contemplated by such consent,
any holder of a bond, the serial number of which is shown by the evidence to be
included in the bonds the holders of which have consented to such action, may,
by filing written notice with the Corporate Trustee at its principal office and
upon proof of holding as provided in subsection (B) above, revoke such consent
so far as it concerns such bond. Except as aforesaid, any such action taken by
the holder of any bond shall be conclusive and binding upon such holder and upon
all future holders of such bond (and any bond issued in lieu thereof or
exchanged therefor), irrespective of whether or not any notation of such consent
is made upon such bond, and in any event any action taken by the holders of the
percentage in aggregate principal amount of the bonds specified in subsection
(A) above in connection with such action shall be conclusively binding upon the
Company, the Corporate Trustee and the holders of all the bonds.
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EXHIBIT G
AMENDMENTS TO MORTGAGE
(1) The amendment of Section 5 of the Original Mortgage to delete
the second paragraph thereof and to substitute therefor three paragraphs reading
as follows:
In the event that in any certificate filed with the Trustee in
connection with any of the transactions referred to in clauses
(2),(3),(5),(6) or (7) of this Section, only a part of the Cost or fair
value of the Property Additions described in such certificate shall be
required for the purposes of such certificate, then such Property
Additions shall be deemed to be Funded Property only to the extent so
required for the purpose of such certificate.
All Funded Property that shall be abandoned, destroyed,
released or otherwise disposed of free of the Lien of this Indenture
shall for the purpose of Section 4 hereof be deemed Funded Property
retired and for other purposes of this Indenture shall thereupon cease
to be Funded Property but as in this Indenture provided may at any time
thereafter again become Funded Property. Neither any reduction in the
Cost or book value of property recorded in the plant account of the
Company, nor the transfer of any amount appearing in such account to
intangible and/or adjustment accounts, otherwise than in connection
with actual retirements of physical property so abandoned, destroyed,
released or disposed of, and otherwise than in connection with the
removal of such property in its entirety from plant account, shall be
deemed to constitute a retirement of Funded Property.
The Company may make allocations, on a pro-rata or other
reasonable basis, for the purpose of determining the extent to which
fungible properties, reflected in the same generic class of property in
the Company's books of account and not otherwise specifically
identified, constitute Funded Property or Funded Property retired.
(2) The deletion of Section 7 of the Original Mortgage in its entirety
and the substitution therefor of a new Section 7 reading as follows:
SECTION 7. The term "Net Earning Certificate" shall mean a certificate
signed and verified by the President or a Vice-President and the Treasurer or an
Assistant Treasurer of the Company, stating
(A) the Net Earnings of the Company for a period of twelve
(12) consecutive calendar months within the eighteen (18) calendar
months immediately preceding the first day of the month in which the
application for the authentication and delivery under this Indenture of
bonds then applied for is made, specifying;
(1) its operating revenues (which may include revenues
subject when collected or accrued to possible refund at a future
date), with the principal divisions thereof;
(2) its operating expenses, with the principal divisions
thereof;
(3) the amount remaining after deducting such operating
expenses from such operating revenues;
(4) its rental expenses for plants or systems not
otherwise deducted from revenues or from other income in such
certificate;
(5) the balance remaining after deducting such rental
expenses from the amount required to be stated in such
certificate by clause (3) of this Section;
(6) its rental revenues from plants or systems not
otherwise included in revenues, or in other income (net) in such
certificate;
(7) the sum of the amounts required to be stated in such
certificate by clauses (5) and (6) of this Section;
(8) its other income (net), which may include any
portion of the allowance for funds used during construction or
any portion of the allowance for funds used for conservation
expenditures (or any analogous amount), in either case, which is
not included in "other income" (or any analogous item) in the
Company's books of account;
(9) the sum of the amounts required to be stated in such
certificate by clauses (7) and (8) of this Subdivision (A);
(10) the amount, if any, by which the aggregate of (a)
such other income (net) and (b) that portion of the amount
required to be stated in such certificate by clause (7) of this
Section which, in the opinion of the signers, is directly
derived from the operations of the property (other than paving,
grading and other improvements to, under or upon public high-
ways, bridges, parks or other public properties of analogous
character) not subject to the Lien of this Indenture at the date
of such certificate, exceeds twenty per centum (20%) of the sum
required to be stated by clause (9) of this Section;
(11) the Net Earnings of the Company for such period of
twelve (12) consecutive calendar months (being the amount
remaining after deducting in such certificate the amount
required to be stated by clause (10) of this Section from the
sum required to be stated by clause (9) of this Section);
(B) the Annual Interest Requirements, being the interest
requirements for twelve (12) months upon:
(i) all bonds Outstanding hereunder at the date of
such certificate, except any for the refunding of which the
bonds applied for are to be issued;
(ii) all bonds then applied for in pending applica-
tions, including the application in connection with which such
certificate is made;
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(iii) all bonds deposited with or held in pledge by
the Corporate Trustee under any of the provisions of this
Indenture under conditions such that they may be issued or
reissued;
(iv) all Prior Lien Bonds which will be Outstanding
immediately after the authentication of the bonds then applied
for in pending applications, including the application in
connection with which such certificate is made; and
(v) the principal amount of all other indebtedness
(except indebtedness for the purchase, payment or redemption
of which moneys in the necessary amount shall have been
deposited with or be held by the Corporate Trustee or the
trustee or other holder of a lien prior hereto with
irrevocable direction so to apply the same; provided that, in
the case of redemption, the notice required therefor shall
have been given or have been provided for to the satisfaction
of the Corporate Trustee), outstanding in the hands of the
public on the date of such certificate and secured by lien
prior or equal to the Lien of this Indenture upon property of
the Company subject to the Lien of this Indenture, if said
indebtedness has been assumed by the Company or if the Company
customarily pays the interest upon the principal thereof.
In calculating such Net Earnings, all the Company's expenses
for taxes (other than income, profits and other taxes measured by, or
dependent on, net income), assessments, rentals, insurance and expenses
for current repairs and maintenance, shall be included in its operating
expenses, or otherwise deducted from its revenues or other income;
provided, however, that there shall not be required to be so included
or deducted (A) any provision for renewal, replacement, depreciation,
depletion or retirement of property, or for amortization, (B) expenses
or provisions for interest on any of its indebtedness or for the
amortization of debt discount, expense or loss on reacquired debt for
any maintenance and replacement, improvement or sinking fund or other
device for the retirement of any indebtedness, (C) expenses or
provisions for any non-recurring charge to income of whatever kind or
nature (including without limitation the recognition of expense due to
the non-recoverability of investment), whether or not recorded as an
extraordinary item in the Company's books of account or (D) provisions
for any refund of revenues previously collected or accrued subject to
possible refund.
In calculating such Annual Interest Requirements (A) if any
bonds issued hereunder, Prior Lien Bonds and/or other indebtedness
bears interest at a variable rate or rates, the Annual Interest
Requirements thereon shall be determined by reference to the rate or
rates in effect on the date next preceding the date of the initial
authentication and delivery of the bonds then applied for in the
application in connection with which the Net Earning Certificate is
made, (B) if such bonds then applied for and/or any bonds applied for
in any other pending application are to bear interest at a variable
rate or rates, the Annual Interest Requirements thereon shall be
determined by reference to the rate or rates to be in effect at the
time of the initial authentication and delivery thereof, and (C) the
Annual Interest Requirements on bonds issued or to be issued hereunder,
Prior Lien Bonds and any other indebtedness shall be determined by
reference to the rate or rates at which such obligations are stated by
their terms to bear simple interest, without regard to the effective
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interest cost to the Company of such obligations and without regard to
the stated interest rate or rates upon, or the effective interest cost
to the Company of, other obligations for which such obligations are or
are to be pledged or otherwise delivered as security.
If any of the property of the Company owned by it at the time
of the making of any Net Earning Certificate shall have been acquired
during or after any period for which Net Earnings of the Company are to
be computed, the Net Earnings of such property (computed in the manner
in this Section provided for the computation of the Net Earnings of the
Company) during such period or such part of such period as shall have
preceded the acquisition thereof, to the extent that the same have not
otherwise been included and unless such property shall have been
acquired in exchange or substitution for property the earnings of which
have been included, may, at the option of the Company, be included in
the Net Earnings of the Company for all purposes of this Indenture.
Net Earnings, whether of the Company, or of a particular
property, shall be determined in accordance with accepted principles of
accounting.
(3) (a) The amendment of Section 25 of the Original Mortgage to
delete the words "sixty per centum (60%)" from the first sentence thereof and to
substitute therefor the words "seventy per centum (70%)";
(b) The amendment of Section 26 of the Original Mortgage,
(i) to delete the words "ten sixths (10/6)" from the
first paragraph thereof and to substitute therefor the words
"ten sevenths (10/7)";
(ii) to delete the words "sixty per centum (60%)"
from each of clause (c) and clause (d) of the fourth paragraph
thereof and to substitute therefor the words "seventy per
centum (70%)";
(iii) to insert immediately following the words
"fifteen per centum of after clause (d) in the fourth
paragraph thereof the words "the sum of (1)" and to insert at
the end of such paragraph the words "and (2) all Prior Lien
Bonds to be Outstanding upon the granting of such
application." and
(iv) to delete the words "fifty per centum (50%)"
from the fourth paragraph thereof and to substitute therefor
the words "seventy per centum (70%)".
(c) The amendment of Section 59 of the Original Mortgage,
(i) to insert the phrase "ten-sevenths (10/7) of" at the
beginning of clause (c) of subdivision (4) of the first
paragraph thereof;
(ii) to delete the words "sixty per centum (60%)"
from the proviso to subdivision (4) of the first paragraph
thereof and to substitute therefor the words "seventy per
centum (70%)"; and
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(iii) to delete the words "sixty per centum (60%)"
from the second and third paragraphs thereof and to substitute
therefor, in each case, the words "seventy per centum (70%)".
(d) The amendment of Section 61 of the Original Mortgage
(i) to insert the words "ten sevenths (10/7) of"
immediately before the words "the principal amount ..." in
subdivision (2) of the first paragraph thereof; and
(ii) to delete the words "sixty per centum (60%)"
from the second and third paragraphs thereof and to substitute
therefor, in each case, the words "seventy per centum (70%)";
(4) The amendment in its entirety of Section 38 of the Original
Mortgage to read as set forth below, and the deletion of all references in the
Mortgage to Section 38 to the extent such references are rendered nugatory by
such amendment:
Section 38. The Company will cause (or, with respect
to property owned in common with others, make reasonable
effort to cause) the Mortgaged and Pledged Property, as an
operating system or systems, to be maintained and kept in good
repair, working order and condition and will cause (or, with
respect to property owned in common with others, make
reasonable effort to cause) to be made such repairs, renewals
and replacements thereof as, in the judgment of the Company,
may be necessary in order that the operation of the Mortgaged
and Pledged Property, considered as an operating system or
systems, may be conducted in accordance with common industry
practice; provided, however, that nothing in this Section
shall prevent the Company from discontinuing, or causing or
consenting to the discontinuance of, the operation and
maintenance of any of its properties if such discontinuance
is, in the judgment of the Company, desirable in the conduct
of its business.
After the effectiveness of such amendment, among other things,
Funded Property shall not include any Property Additions that have at
any time been deemed to have been made the basis of a credit under the
provisions of Section 38, as in effect prior to such amendment, or
substituted for other Property Additions that have so been deemed to
have been made the basis of such a credit.
(5) (a) The amendment of Section 85 of the Mortgage, as amended,
to add thereto a second paragraph reading as follows:
Nothing in this Indenture shall prevent any consolidation
or merger after the consummation of which the
Company would be the surviving or resulting corporation or any
conveyance, transfer or lease of any part of the Mortgaged and
Pledged Property which does not constitute the entirety, or
substantially the entirety, thereof.
; and
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(b) The amendment of Section 87 of the Original Mortgage to
add thereto a second paragraph reading as follows:
In case the Company shall enter into any transaction
contemplated in the second paragraph of Section 85 hereof,
unless an indenture executed and delivered by the Company and
the Trustee shall otherwise provide, this Indenture shall not
become or be a lien upon any of the properties or franchises
acquired by the Company in or as a result of such transaction
or upon any improvements, extensions or additions thereto or
any renewals or replacements thereof.
(6) The amendment of Section 102 of the Original Mortgage to insert
immediately after the first paragraph thereof a new paragraph reading as
follows:
(A) So long as no event which is, or after notice or
lapse of time, or both, would become, a Completed Default (as
defined in Section 65 hereof) shall have occurred and be
continuing, if the Company shall have delivered to the Trustee
(i) an instrument executed by order of its Board of Directors
and duly acknowledged by proper officers of the Company
appointing a successor Corporate Trustee, Individual Trustee
or other trustee, effective as of a date specified therein,
and (ii) an instrument of acceptance of such appointment,
effective as of such date, by such successor trustee, such
trustee shall be deemed to have resigned as contemplated in
Section 100, and such successor trustee shall be deemed to
have been appointed pursuant to the first paragraph of this
Section, all as of such date, and all other provisions of this
Article shall be applicable to such resignation, appointment
and acceptance except to the extent inconsistent with this
paragraph
(7) The amendment of Section 120 of the Original Mortgage to read as
follows:
SECTION 120. Anything in this Indenture to the contrary
notwithstanding, without the consent of any holders of bonds, the
Company and the Trustees, at any time and from time to time, may enter
into one or more indentures supplemental hereto, in form satisfactory
to the Trustees, for any of the following purposes:
(a) to evidence the succession of another corporation to
the Company and the assumption by any such successor of the
covenants of the Company herein and in the bonds, all as
provided in Article XV hereof, or
(b) to add one or more covenants of the Company or
other provisions for the benefit of all holders of the bonds
or for the benefit of the holders of, or to remain in effect
only so long as there shall be Outstanding, bonds of one or
more specified series, and to make the occurrence of a default
in the performance of any of such additional covenants an
additional "Completed Default" under Section 65 permitting the
enforcement of all or any of the several remedies provided in
this Indenture, as herein set forth; provided, however, that
in respect of any such additional covenant, such supplemental
indenture may provide for a particular period of grace after
default (which period may be shorter or longer than those
allowed in the case of other defaults) or may provide for an
immediate enforcement upon such default, or may (subject to
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the provisions of applicable law) limit the remedies available
to the Trustees upon such default; or to provide that the
occurrence of one or more specified events shall constitute
additional "Completed Defaults" under Section 65 as if set
forth therein, or to surrender any right or power herein
conferred upon the Company, which additional "Completed
Default" or surrender may be limited so as to remain in effect
only so long as bonds of one or more specified series shall
remain Outstanding; or
(c) to correct or amplify the description of any
property at any time subject to the Lien of this Indenture, or
better to assure, convey and confirm unto the Trustees any
property subject or required to be subjected to the Lien of
this Indenture, or to subject to the Lien of this Indenture
additional property; or
(d) to change or eliminate any provision of this
Indenture or to add any new provision to this Indenture;
provided, however, that no such change, elimination or
addition shall adversely affect the interests of the holders
of bonds of any series in any material respect; or
(e) to establish the form or terms of bonds of any
series as contemplated by Article II; or
(f) to provide for the procedures required to permit the
Company to utilize, at its option, a non-certificated system of
registration for all or any series of bonds; or
(g) to change any place or places where (1) the
principal of and premium, if any, and interest, if any, on all
or any series of bonds shall be payable, (2) all or any series
of bonds may be surrendered for registration of transfer, (3)
all or any series of bonds may be surrendered for exchange and
(4) notices and demands to or upon the Company in respect of
all or any series of bonds and this Indenture may be served;
or
(h) to increase or decrease the amount set forth in
Section 20 and Section 121; or
(i) to cure any ambiguity, to correct or supplement
any provision herein which may be defective or inconsistent
with any other provision herein; or to make any other changes
to the provisions hereof or to add other provisions with
respect to matters or questions arising under this Indenture,
provided that such other changes or additions shall not
adversely affect the interests of the holders of bonds of any
series in any material respect.
Without limiting the generality of the foregoing, if the Trust
Indenture Act of 1939, as in effect at any time and from time to time,
(x) shall require one or more changes to any
provisions hereof or the inclusion herein of any additional
provisions, or shall by operation of law be deemed to effect
such changes or incorporate such provisions by reference or
G-7
otherwise, this Indenture shall be deemed to have been amended
so as to conform to the Trust Indenture Act of 1939 as then in
effect, and the Company and the Trustees may, without the
consent of any holders of bonds, enter into an indenture
supplemental hereto to evidence such amendment hereof; or
(y) shall permit one or more changes to, or the
elimination of, any provisions hereof which shall theretofore
have been required by the Trust Indenture Act of 1939 to be
contained herein or are contained herein to reflect any
provisions of the Trust Indenture Act of 1939, this Indenture
shall be deemed to have been amended to effect such changes or
elimination, and the Company and the Trustees may, without the
consent of any holders of bonds, enter into an indenture
supplemental hereto to evidence such amendment hereof.
G-8
EXHIBIT H
AMENDMENTS TO MORTGAGE
(1) The amendment of Section 100 of the Original Mortgage to read as
follows:
Section 100. The Trustees, or any successor or
successors hereafter appointed, or any of them, may at any
time resign and be discharged of the trusts hereby created by
giving written notice to the Company and thereafter publishing
notice thereof, specifying a date when such resignation shall
take effect, once in a Daily Newspaper of general circulation
in the Borough of Manhattan, The City of New York, upon any
business day of the week, and such resignation shall take
effect upon the day specified in such notice unless previously
a successor trustee shall have been appointed by the
bondholders or the Company as hereinafter provided, and in
such event such resignation shall take effect immediately on
the appointment of such successor trustee.
(2) The amendment of the present second sentence of the first
paragraph of Section 102 of the Original Mortgage to read as follows:
The Company shall publish notice of any such appointment made
by it once in a Daily Newspaper of general circulation in the
Borough of Manhattan, The City of New York, upon any business
day of the week.
EXHIBIT 4(c)
Execution Copy
AVISTA CORPORATION
7.75% FIRST MORTGAGE BONDS DUE 2007
----------
EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
December 19, 2001
Goldman, Sachs & Co.
BNY Capital Markets, Inc.
Fleet Securities, Inc.
TD Securities (USA) Inc.
c/o 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 7.75% First Mortgage Bonds due
2007. 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 Mortgage,
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.
"Liquidated Damages" shall have the meaning assigned thereto in
Section 2(c) hereof.
"Mortgage" shall mean the Company's Mortgage and Deed of Trust,
dated as of June 1, 1939, to Citibank, N.A., as Trustee, as amended and
supplemented and as it will be further supplemented by a supplemental
indenture establishing the Securities.
"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 December 12, 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)); (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
2
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 restrictions on transferability thereof, under the
Securities Act or otherwise, is removed by the Company or pursuant to
the Mortgage; (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 Default Period" 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 First Mortgage Bonds,
7.75% Series due 2007 of the Company to be issued and sold to the
Purchasers, and securities issued in exchange therefor or in lieu
thereof pursuant to the Mortgage.
"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
3
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
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 Mortgage or is the Mortgage 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 consummated within 225 days following the Closing Date
or (iii) the Exchange Offer is not available to any holder of the
4
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 or be declared effective no later than 90 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
5
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, will be
(1) with respect to the first 90-day period immediately following the
occurrence of the first Registration Default, an amount equal to $0.05 per
week per $1,000 principal amount of Securities outstanding; and (2) an
additional $0.05 per week per $1,000 principal amount of Securities with
respect to each subsequent 90-day period, up to a maximum amount of
Liquidated Damages for all Registration Defaults of $0.20 per week per
$1,000 principal amount of Securities outstanding, to and including the
first week in which all Registration Defaults have been cured, but only so
long as any Securities are Registrable Securities.
(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 Mortgage under the Trust Indenture Act of 1939 or
maintain such qualification, as applicable .
(b) In the event that such qualification would require the appointment
of a new trustee under the Mortgage, the Company shall appoint a new
trustee thereunder pursuant to the applicable provisions of the Mortgage.
(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
6
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;
(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;
7
(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,
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
8
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
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
9
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
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
10
Securities and any discount, commission or other compensation payable
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
such jurisdiction or (3) make any changes to its certificate of
incorporation or by-laws or any agreement between it and its
stockholders;
11
(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,
Iithographed 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
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
12
such Shelf Registration Statement and any documents incorporated by
reference therein and of the Mortgage 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;
(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
13
(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
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.
14
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 Mortgage, 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.
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
15
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
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 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.
16
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 such 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.
(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
17
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
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
18
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
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.
19
(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
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
20
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
Mortgage and the form of Securities) or delivered pursuant hereto which
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.
21
(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 Mortgage
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
Mortgage.
(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.
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/ Christy Burmeister-Smith
----------------------------------------
Name: Christy Burmeister-Smith
Title: Vice President & Controller
Accepted as of the date hereof:
Goldman, Sachs & Co.
BNY Capital Markets, Inc.
Fleet Securities, Inc.
TD Securities (USA) Inc.
By: /s/ Goldman, Sachs & Co.
-------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
22
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") First
Mortgage Bonds, 7.75% Series due 2007 (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 First Mortgage Bonds, 7.75% Series due 2007 (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).
A-4
23
State any exceptions here:
(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
A-5
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
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
Citibank, N.A.
Avista Corporation
c/o Citibank, N.A.
[Address of Trustee]
Attention: Trust Officer
Re: Avista Corporation (the "Company")
First Mortgage Bonds, 7.75% Series due 2007 (the "Securities")
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 Securities is named as a "Selling Holder" in the
Prospectus dated [DATE] or in supplements thereto, and that the aggregate
principal amount of the Securities transferred are the Securities listed in such
Prospectus opposite such owner's name.
Dated:
Very truly yours,
_________________________
(Name)
By: _________________________
(Authorized Signature)
B-1
EXHIBIT 4(d)
AVISTA CORPORATION
--------------------------
LETTER OF TRANSMITTAL
Avista Corp. is offering to issue its
7.75% FIRST MORTGAGE BONDS DUE 2007
(REGISTERED UNDER THE SECURITIES ACT OF 1933)
in exchange for its
7.75% FIRST MORTGAGE BONDS DUE 2007
(UNREGISTERED UNDER THE SECURITIES ACT OF 1933)
PURSUANT TO THE PROSPECTUS, DATED , 2002
- --------------------------------------------------------------------------------
THIS EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M. NEW YORK CITY TIME, ON ,
2002 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:
CITIBANK, N.A.
By Registered or Certified Mail: By Facsimile: By Hand or Overnight Courier:
(212) 825-3483 Citibank, N.A.
Citibank, N.A. 111 Wall Street
111 Wall Street Confirm by Telephone: 14th Floor/Zone 3
14th Floor/Zone 3 1-800-422-2066 New York, New York 10043
New York, New York 10043 Attn: Sebastien Andrieszyn
Telephone: (212) 657-9055
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 , 2002 (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 $150,000,000 of its
7.75% First Mortgage Bonds due 2007 (the "New Bonds"), 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 7.75% First
Mortgage Bonds due 2007 (the "Old Bonds" and, together with the New Bonds, the
"Bonds"), which were not so registered. Capitalized terms used but not defined
herein have the meanings given to them in the Prospectus.
In order for any Holder (as herein defined) of Old Bonds to tender all or
any portion of such Old Bonds, 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 Bonds are
to be forwarded herewith or, if a tender of Old Bonds 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 Bonds whose certificates are not immediately available, or who are unable
to deliver their certificates or confirmation of the book-entry tender of their
Old Bonds 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 Bonds 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.
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF OR AN AGENT'S MESSAGE IN LIEU
THEREOF (TOGETHER WITH THE CERTIFICATES FOR OLD BONDS OR A BOOK-ENTRY
CONFIRMATION AND ALL OTHER REQUIRED DOCUMENTS OR THE NOTICE OF GUARANTEED
DELIVER) MUST BE RECEIVED BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK
CITY TIME, ON THE EXPIRATION DATE.
By causing Old Bonds 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
Bonds, 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 Bonds 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) any person in whose name Old Bonds 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 Bonds are held
of record by DTC. Holders who wish to tender their Old Bonds 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 Bonds 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 Bonds, either make appropriate arrangements
to register ownership of the Old Bonds in such beneficial owner's name or obtain
a properly completed bond power from the registered Holder of the Old Bonds. The
transfer of registered ownership may take considerable time.
2
Complete the appropriate boxes below to indicate the Old Bonds 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 Bonds should be
listed on a separate signed schedule affixed hereto.
THE INSTRUCTIONS INCLUDED WITH THIS LETTER OF TRANSMITTAL MUST BE FOLLOWED.
QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF THE PROSPECTUS
AND THIS LETTER MAY BE DIRECTED TO THE EXCHANGE AGENT.
- ------------------------------------------------------ ------------------ ----------------------- --------------------
DESCRIPTION OF OLD BONDS 1 2 3
- ------------------------------------------------------ ------------------ ----------------------- --------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S) CERTIFICATE AGGREGATE PRINCIPAL PRINCIPAL AMOUNT
AMOUNT OF OLD BOND(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) REPRESENTED BY
APPEAR(S) ON CERTIFICATE(S)) NUMBER(S)* CERTIFICATE TENDERED**
- ------------------------------------------------------ ------------------ ----------------------- --------------------
------------------ ----------------------- --------------------
------------------ ----------------------- --------------------
------------------ ----------------------- --------------------
TOTAL
- ----------------------------------------------------------------------------------------------------------------------
* Need not be completed if Old Bonds 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 Bonds
represented by the Old Bonds indicated in column 2. See Instruction 2. Old Bonds 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 BONDS 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:
------------------------------------------------------
By crediting Old Bonds to the Exchange Agent's Account at DTC in accordance
with DTC's Automated Tender Offer Program ("ATOP") and by complying with
applicable ATOP procedures with respect to the Exchange Offer, including
transmitting an Agent's Message to the Exchange Agent in which the Holder of Old
Bonds acknowledges and agrees to be bound by the terms of this Letter of
Transmittal, the participant in ATOP confirms on behalf of itself and the
beneficial owners of such Old Bonds all provisions of this Letter of Transmittal
applicable to it and such beneficial owners as if it had completed the
information required herein and executed and transmitted this Letter of
Transmittal to the Exchange Agent.
[ ] CHECK HERE IF TENDERED OLD BONDS 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 Eligible Institution that guaranteed delivery:
------------------------
3
IF DELIVERY BY BOOK-ENTRY TRANSFER, COMPLETE THE FOLLOWING:
Account Number Transaction Code Number
----------------------- ----------------
Name of Tendering Institution
-------------------------------------------------
[ ] CHECK HERE IF TENDERED OLD BONDS 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:
-----------------------------------------------------------------------
-----------------------------------------------------------------------
If the undersigned is not a broker-dealer, the undersigned represents that
it is not participating in, and does not intend to participate in, a
distribution of the New Bonds. If the undersigned is a broker-dealer that will
receive New Bonds for its own account in exchange for Old Bonds, it represents
that the Old Bonds to be exchanged for New Bonds were acquired by it as a result
of market-making or other trading activities and acknowledges that it will
deliver a prospectus meeting the requirements of the Securities Act in
connection with any resale of such New Bonds; 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.
4
TENDER OF OLD BONDS
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
Bonds indicated above. Subject to, and effective upon, the acceptance for
exchange of the Old Bonds 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 Bonds 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 Bonds 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 Bonds
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 (a) any New Bonds
acquired in exchange for Old Bonds tendered hereby will have been acquired in
the ordinary course of business of the person receiving such New Bonds, whether
or not such person is the undersigned, (b) neither the Holder of such Old Bonds
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 Bonds, (c) neither the
Holder of such Old Bonds nor any such other person is an "affiliate," as defined
in Rule 405 under the Securities Act, of the Company, and (d) if such holder is
a broker or dealer registered under the Exchange Act, it will receive the New
Bonds for its own account in exchange for Old Bonds that were acquired as a
result of market-making activities or other trading activities.
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 Bonds issued in exchange for the Old Bonds pursuant
to the Exchange Offer may be offered for resale, resold and otherwise
transferred by Holders thereof (other than (i) any such Holder that is an
"affiliate" of the Company within the meaning of Rule 405 under the Securities
Act, and (ii) any broker-dealer that purchases Old Bonds from the Issuer to
resell pursuant to Rule 144A under the Securities Act ("Rule 144A") or any other
available exemption), without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Bonds 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 Bonds. However, the Company does
not intend to request the SEC to consider, and the SEC has not considered the
Exchange Offer in the context of a no-action letter and there can be no
assurance that the staff of the SEC would make a similar determination with
respect to the Exchange Offer as in other circumstances. The undersigned
represents that it has no arrangement or understanding with any person to
participate in a distribution (within the meaning of the Securities Act) of New
Bonds, and if such Holder is not a broker-dealer, 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 Bonds.
If the undersigned is a broker-dealer that will receive New Bonds for its
own account in exchange for Old Bonds 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 Bonds; 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 Bonds (other than a resale of New Bonds received in exchange for an
unsold allotment of Old Bonds purchased directly from the Company) with the
Prospectus which constitutes part of this Exchange Offer.
5
The undersigned also warrants that acceptance of any tendered Old Bonds by
the Company and the issuance of New Bonds in exchange therefor shall constitute
performance in full by the Company of certain of its obligations under the
Registration Rights Agreement relating to the Old Bonds, which has been filed as
an exhibit to the registration statement in connection with the 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 Bonds
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
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 Bonds" section of the Prospectus.
Unless otherwise indicated herein in the box entitled "Special Issuance
Instructions" below, please issue the New Bonds (and, if applicable, substitute
certificates representing Old Bonds for any Old Bonds not tendered or exchanged)
in the name of the undersigned or, in the case of a book-entry delivery of Old
Bonds, 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 Bonds (and, if applicable, substitute
certificates representing Old Bonds for any Old Bonds not exchanged) to the
undersigned at the address shown below in the box entitled "Description of Old
Bonds".
The Company will be deemed to have accepted validly tendered Old Bonds
when, as and if the Company shall have given oral (promptly confirmed in
writing) or written notice of acceptance to the Exchange Agent.
6
THE UNDERSIGNED, BY COMPLETING THE BOX ENTITLED "DESCRIPTION OF OLD
BONDS" ABOVE AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD
BONDS AS SET FORTH IN SUCH BOX ABOVE.
- --------------------------------------------------------------------------------
SPECIAL ISSUANCE INSTRUCTIONS
(SEE INSTRUCTIONS 3 AND 4)
To be completed ONLY if certificates for Old Bonds not exchanged and/or New
Bonds 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
Bonds 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 Bonds and/or Old Bonds to:
Name(s)
------------------------------------------
(PLEASE TYPE OR PRINT)
------------------------------------------
(PLEASE TYPE OR PRINT)
Address
------------------------------------------
(ZIP CODE)
------------------------------------------
(EMPLOYER IDENTIFICATION NUMBER
OR SOCIAL SECURITY NUMBER)
(COMPLETE SUBSTITUTE FORM W-9)
[ ] Credit unexchanged Old Bonds 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 Bonds not exchanged and/or New
Bonds are to be sent to someone other than the person or persons whose
signature(s) appear(s) on this Letter of Transmittal below or to such person or
persons at an address other than shown in the box entitled "Description of Old
Bonds" on this Letter of Transmittal above.
Mail: New Bonds and/or Old Bonds 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 BONDS
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
7
- --------------------------------------------------------------------------------
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(COMPLETE ACCOMPANYING SUBSTITUTE FORM W-9)
Dated:
x , 2002
------------------------------------------- -------------------------------
x , 2002
------------------------------------------- -------------------------------
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 Bonds hereby tendered
or on a DTC security position listing or by any person(s) authorized to become a
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:
-------------------------------
- --------------------------------------------------------------------------------
8
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD BONDS; GUARANTEED DELIVERY
PROCEDURES.
In order for any Holder of Old Bonds to tender all or any portion of such
Old Bonds, 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 Bonds, 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 hereof) 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 Bonds tendered hereby must be in
denominations of principal amount of $1,000 and any integral multiple thereof.
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
acknowledgment from a Holder of Old Bonds 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.
Holders whose certificates for Old Bonds 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
procedures for book-entry tender on a timely basis, may tender their Old Bonds
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 Bonds, the certificate
numbers of such Old Bonds (unless tender is to be made by book-entry transfer)
and the principal amount of Old Bonds 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 Bonds in proper form for
transfer, 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 Bonds, 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 Bonds, 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 Bonds 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".
9
2. PARTIAL TENDERS (NOT APPLICABLE TO HOLDERS WHO TENDER BY BOOK-ENTRY
TRANSFER).
If less than all of the Old Bonds evidenced by a submitted certificate are
to be tendered, the tendering Holder(s) should fill in the aggregate principal
amount of Old Bonds to be tendered in the box above entitled "Description of Old
Bonds -- Principal Amount Tendered". A reissued certificate representing the
balance of nontendered Old Bonds will be sent to such tendering Holder, unless
otherwise provided in the appropriate box on this Letter of Transmittal,
promptly after the Expiration Date. ALL OF THE OLD BONDS DELIVERED TO THE
EXCHANGE AGENT WILL BE DEEMED TO HAVE BEEN TENDERED UNLESS OTHERWISE INDICATED.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES.
If this Letter of Transmittal is signed by the Holder of the Old Bonds
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 Bonds without any change whatsoever.
If any tendered Old Bonds are owned of record by two or more joint owners,
all of such owners must sign this Letter of Transmittal.
If any tendered Old Bonds 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 Bonds specified herein and tendered hereby, no endorsements of
certificates or separate bond powers are required. If, however, the New Bonds
are to be issued, or any untendered Old Bonds 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 Bonds 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 BONDS 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 BONDS ARE TENDERED: (1) BY A REGISTERED HOLDER
OF OLD BONDS WHO HAS NOT COMPLETED THE BOX ENTITLED "SPECIAL ISSUANCE
INSTRUCTIONS" OR "SPECIAL DELIVERY INSTRUCTIONS" OR (2) FOR THE ACCOUNT OF AN
ELIGIBLE INSTITUTION.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTION.
Tendering Holders of Old Bonds should indicate in the applicable box the
name and address to which New Bonds issued pursuant to the Exchange Offer and/or
substitute certificates evidencing Old Bonds 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 Bonds by book-entry transfer may request that
10
Old Bonds not exchanged be credited to such account maintained at DTC as such
Holder may designate hereon. If no such instructions are given, such Old Bonds
not exchanged will be returned to the name or address of the person signing this
Letter of Transmittal.
5. TAXPAYER IDENTIFICATION NUMBER.
Federal income tax law generally requires that a tendering Holder whose Old
Bonds 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 Bonds may be subject to backup withholding in an
amount equal to 30% (subject to further adjustment under applicable law) of all
reportable payments made after the exchange. If withholding results in an
overpayment for taxes, a refund may be obtained.
Certain types of Holders of Old Bonds (generally including, among others,
corporations and certain foreign entities) are not subject to these backup
withholding and reporting requirements. See the enclosed Guidelines for
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 Bonds must
provide its correct TIN by completing the "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 Bonds 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 Bonds 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 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 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 Bonds to it or its order pursuant to the Exchange Offer. If, however, New
Bonds and/or substitute Old Bonds not exchanged are to be delivered to, or are
to be registered or issued in the name of, any person other than the registered
Holder of the Old Bonds tendered hereby, or if tendered Old Bonds 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 Bonds to the Company or its order pursuant to the Exchange
Offer, then 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 Bonds and withdrawal of tendered Old Bonds
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 Bonds not properly tendered or any Old Bonds the Company's
acceptance of which would, in the opinion of counsel for the Company, be
11
unlawful. The Company also reserves the right to waive any defects,
irregularities or conditions of tender as to particular Old Bonds. 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 Bonds must be cured within such time as the Company shall determine. None
of 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
Bonds, nor shall any of them incur any liability for failure to give such
notification. Tenders of Old Bonds will not be deemed to have been made until
such defects or irregularities have been cured or waived. Any Old Bonds 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 Bonds, 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 Bonds, by causing this Letter of
Transmittal or an Agent's Message in lieu hereof to be delivered to the Exchange
Agent, shall waive any right to receive notice of the acceptance of their Old
Bonds for exchange.
None of 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
Bonds nor shall any of them incur any liability for failure to give any such
notice.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD BONDS.
Any Holder whose Old Bonds 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. INCORPORATION OF LETTER OF TRANSMITTAL.
This Letter of Transmittal shall be deemed to be incorporated in and
acknowledged and accepted by an tender through the DTC's ATOP procedures by any
participant on behalf of itself and the beneficial owners of any Old Bonds so
tendered.
12. WITHDRAWALS.
This tender may be withdrawn only in accordance with the procedures set
forth in "The Exchange Offer -- Withdrawal of Tenders of Old Bonds" section of
the Prospectus.
12
TO BE COMPLETED BY ALL TENDERING HOLDERS
(SEE INSTRUCTION 5)
- --------------------- ---------------------------------- -----------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN: __________________
Form W-9 TIN IN THE BOX AT RIGHT AND (Social Security Number
CERTIFY BY SIGNING AND DATING or Employer
BELOW: Identification Number)
- --------------------- ---------------------------------- -----------------------
PART 2 -- TIN APPLIED FOR [ ]
- --------------------- ----------------------------------------------------------
DEPARTMENT OF THE PAYOR'S REQUEST FOR TAXPAYER IDENTIFICATION NUMBER ("TIN")
TREASURY INTERNAL AND CERTIFICATION
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,
(3) I am a U.S. person (including a U.S. resident
alien), and
(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
subsequently 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, 30%
(subject to further adjustment under applicable law) of all reportable payments
made to me thereafter will be withheld until I provide a number.
- ------------------------------------------ ----------------------------------
SIGNATURE DATE
- --------------------------------------------------------------------------------
13
EXHIBIT 4(e)
CUSIP [ ]
THIS BOND IS SUBJECT TO RESTRICTIONS ON TRANSFER,
AS HEREINAFTER SET FORTH.
AVISTA CORPORATION
First Mortgage Bond,
7.75% Series due 2007
REGISTERED REGISTERED
NO. R-1 $[ ],000,000
AVISTA CORPORATION, a corporation of the State of Washington
(hereinafter called the Company), for value received, hereby promises to pay to
CEDE & CO. or registered assigns, on January 1, 2007, [ ] DOLLARS, and to pay
the registered owner hereof interest thereon from December 19, 2001
semi-annually in arrears on January 1 and July 1 in each year (each such date
being hereinafter called an "Interest Payment Date"), commencing July 1, 2002,
and at Maturity (as hereinafter defined), at the rate of seven and seventy-five
one-hundredths per centum (7.75%) per annum, computed on the basis of a 360-day
year consisting of twelve 30-day months, until the Company's obligation with
respect to the payment of such principal shall have been discharged. The
principal of and premium, if any, and interest on this bond payable at Maturity
shall be paid upon presentation hereof at the office or agency of the Company in
the Borough of Manhattan, The City of New York, in such coin or currency of the
United States of America as at the time of payment is legal tender for public
and private debts. The interest on this bond (other than interest payable at
Maturity) shall be paid by check, in the similar coin or currency, mailed to the
registered owner hereof as of the close of business on the December 15 or June
15, as the case may be, next preceding each Interest Payment Date (each such
date being herein called a "Record Date"); provided, however, that if such
registered owner shall be a securities depositary, such payment shall be made by
such other means in lieu of check as shall be agreed upon by the Company, the
Trustee and such registered owner. Interest payable at Maturity shall be paid to
the person to whom principal shall be paid. As used herein, the term "Maturity"
shall mean the date on which the principal of this bond becomes due and payable,
whether at stated maturity, upon redemption or acceleration, or otherwise.
This bond is one of an issue of bonds of the Company issuable in
series and is one of a series known as its First Mortgage Bonds, 7.75% Series
due 2007, all bonds of all such issue of series being issued and issuable under
and equally secured (except insofar as any sinking or other fund, established in
accordance with the provisions of the Mortgage hereinafter mentioned, may afford
additional security for the bonds of any particular series) by a Mortgage and
Deed of Trust, dated as of June 1, 1939, executed by the Company (formerly known
as The Washington Water Power Company) to City Bank Farmers Trust Company and
Ralph E. Morton, as Trustees (Citibank, N.A., successor Trustee to both said
Trustees). Such mortgage and deed of trust has been amended and supplemented by
various supplemental indentures, including the Twenty-ninth Supplemental
Indenture, dated as of December 1, 2001 (the "Twenty-ninth Supplemental
Indenture") and, as so amended and supplemented, is herein called the
"Mortgage". Reference is made to the Mortgage for a description of the property
mortgaged and pledged, the nature and extent of the security, the rights of the
holders of the bonds and of the Trustee in respect thereof, the duties and
immunities of the Trustee and the terms and conditions upon which the bonds are
and are to be secured and the circumstances under which additional bonds may be
issued. If there shall be a conflict between the terms of this bond and the
provisions of the Mortgage, the provisions of the Mortgage shall control to the
extent permitted by law. The holder of this bond, by its acceptance hereof,
shall be deemed to have consented and agreed to all terms and provisions of the
Mortgage and, further, in the event that such holder shall not be the sole
beneficial owner of this bond, shall be deemed to have agreed to use all
commercially reasonable efforts to cause all direct and indirect beneficial
owners of this bond to have knowledge of the terms and provisions of the
Mortgage and of this bond and to comply therewith, including particularly, but
without limitation, any provisions or restrictions in the Mortgage regarding the
transfer or exchange of such beneficial interests and any legend set forth on
this bond.
With the consent of the Company and to the extent permitted by and as
provided in the Mortgage, the rights and obligations of the Company and/or the
rights of the holders of the bonds and/or coupons and/or the terms and
provisions of the Mortgage may be modified or altered by affirmative vote of the
holders of at least 75% in principal amount of the bonds then outstanding under
the Mortgage and, if the rights of one or more, but less than all, series of
bonds then outstanding are to be affected, then also by affirmative vote of the
holders of at least 75% in principal amount of the series of bonds so to be
affected (excluding in any case bonds challenged and disqualified from voting by
reason of the Company's interest therein as provided in the Mortgage). The
Company has amended the Mortgage, effective as of the Modification Effective
Date (as defined in the Twenty-ninth Supplemental Indenture), to provide that
the Mortgage may be modified or altered by affirmative vote of the holders of at
least 60% in principal amount of the bonds outstanding under the Mortgage,
considered as one class, or, if the rights of one or more, but less than all,
series of bonds then outstanding are to be affected, then such modification or
alteration may be effected with the affirmative vote only of 60% in principal
amount of the bonds outstanding of the series so to be affected, considered as
one class, and, furthermore, to provide that, for limited purposes, the Mortgage
may be modified or altered without any consent or other action of holders of any
series of bonds. No modification or alteration shall, however, permit an
extension of the Maturity of the principal of, or interest on, this bond or a
reduction in such principal or the rate of interest hereon or any other
modification in the terms of payment of such principal or interest or the
creation of any lien equal or prior to the lien of the Mortgage or deprive the
holder of a lien on the mortgaged and pledged property without the consent of
the holder hereof.
The principal hereof may be declared or may become due prior to the
stated maturity date on the conditions, in the manner and at the time set forth
in the Mortgage, upon the occurrence of a completed default as in the Mortgage
provided.
2
In the manner prescribed in the Mortgage, this bond is transferable by
the registered owner hereof in person, or by his duly authorized attorney, at
the office or agency of the Company in the Borough of Manhattan, The City of New
York, upon surrender and cancellation of this bond, together with a written
instrument of transfer whenever required by the Company duly executed by the
registered owner or by its duly authorized attorney, and, thereupon, a new fully
registered bond of the same series for a like principal amount will be issued to
the transferee in exchange herefor as provided in the Mortgage. The Company and
the Trustee may deem and treat the person in whose name this bond is registered
as the absolute owner hereof for the purpose of receiving payment and for all
other purposes.
In the manner prescribed in the Mortgage, any bonds of this series,
upon surrender thereof for cancellation at the office or agency of the Company
in the Borough of Manhattan, The City of New York, are exchangeable for a like
aggregate principal amount of bonds of the same series of other authorized
denominations.
The bonds of this series are not subject to redemption prior to the
stated maturity date thereof.
No recourse shall be had for the payment of the principal of or
interest on this bond against any incorporator or any past, present or future
subscriber to the capital stock, stockholder, officer or director of the Company
or of any predecessor or successor corporation, as such, either directly or
through the Company or any predecessor or successor corporation, under any rule
of law, statute or constitution or by the enforcement of any assessment or
otherwise, all such liability of incorporators, subscribers, stockholders,
officers and directors being released by the holder or owner hereof by the
acceptance of this bond and being likewise waived and released by the terms of
the Mortgage.
This bond shall not become obligatory until Citibank, N.A., the
Trustee under the Mortgage, or its successor thereunder, shall have signed the
form of certificate endorsed hereon.
IN WITNESS WHEREOF, AVISTA CORPORATION has caused this bond to be
signed in its corporate name by its President or one of its Vice Presidents by
his signature or a facsimile thereof, and its corporate seal to be impressed or
imprinted hereon and attested by its Corporate Secretary or one of its Assistant
Corporate Secretaries by his signature or a facsimile thereof.
Dated: AVISTA CORPORATION
By:
-----------------------------------
ATTEST:
--------------------------------------
3
TRUSTEE'S CERTIFICATE
This bond is one of the bonds, of the series herein designated,
described or provided for in the within-mentioned Mortgage.
CITIBANK, N.A.
Trustee
By
------------------------------------
Authorized Officer
4
THIS GLOBAL BOND IS HELD BY CEDE & CO., AS NOMINEE FOR THE DEPOSITORY
TRUST COMPANY (THE "DEPOSITARY") FOR THE BENEFIT OF THE BENEFICIAL OWNERS
HEREOF. THIS BOND MAY NOT BE TRANSFERRED, NOR MAY ANY PURPORTED TRANSFER BE
REGISTERED, EXCEPT THAT (I) THIS BOND MAY BE TRANSFERRED IN WHOLE, AND
APPROPRIATE REGISTRATION OF TRANSFER EFFECTED, IF SUCH TRANSFER IS BY CEDE &
CO., AS NOMINEE FOR THE DEPOSITARY, TO THE DEPOSITARY, OR BY THE DEPOSITARY TO
ANOTHER NOMINEE THEREOF, OR BY ANY NOMINEE OF THE DEPOSITARY TO ANY OTHER
NOMINEE THEREOF, OR BY THE DEPOSITARY OR ANY NOMINEE THEREOF TO ANY SUCCESSOR
BONDS DEPOSITARY OR ANY NOMINEE THEREOF; AND (II) THIS BOND MAY BE TRANSFERRED,
AND APPROPRIATE REGISTRATION OF TRANSFER EFFECTED, TO THE BENEFICIAL HOLDERS
HEREOF, AND THEREAFTER SHALL BE TRANSFERABLE WITHOUT RESTRICTIONS (EXCEPT AS
PROVIDED IN THE PRECEDING PARAGRAPH) IF: (A) THE DEPOSITARY, OR ANY SUCCESSOR
SECURITIES DEPOSITARY, SHALL HAVE NOTIFIED THE COMPANY AND THE TRUSTEE THAT (I)
IT IS UNWILLING OR UNABLE TO CONTINUE TO ACT AS SECURITIES DEPOSITARY WITH
RESPECT TO THE BONDS OR (II) IT IS NO LONGER A CLEARING AGENCY REGISTERED UNDER
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, AND, IN EITHER CASE, THE
TRUSTEE SHALL NOT HAVE BEEN NOTIFIED BY THE COMPANY WITHIN ONE HUNDRED TWENTY
(120) DAYS OF THE IDENTITY OF A SUCCESSOR SECURITIES DEPOSITARY WITH RESPECT TO
THE BONDS; OR (B) THE COMPANY SHALL HAVE DELIVERED TO THE TRUSTEE A WRITTEN
ORDER TO THE EFFECT THAT THE BONDS SHALL BE SO TRANSFERABLE ON AND AFTER A DATE
SPECIFIED THEREIN.
5
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
- --------------------------------------------------------------------------------
[please insert social security or other identifying number of assignee]
- --------------------------------------------------------------------------------
[please print or typewrite name and address of assignee]
- --------------------------------------------------------------------------------
the within bond of AVISTA CORPORATION and does hereby irrevocably constitute and
appoint , Attorney, to transfer said
-----------------------------------------
bond on the books of the within-mentioned Company, will full power of
substitution in the premises.
Dated:
-------------------------
-------------------------
Notice: The signature to this assignment must correspond with the name as
written upon the face of the bond in every particular without alteration or
enlargement or any change whatsoever.
6
EXHIBIT 5(a)
[Heller Ehrman White & McAuliffe LLP Letterhead]
February 11, 2002
Avista Corporation
1411 East Mission Avenue
Spokane, WA 99202
RE: AVISTA CORPORATION - REGISTRATION STATEMENT ON FORM S-4
FIRST MORTGAGE BONDS, 7.75% SERIES DUE 2007, IN AN AGGREGATE
PRINCIPAL AMOUNT OF $150,000,000
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 $150,000,000 in aggregate principal amount of First Mortgage Bonds, 7.75%
Series due 2007 (registered) (the "SECURITIES"), in exchange for First Mortgage
Bonds, 7.75% Series due 2007 (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, as amended, of the
Company certified by the Washington Secretary of State as of
February 7, 2002, 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 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 February
7, 2002;
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
[COMPANY LOGO OMITTED] Avista Corporation
February 11, 2002
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-011476, entered November 29, 2001, in Docket No.
UE-011476 of the Washington Utilities and
Transportation Commission;
(g) Order No. 28898, entered November 27, 2001, in Case No.
AVU-U-01-2 of the Idaho Public Utilities Commission;
(h) Order No. 01-1003. entered November 29, 2001, in Docket No.
UF-4186 of the Public Utility Commission of Oregon, together with
the staff report appended thereto which constitute part of the
order1;
(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 Montana2; and
(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 secured debt ratings are within the permitted
tolerances identified by the OPUC staff in Order No. 01-1003 at page 2 of the
staff report appended thereto.
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
[COMPANY LOGO OMITTED] Avista Corporation
February 11, 2002
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 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 (other
than those listed in Part I above) required in connection with
the 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
[COMPANY LOGO OMITTED] Avista Corporation
February 11, 2002
Page 4
(g) The enforceability of any agreement or instrument (including the
Company's Mortgage and Deed of Trust, dated as of June 1, 1939,
as previously amended and supplemented), which is referred to in
the Securities.
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.
Heller Ehrman White & McAuliffe LLP
[COMPANY LOGO OMITTED] Avista Corporation
February 11, 2002
Page 5
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,
Heller Ehrman White & McAuliffe LLP
Heller Ehrman White & McAuliffe LLP
Exhibit 5(b) & 8
THELEN REID & PRIEST LLP
NEW YORK ATTORNEYS AT LAW
SAN FRANCISCO 40 WEST 57TH STREET
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
February 11, 2002
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
$150,000,000 in aggregate principal amount of First Mortgage Bonds, 7.75% Series
due 2007 (the "New Bonds") of the Company, in connection with an offer by the
Company to issue the New Bonds in exchange for First Mortgage Bonds, 7.75%
Series due 2007 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 Bonds, 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 Bonds 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
2
EXHIBIT 23(b)
Independent Auditors' 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
DELOITTE & TOUCHE LLP
Seattle, Washington
February 11, 2002
Exhibit 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a Trustee
pursuant to Section 305 (b)(2) ____
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CITIBANK, N.A.
(Exact name of trustee as specified in its charter)
13-5266470
(I.R.S. employer
identification no.)
399 Park Avenue, New York, New York 10043
(Address of principal executive office) (Zip Code)
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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
Spokane, Washington 99202-2600
(Address of principal executive offices) (Zip Code)
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First Mortgage Bonds, 7.75% Series due 2007 due January 1, 2007
(Title of the indenture securities)
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.
Name Address
---- -------
Comptroller of the Currency Washington, D.C.
Federal Reserve Bank of New York New York, NY
33 Liberty Street
New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None.
Item 16. List of Exhibits.
List below all exhibits filed as a part of this Statement of
Eligibility.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as exhibits
hereto.
Exhibit 1 - Copy of Articles of Association of the Trustee, as
now in effect. (Exhibit 1 to T-1 to Registration Statement No.
2-79983)
Exhibit 2 - Copy of certificate of authority of the Trustee to
commence business. (Exhibit 2 to T-1 to Registration
Statement No. 2-29577).
Exhibit 3 - Copy of authorization of the Trustee to exercise
corporate trust powers. (Exhibit 3 to T-1 to Registration
Statement No. 2-55519)
Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit 4 to
T-1 to Registration Statement No. 33-34988)
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the Trustee required by Section
321(b) of the Trust Indenture Act of 1939. (Exhibit 6 to T-1
to Registration Statement No. 33-19227.)
Exhibit 7 - Copy of the latest Report of Condition of
Citibank, N.A. (as of September 30, 2001-attached)
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
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SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the
Trustee, Citibank, N.A., a national banking association organized and existing
under the laws of the United States of America, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York and State of New York, on the 1st day of
February, 2002.
CITIBANK, N.A.
By /s/ Wafaa Orfy
-------------------------------
Wafaa Orfy
Assistant Vice President
EXHIBIT 7
Charter No. 1461
Comptroller of the Currency
Northeastern District
REPORT OF CONDITION
CONSOLIDATING
DOMESTIC AND FOREIGN
SUBSIDIARIES OF
Citibank, N.A. of New York in the State of New York, at the close of business on
September 30, 2001, published in response to call made by Comptroller of the
Currency, under Title 12, United States Code, Section 161. Charter Number 1461
Comptroller of the Currency Northeastern District.
ASSETS THOUSANDS OF DOLLARS
Cash and balances due from
depository institutions:
Noninterest-bearing balances
and currency and coin . . . . . $12,723,000
Interest-bearing balances . . . . . . 15,986,000
Held-to-maturity securities . . . . . 0
Available-for-sale securities . . . . 42,250,000
Federal funds sold and
securities purchased under
agreements to resell.. . . . . . 28,213,000
Loans and leases held for sale . . . . 6,795,000
Loans and lease financing
receivables:
Loans and Leases, net of
unearned income . . 251,317,000
LESS: Allowance for loan and lease
losses . . . . . . 4,691,000
------------
Loans and leases, net of unearned
income, allowance, and reserve. . 246,626,000
Trading assets . . . . . . . . . . . . . 34,574,000
Premises and fixed assets
(including capitalized leases) . 3,927,000
Other real estate owned . . . . . . . . . 232,000
Investments in unconsolidated
subsidiaries and associated
companies . . . . . . . . . . . . . . 813,000
Customers' liability to this bank
on acceptances outstanding . . . . . 944,000
Intangible assets: Goodwill . . . . . . . 3,738,000
Intangible assets: Other intangible
assets . . . . . . . . . . . . . . . 3,402,000
Other assets . . . . . . . . . . . . . . 24,063,000
------------
TOTAL ASSETS . . . . . . . . . . . . . . $424,286,000
============
LIABILITIES
Deposits: In domestic offices . . .. . . $ 90,996,000
Noninterest- bearing . . . . . . . . . 16,729,000
Interest- bearing . . . . . . . . . . . 74,267,000
In foreign offices, Edge and
Agreement subsidiaries,
and IBFs . . . . . . . . . . . . . 206,485,000
Noninterest- bearing . . .. . . . . . . 14,474,000
Interest- bearing . . . . . . . . . . . 192,011,000
Federal funds purchased and securities
sold under agreements
to repurchase . . . . . . . . . . . 21,926,000
Demand notes issued to the
U.S. Treasury . . . . . .. . . . . 0
Trading liabilities . . . . . . . . . . . 19,036,000
Other borrowed money (includes
mortgage indebtedness and
obligations under capitalized
leases): ss . . . . . . . . . . . . 23,128,000
Bank's liability on acceptances
executed and outstanding . . . . . 944,000
Subordinated notes and debentures . . . . 9,350,000
Other liabilities . . . . . . . . . . . . 21,755,000
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TOTAL LIABILITIES . . . . . . . . . . . . $393,620,000
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MINORITY INTEREST IN CONSOLIDATED
SUBSIDIARIES.. .. .. .. .. .. .. .. .. .. .. .. 204,000
EQUITY CAPITAL
Perpetual preferred stock and
related surplus . . . . . . . . . . 350,000
Common stock . . . . . . . . . . . . . . 751,000
Surplus . . . . . . . . . . . . . . . . . 12,843,000
Retained Earnings . . . . . . . . . . . . 17,625,000
Accumulated net gains (losses)
on cash flow hedges . . .. . . . . -1,107,000
Other equity capital components . . . . . 0
------------
TOTAL EQUITY CAPITAL . . . . .. . .. . . $ 30,462,000
------------
TOTAL LIABILITIES AND EQUITY
CAPITAL . . . . . . . . . . . . . $424,286,000
============
I, Roger W. Trupin, Controller of the above-named bank do hereby declare that
this Report of Condition is true and correct to the best of my knowledge and
belief.
ROGER W. TRUPIN CONTROLLER
We, the undersigned directors, attest to the correctness of this Report of
Condition. We declare that it has been examined by us, and to the best of our
knowledge and belief has been prepared in conformance with the instructions and
is true and correct.
ALAN S. MACDONALD
WILLIAM R. RHODES
VICTOR J. MENEZES
DIRECTORS