As filed with the Securities and Exchange Commission on March 11, 2004
Registration No. 333-
333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form S-3
Registration Statement
and
Post-Effective Amendment No. 1
under
the Securities Act of 1933
AVISTA CORPORATION
(Exact name of Registrant as specified in its charter)
Washington (State or other jurisdiction of incorporation or organization) |
91-0462470 (I.R.S. Employer 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)
AVA CAPITAL TRUST III
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization) |
To be applied for
(I.R.S. Employer Identification No.) |
c/o Avista Corporation
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
Vice President and Chief Counsel for Regulatory and Governmental Affairs Avista Corporation 1411 East Mission Avenue Spokane, Washington 99202 (509) 489-0500 |
J.
ANTHONY TERRELL
Dewey Ballantine LLP 1301 Avenue of the Americas New York, New York 10019 (212) 259-8000 |
(Name and address, including zip code, and
telephone number, including area code, of agents for service)
It is respectfully requested that the Commission
send copies of all notices, orders and communications to:
John E. Baumgardner, Jr.
Sullivan & Cromwell LLP
125 Broad Street
New York, New York 10004
Approximate date of commencement of proposed
sale to the public: To be determined by market conditions and other factors,
after the registration statement becomes effective.
If
the only securities being registered on this Form are being offered pursuant
to
dividend or interest reinvestment plans, please check the following box. [ ]
If
any the securities being registered on this form are to be offered on a
delayed
or continuous basis pursuant to Rule 415 under the Securities Act of 1933,
other than securities offered only in connection with dividend or interest
reinvestment
plans, 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 of 1933, please check the following box
and list the Securities Act of 1933 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(c) under
the
Securities Act of 1933, check the following box and list the Securities Act
of 1933 registration statement number of the earlier effective registration
statement
for
the same offering. [ ]
If
delivery of the prospectus is expected to be made pursuant to Rule 434, please
check
the following box. [ ]
CALCULATION OF REGISTRATION FEE
Pursuant to Rule 429 under the Securities Act
of 1933, as amended (the “Securities Act”), the prospectus contained in
this registration statement will be used as a combined prospectus in connection
with this Registration Statement and Registration Statement No. 333-16353 which
was initially filed on November 19, 1996 and became effective on January 9, 1997
(the “Prior Registration Statement”) under which $40,000,000 in principal
amount of securities remain unsold. This Registration Statement is a new registration
statement and also constitutes Post-Effective Amendment No. 1 to the Prior Registration
Statement. Such Post-Effective Amendment will become effective concurrently with
the effectiveness of this Registration Statement in accordance with Section 8(c)
of 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 this Registration Statement shall
become effective on such date as the Commission, acting pursuant to said Section
8(a), may determine.
The Information contained 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 sell these securities and it is not soliciting an offer to buy
these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MARCH 11, 2004
PROSPECTUS
AVISTA CORPORATION
AVA Capital Trust III Fully and unconditionally guaranteed,
as described herein
The initial distribution rate on the Flexible Trust Preferred
Securities will be % per annum from the date of original issuance through , 2009,
which is the initial fixed rate period. Thereafter, the distribution rate for the
Preferred Securities may be at fixed rates determined through remarketings of the
Preferred Securities for specific periods of varying length or may be at a Floating
Rate as defined herein.
A brief description of the Preferred Securities can be
found under Summary Information-Q&A in this Prospectus.
(1) Plus accumulated distributions, if any, from
the
date of original issuance, which is expected to be , 2004.
INVESTING IN THESE PREFERRED SECURITIES INVOLVES RISKS.
SEE
THE SECTION ENTITLED “RISK FACTORS” BEGINNING ON PAGE 6 OF THIS PROSPECTUS
Neither the Securities and Exchange Commission nor any
state securities commission has approved or disapproved of the Preferred Securities
or determined that this Prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.
The Preferred Securities will be ready for delivery in
book-entry form only through The Depository Trust Company on or about , 2004.
LEHMAN BROTHERS
MCDONALD INVESTMENTS
INC.
PIPER JAFFRAY
The date of this Prospectus is , 2004.
TABLE OF CONTENTS
You should rely only on the information incorporated
by reference or provided in this Prospectus. We have not authorized anyone to provide
you with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume that the information
in this Prospectus is accurate as of any date other than the date on the front of
this Prospectus.
i
SUMMARY INFORMATION – Q&A
The following information supplements,
and should be read together with, the information contained in other parts of this
Prospectus. This summary highlights selected information from this Prospectus to
help you understand the Flexible Trust Preferred Securities (the “Preferred
Securities”). You should carefully read this Prospectus to understand fully
the terms of the Preferred Securities as well as the tax and other considerations
that are important to you in making a decision about whether to invest in the Preferred
Securities. You should pay special attention to the Risk Factors section
beginning on page 6 of this Prospectus to determine whether an investment in the
Preferred Securities is appropriate for you.
What are the Preferred Securities?
Each Preferred Security represents an undivided
beneficial interest in the assets of AVA Capital Trust III (the “Trust”).
Each Preferred Security will entitle the holder to receive cash distributions (“Distributions”)
as described in this Prospectus. The Trust is offering 60,000 Preferred Securities
at a price of $ for each Preferred Security.
Who is the Trust?
The Trust is a Delaware statutory trust.
Its principal place of business is c/o Avista Corporation, 1411 East Mission Avenue,
Spokane, Washington 99202, and its telephone number is 509-489-0500.
The Trust will sell its Preferred Securities
to the public and its common securities (the “Common Securities”) to Avista
Corporation (the “Company” or “Avista Corp.”). The Trust will
use the proceeds from these sales to buy a series of Subordinated Debt Securities,
Series due (the “Subordinated Debt Securities”) from the Company with
the same financial terms as the Preferred Securities. The Company will guarantee
payments made on the Preferred Securities as described herein.
Union Bank of California, N.A. will act
as institutional trustee (the “Institutional Trustee”) of the Trust. Two
officers of the Company also will act as trustees (the “Regular Trustees”)
of the Trust. SunTrust Delaware Trust Company will be an additional trustee (the
“Delaware Trustee”) of the Trust.
Union Bank of California, N.A. will act
as trustee (the “Indenture Trustee”) under the Indenture, dated as of
, 2004 (the “Indenture”), pursuant to which the Subordinated Debt Securities
will be issued and will act as trustee (the “Guarantee Trustee”) under
the Trust Securities Guarantee, dated as of , 2004, of the Company (the “Guarantee”).
The Institutional Trustee, the Delaware Trustee and the Regular Trustees are sometimes
referred to as the “Securities Trustees”.
Who is the Company?
The Company is an energy company engaged
in the generation, transmission and distribution of electric energy and the distribution
of natural gas, as well as other energy-related businesses. The Company provides
electric distribution and transmission as well as natural gas distribution services
in eastern Washington and northern Idaho and natural gas distribution service in
northeast and southwest Oregon and the South Lake Tahoe region of California. The
Company’s principal executive offices are located at 1411 East Mission Avenue,
Spokane, Washington 99202, telephone number (509) 489-0500.
What will the Distribution Rate be on the Preferred
Securities?
Distributions will initially be paid at
a rate (a “Distribution Rate”) of % per annum (the “Initial Distribution
Rate”), payable semiannually in arrears, for the period from the date of original
issuance of the Preferred Securities (the “Issue Date”), which is expected
to be , 2004, through , 2009 (the “Initial Fixed Rate Period”).
The Company and the Trust will have the
option to remarket the Preferred Securities prior to expiration of the Initial Fixed
Rate Period to establish a new fixed per annum Distribution Rate (together with
the Initial Distribution Rate and any subsequent fixed rate established pursuant
to a remarketing, as described below, a “Fixed Rate”) with respect to
the Preferred Securities (to be in effect after the Initial Fixed Rate Period).
Any new Fixed Rate so established will be in effect for such period (together with
the Initial Fixed Rate Period and any subsequent period established pursuant to
a remarketing, as described below, a “Fixed Rate Period”) as the Company
and the Trust determine in connection with the remarketing, provided that a Fixed
Rate Period must be for a duration of at least six months. A Fixed Rate Period may
not
1
extend beyond , the final maturity of the Subordinated Debt Securities,
and may not end on a day other than a day immediately preceding a Distribution Payment
Date (as defined below). Distributions on Preferred Securities during any Fixed
Rate Period will be payable semiannually in arrears. Prior to the expiration of
any Fixed Rate Period, the Company and the Trust will have the option to again remarket
the Preferred Securities to establish a new Fixed Rate for a new Fixed Rate Period
(to be in effect after the expiration of the then current Distribution Period, as
defined below).
If the Company and the Trust do not remarket
the Preferred Securities prior to expiration of the Initial Fixed Rate Period or
any subsequent Fixed Rate Period, or if they are unable to successfully remarket
all Preferred Securities tendered for sale in a remarketing, Distributions on the
Preferred Securities will thereafter be payable at a floating rate (a “Floating
Rate”) reset quarterly equal to % (the “Initial Credit Spread”),
plus the “Adjustable Rate”, which will be the greater of (i) the 3-month
LIBOR Rate; (ii) the 10-year Treasury CMT Rate; and (iii) the 30-year Treasury CMT
Rate (each as defined herein). A Floating Rate will be in effect until the Company
and the Trust subsequently remarket Preferred Securities to again establish a Fixed
Rate for a new Fixed Rate Period as described above. During any period during which
a Floating Rate is in effect (a “Floating Rate Period”), Distributions
on the Preferred Securities will be payable quarterly in arrears. The Company and
the Trust may elect to remarket the Preferred Securities prior to any Distribution
Payment Date relating to a Floating Rate Period in order to again establish a new
Fixed Rate for a new Fixed Rate Period (to be in effect after the expiration of
the then current Distribution Period).
In this Prospectus, each semiannual distribution
period in a Fixed Rate Period (including, without limitation, the Initial Fixed
Rate Period) and each quarterly distribution period in a Floating Rate Period are
sometimes referred to as a “Distribution Period”.
What are the procedures for remarketing the Preferred
Securities and establishing the Distribution Rate for Distribution Periods subsequent
to the Initial Fixed Rate Period?
In connection with any remarketing of the
Preferred Securities, holders of Preferred Securities will be given the option to
elect to retain or tender all or a portion of their Preferred Securities for sale
in the remarketing. Such election will be required to be made on a date that is
no later than the fifth Business Day (as defined below) prior to the proposed remarketing
date (an “Election Date”). A holder that fails to give an election notice
to the Remarketing Agent (as defined below) by the Election Date will be deemed
to have elected to tender its Preferred Securities for purchase in the remarketing.
A holder of Preferred Securities may notify the Remarketing Agent of its interest
in retaining all or some of its Preferred Securities, provided that the new Distribution
Rate is a Fixed Rate not less than a rate per annum specified by the holder. In
such case, the holder will tender all its Preferred Securities and then be given
priority to purchase the specified number of Preferred Securities in the remarketing,
provided the new Distribution Rate is a Fixed Rate not less than the rate specified
by the holder.
If the Remarketing Agent is able to remarket
all Preferred Securities tendered or deemed tendered in connection with the remarketing
at a price equal to $1,000 per Preferred Security for the new Fixed Rate Period
selected by the Company and the Trust, the Distribution Rate on the Preferred Securities
for the new Fixed Rate Period will be the rate that the Remarketing Agent determines,
in its sole judgment, to be the lowest rate per annum that will enable it to remarket
all Preferred Securities tendered or deemed tendered for purchase in the remarketing
at a price of $1,000 per Preferred Security.
If the Remarketing Agent is unable to remarket
all Preferred Securities tendered or deemed tendered for purchase in a remarketing
at a price equal to $1,000 per Preferred Security for the new Fixed Rate Period
selected by the Company and the Trust, the Distribution Rate on the Preferred Securities
will be the then applicable Floating Rate. In such case, each holder will continue
to hold its Preferred Securities at the Floating Rate.
The purchase price payable to a holder
for any Preferred Securities purchased from it in a remarketing will be equal to
$1,000 per Preferred Security plus accrued and unpaid Distributions. Lehman Brothers
Inc. is expected to act as remarketing agent (the “Remarketing Agent”)
in connection with any remarketing of the Preferred Securities.
You should read Description of the Preferred
Securities–Remarketing for more information regarding the procedures relating
to a remarketing of the Preferred Securities.
2
When will you receive Distributions?
If you purchase the Preferred Securities,
you are entitled to receive Distributions at the Distribution Rate on the applicable
distribution payment date (each, a “Distribution Payment Date”). During
the Initial Fixed Rate Period, Distributions will be payable semi-annually in arrears
on and of each year, commencing on , 2004. In any subsequent
Fixed Rate Period, Distributions will be payable semiannually in arrears determined
based on the Remarketing Date (as defined below) (if the Preferred Securities are
remarketed for a new Fixed Rate Period that begins on or , Distributions
will be payable on and of each year and if the Preferred Securities
are remarketed for a new Fixed Rate Period that begins on or , Distributions
will be payable on and of each year). Distributions during any Floating
Rate Period will be payable on , , and of each year.
When can payment of your Distributions be deferred?
The Company can, on one or more occasions,
defer interest payments on the Subordinated Debt Securities for up to five
years
at a time (each, an “Extension Period”). A deferral of interest payments
cannot extend, however, beyond the maturity date of the Subordinated Debt Securities
(which is ,). See Description of the Subordinated Debt Securities–Option
to Extend Interest Payment Period.
If the Company defers interest payments
on the Subordinated Debt Securities, the Trust will also defer Distributions on
the Preferred Securities. During any Extension Period, Distributions will continue
to accrue on the Preferred Securities. If the Company elects to defer interest during
a Fixed Rate Period, Distributions will continue to accrue at the Fixed Rate until
the expiration of the Fixed Rate Period. Upon expiration of such Fixed Rate Period
and any Fixed Rate Period during the Extension Period, the Company and the Trust
will have the option to remarket the Preferred Securities for a new Fixed Rate Period.
If the Company and the Trust do not remarket the Preferred Securities, the Floating
Rate during the Extension Period shall not be less than the Fixed Rate for the Fixed
Rate Period just ended. If the Company elects to defer interest during a Floating
Rate Period, Distributions will continue to accrue at the applicable Floating Rate,
reset quarterly, subject to the right of the Company and the Trust to remarket the
Preferred Securities prior to any Distribution Payment Date in order to establish
a new Fixed Rate Period to begin on that Distribution Payment Date. Deferred Distributions
will themselves accrue interest at the then prevailing Distribution Rate (to the
extent permitted by law). Once the Company makes all interest payments on the Subordinated
Debt Securities, with accrued interest, it can again defer interest payments on
the Subordinated Debt Securities.
During any period in which the Company
defers interest payments on the Subordinated Debt Securities, the Company will not
be permitted to (with limited exceptions):
For a description of the limited exceptions pursuant
to which the Company may make certain repurchases, redemptions or other acquisitions
during an Extension Period, see Description of the Preferred Securities–Certain
Covenants.
If the Company defers payments of interest
on the Subordinated Debt Securities, the Preferred Securities will, from the time
of deferral, be treated as being issued with original issue discount (“OID”)
for United States federal income tax purposes. This means you will be required to
recognize interest income with respect to deferred Distributions and include such
amounts in your gross income for United States federal income tax purposes even
though you will not have received any cash Distributions relating to such interest
income. You should consult with your own tax advisor regarding the tax consequences
of an investment in the Preferred Securities. See Certain United States Federal
Income Tax Consequences–Payments of Interest.
3
When can the Trust redeem the Preferred Securities?
The Trust must redeem all of the outstanding
Preferred Securities and Common Securities (together, the “Trust Securities”)
when the Subordinated Debt Securities are paid at maturity on or are otherwise
due. In addition, if the Company redeems the Subordinated Debt Securities before
their maturity, the Trust will use the cash it receives from the redemption to redeem
Preferred Securities and Common Securities having a combined liquidation amount
equal to the principal amount of the Subordinated Debt Securities redeemed.
The Company can redeem, in whole, but not
in part, the Subordinated Debt Securities before their maturity on the last Distribution
Payment Date relating to the Initial Fixed Rate Period, on such dates with respect
to any other Fixed Rate Period as the Company and the Trust may determine prior
to the remarketing establishing such Fixed Rate Period or on any Distribution Payment
Date relating to a Floating Rate Period (each, a “Redemption Date”), at
100% of their principal amount plus accrued and unpaid interest to that Redemption
Date (the “Debt Securities Redemption Price”). The Company also has the
option to redeem the Subordinated Debt Securities, in whole, but not in part, at
any time at the Debt Securities Redemption Price if certain changes in tax or investment
company law occur and certain other conditions are satisfied, as more fully described
under Description of the Preferred Securities–Special Event Redemption;
Distribution of Subordinated Debt Securities.
What is the Company’s guarantee of the Preferred
Securities?
The Company will guarantee the Preferred
Securities based on:
The Company’s obligations under the Subordinated
Debt Securities are subordinate and junior in right of payment to all of its Senior
Indebtedness (as defined under Description of the Subordinated Debt Securities–Subordination),
which aggregated approximately $1.04 billion (including the current portion of long-term
debt of $30 million and short-term borrowings of $81 million) at December 31, 2003.
The payment of Distributions on the Preferred
Securities is guaranteed by the Company under the Guarantee, but only to the extent
the Trust has funds on hand available to make Distributions.
The Company’s obligations under the
Guarantee are:
When could the Subordinated Debt Securities be distributed
to you?
The Company has the right to dissolve the
Trust at any time. If the Company dissolves the Trust, the Trust will liquidate
by distributing the Subordinated Debt Securities to holders of the Preferred Securities
and the Common Securities on a pro rata basis. For a discussion of the Company’s
ability to distribute the Subordinated Debt Securities, see Description of the
Preferred Securities–Special Event Redemption; Distribution of Subordinated
Debt Securities and –Dissolution of Trust; Liquidation Distribution.
Will the Preferred Securities be listed on a stock exchange?
The Preferred Securities will not be listed
on a stock exchange.
4
Will holders of the Preferred Securities have any voting rights?
Generally, the holders of the Preferred
Securities will not have any voting rights. See Description of the Preferred
Securities–Voting Rights; Amendment of the Declaration.
In what form will the Preferred Securities be issued?
The Preferred Securities will be represented
by one or more global securities that will be deposited with and registered in the
name of a securities depository or its nominee. This means that you will not receive
a certificate for your Preferred Securities and that your broker will maintain your
position in the Preferred Securities. The Company expects that the Preferred Securities
will be ready for delivery through a securities depository on or about , 2004.
The Depository Trust Company (“DTC”) will act as the initial securities
depository for the Preferred Securities.
5
RISK FACTORS
Your investment in the Preferred Securities
will involve certain risks. You should carefully consider the following discussion
of risks as well as the other information in this Prospectus before deciding whether
an investment in the Preferred Securities is suitable for you.
Risks Relating to the Preferred Securities
The Company’s obligations under the Guarantee
and the Subordinated Debt Securities are subordinated.
The Company’s obligations under the
Subordinated Debt Securities will rank junior in priority of payment to all of the
Company’s Senior Indebtedness (as defined under Description of the Subordinated
Debt Securities—Subordination). This means that the Company cannot make
any payments on the Subordinated Debt Securities if it defaults on a payment of
Senior Indebtedness and does not cure such default within the applicable grace period
or if the Senior Indebtedness becomes immediately due because of a default and has
not yet been paid in full. The Company’s Senior Indebtedness aggregated approximately
$1.04 billion (including the current portion of long-term debt of $30 million and
short-term borrowings of $81 million) as of December 31, 2003.
The Company’s obligations under the
Guarantee will rank in priority of payment as follows:
This means that the Company cannot make any payments
on the Guarantee if it defaults on a payment on any of its other liabilities, except
those obligations or liabilities made pari passu or subordinate by their terms.
In addition, in the event of the bankruptcy, liquidation or dissolution of the Company,
its assets would be available to pay obligations under the Guarantee only after
the Company made all payments on its other liabilities, except those obligations
or liabilities made pari passu or subordinate by their terms.
Neither the Preferred Securities, the Subordinated
Debt Securities nor the Guarantee limit the ability of the Company to incur additional
indebtedness, including indebtedness that ranks senior in priority of payment to
the Subordinated Debt Securities and the Guarantee. See Description of the Subordinated
Debt Securities–Subordination.
The Guarantee only covers payments if the Trust has
cash available.
The ability of the Trust to pay scheduled
Distributions on the Preferred Securities, the Preferred Securities Redemption Price
(as defined below) and the liquidation amount of each Preferred Security is solely
dependent upon the Company making the related payments on the Subordinated Debt
Securities when due.
If the Company defaults on its obligations
to pay principal or interest on the Subordinated Debt Securities, the Trust will
not have sufficient funds to pay Distributions, the Preferred Securities Redemption
Price or the liquidation amount of each Preferred Security. In those circumstances,
you will not be able to rely upon the Guarantee for payment of these amounts.
Instead, you:
Deferral of Distributions would have tax consequences for you
and may affect the trading price of the Preferred Securities.
The Company can, on one or more occasions,
defer interest payments on the Subordinated Debt Securities for up to five years
at any time. If the Company defers interest payments on the Subordinated Debt Securities,
the Trust
6
will defer Distributions on the Preferred Securities during such
Extension Period. However, Distributions would still accumulate and such deferred
Distributions would themselves accrue interest at the prevailing Distribution Rate
(to the extent permitted by law).
If the Company defers payments of interest
on the Subordinated Debt Securities, you will be required to recognize interest
income for United States federal income tax purposes (based on your pro rata share
of the interest on the Subordinated Debt Securities held by the Trust) before you
receive any cash relating to such interest. In the event of a deferral, this income
would constitute OID. In addition, you will not receive such cash if you sell the
Preferred Securities before the end of any deferral period or before the Record
Date (as defined under Description of the Preferred Securities—Distributions)
relating to Distributions which are paid. Instead, the accrued Distributions will
be paid to the holder of record on the Record Date, regardless of who the holder
of record may have been on any date during the deferral period. Moreover, the accrued
OID will be added to your adjusted tax basis in the Preferred Securities but might
not be reflected in the amount you realize on the sale. To the extent the amount
realized on a sale is less than your adjusted tax basis, you will recognize a capital
loss for United States federal income tax purposes. The deduction of capital losses
is subject to limitations.
The Company has no current intention of
deferring interest payments on the Subordinated Debt Securities. However, if the
Company exercises its right in the future, the Preferred Securities may trade at
a price that does not fully reflect the value of accrued but unpaid interest on
the Subordinated Debt Securities. If you sell the Preferred Securities during an
interest deferral period, you may not receive the same return on investment as someone
else who continues to hold the Preferred Securities. In addition, the existence
of the Company’s right to defer payments of interest on the Subordinated Debt
Securities may mean that the market price for the Preferred Securities (which represent
an undivided beneficial interest in the Trust, substantially all of the assets of
which consist of the Subordinated Debt Securities) may be more volatile than other
securities that do not have these rights.
See Certain United States Federal Income
Tax Consequences for more information regarding the tax consequences of purchasing,
holding and selling the Preferred Securities.
Preferred Securities may be redeemed at any time if
certain changes in tax or investment company law occur.
Certain tax law changes have been proposed
from time to time which could affect the deductibility of interest paid on the Subordinated
Debt Securities. None of these proposals has become law. If certain changes in tax
or investment company law occur and are continuing, and certain other conditions
are satisfied, the Company has the right to redeem the Subordinated Debt Securities,
in whole, but not in part, at any time. Any such redemption will cause a mandatory
redemption of all Preferred Securities and Common Securities at a redemption price
equal to $1,000 per security plus any accrued and unpaid Distributions (the “Preferred
Securities Redemption Price”). See Description of the Preferred Securities–Special
Event Redemption; Distribution of Subordinated Debt Securities.
Preferred Securities may be redeemed at the option of
the Company.
At the option of the Company, the Subordinated
Debt Securities may be redeemed, in whole, but not in part, on the last Distribution
Payment Date relating to the Initial Fixed Rate Period, on such dates with respect
to any other Fixed Rate Period as the Company and the Trust may determine prior
to the remarketing establishing such Fixed Rate Period or on any Distribution Payment
Date relating to a Floating Rate Period at the Debt Securities Redemption Price.
See Description of the Subordinated Debt Securities–Redemption. You
should assume that the Company will exercise its redemption option if the Company
is able to refinance at a lower interest rate or it is otherwise in the interest
of the Company to redeem the Subordinated Debt Securities. If the Subordinated Debt
Securities are redeemed, the Trust must redeem the Preferred Securities and the
Common Securities having an aggregate liquidation amount equal to the aggregate
principal amount of Subordinated Debt Securities to be redeemed. See Description
of the Preferred Securities–Redemption.
There can be no assurance as to the liquidity of the
Preferred Securities.
There is no assurance that a secondary
market for the Preferred Securities will develop or, if such a market develops,
that the Preferred Securities will trade at or close to their stated liquidation
amount. The ability of a holder of the Preferred Securities to sell such Preferred
Securities may depend on the success of the remarketing. If the Remarketing Agent
cannot remarket the Preferred Securities or the Company does not elect to remarket
the Preferred Securities,
7
the holders of the Preferred Securities may not be able to sell Preferred
Securities. It is not expected that the Preferred Securities will be listed on any
securities exchange.
After the Initial Fixed Rate Period, the Distribution
Rate on the Preferred Securities will vary.
The Distribution Rate on the Preferred
Securities is fixed at % per annum for the Initial Fixed Rate Period. Thereafter,
the Preferred Securities will pay Distributions at Fixed Rates during future Fixed
Rate Periods, which rates will be determined through remarketings of the Preferred
Securities, or at Floating Rates during Floating Rate Periods, which rates will
be the Initial Credit Spread plus the Adjustable Rate. In connection with any proposed
remarketing to set a Fixed Rate for a new Fixed Rate Period, you may have the opportunity
to elect to sell your Preferred Securities to the Remarketing Agent at a price of
$1,000, plus accrued and unpaid Distributions, per Preferred Security. If, however,
the remarketing is unsuccessful, the Preferred Securities will pay Distributions
at a Floating Rate until any future time that the Company and the Trust elect to
remarket the Preferred Securities to set a new Fixed Rate and are able to successfully
remarket the Preferred Securities.
Fixed Rate Periods and Floating Rate Periods
can be of varying lengths and varying Distribution Rates. Distribution Rates on
the Preferred Securities may move back and forth between Fixed Rates and Floating
Rates over the life of the Preferred Securities.
There can be no assurance as to the market prices for
the Preferred Securities or the Subordinated Debt Securities.
There can be no assurance as to the market
prices for the Preferred Securities or the Subordinated Debt Securities that may
be distributed in exchange for Preferred Securities upon a dissolution of the Trust.
Accordingly, the Preferred Securities that an investor may purchase, whether pursuant
to the offer made by this Prospectus, in a remarketing or in the secondary market,
or the Subordinated Debt Securities that a holder of Preferred Securities may receive
upon a dissolution of the Trust, may trade at a discount to the price that the investor
paid to purchase the Preferred Securities offered by this Prospectus. As a result
of the Company’s right to defer interest payments on the Subordinated Debt
Securities, the market price of the Preferred Securities (which represent undivided
beneficial interests in the assets of the Trust, substantially all the assets of
which consist of the Subordinated Debt Securities) may be more volatile than the
market prices of other securities that are not subject to such optional deferrals.
The Company may dissolve the Trust at any time.
The Company has the right to dissolve the
Trust at any time. If the Company decides to exercise its right to dissolve the
Trust, after satisfying creditors of the Trust, if any, the Trust will liquidate
by distributing the Subordinated Debt Securities to holders of the Preferred Securities
and the Common Securities on a pro rata basis.
Under current United States federal income
tax law, a distribution of Subordinated Debt Securities to you on the dissolution
of the Trust should not be a taxable event to you. However, if the Trust is characterized
for United States federal income tax purposes as an association taxable as a corporation
at the time it is dissolved or if there is a change in law, the distribution of
Subordinated Debt Securities to you may be a taxable event to you.
The Company has no current intention of
causing the dissolution of the Trust and the distribution of the Subordinated Debt
Securities. The Company anticipates that it would consider exercising this right
in the event that expenses associated with maintaining the Trust were substantially
greater than currently expected such as if certain changes in tax law or investment
company law occurred. See Description of the Preferred Securities–Special
Event Redemption, Distribution of Subordinated Debt Securities. The Company
cannot predict the other circumstances under which this right would be exercised.
You have limited voting rights.
You will have limited voting rights. In
particular, subject to certain exceptions, only the Company can appoint or remove
any of the Securities Trustees. See Description of the Preferred Securities–Voting
Rights; Amendment of the Declaration.
8
Risks Relating to the Company’s Business
The Company is subject to various operational and
event risks, which are common to the utility industry.
Avista Utilities, the Company’s regulated
utility operation, is subject to operational and event risks including, among others,
increases in load demand, transmission or transport disruptions, fuel quality specifications,
forced outages at generating plants and disruptions to information systems and other
administrative tools required for normal operations. The Company also has exposure
to weather conditions and natural disasters that can cause physical damage to its
property, requiring repairs to restore utility service. The emergence of terrorism
threats, both domestic and foreign, is a risk to the entire utility industry, including
the Company. Potential disruptions to operations or destruction of facilities from
terrorism are not readily determinable.
The Company is subject to the commodity price risk,
credit risk and other risks associated with energy markets.
Both of the Company’s energy-related
businesses, Avista Utilities and Avista Energy, are subject to energy commodity
price risk. Price risk is, in general, the risk of fluctuation in the market price
of the commodity needed, held or traded. In the case of electricity, prices can
be affected by the adequacy of generating reserve margins, scheduled and unscheduled
outages of generating facilities, availability of streamflows for hydroelectric
generation, the price of thermal generating plant fuel, and disruptions or constraints
to transmission facilities. Demand changes (caused by variations in the weather
and other factors) can also affect market prices. Any combination of these factors
that results in a shortage of energy generally causes the market price of power
to move upward. Price risk also includes the risk of fluctuation in the market price
of associated derivative commodity instruments (such as options and forward contracts).
Price risk may also be influenced to the extent that the performance or non-performance
by market participants of their contractual obligations and commitments affect the
supply of, or demand for, the commodity.
Avista Utilities and Avista Energy are
also subject to credit risk. Credit risk relates to the risk of loss that the Company
would incur as a result of non-performance by counterparties of their contractual
obligations to deliver energy and make financial settlements.
Credit risk also involves the exposure
that counterparties perceive related to performance by the Company to perform deliveries
and settlement of energy transactions. These counterparties may seek assurance of
performance from the Company in the form of letters of credit, prepayment or cash
deposits, and, in the case of Avista Energy, parent company performance guarantees.
In periods of price volatility, the level of exposure can change significantly,
with the result that sudden and significant demands may be made against the Company’s
capital resource reserves (credit facilities and cash).
Avista Energy has concentrations of suppliers
and customers in the electric and natural gas industries including electric utilities,
natural gas distribution companies, and other energy marketing and trading companies.
In addition, Avista Energy has concentrations of credit risk related to geographic
location as Avista Energy operates in the western United States and western Canada.
These concentrations of counterparties and concentrations of geographic location
may negatively impact Avista Energy’s overall exposure to credit risk, because
the counterparties may be similarly affected by changes in economic, regulatory
or other conditions.
The Company’s commodity marketing and risk management
activities may increase the volatility in the Company’s results of operations.
Avista Energy engages in resource management
activities, as well as commodity marketing and trading. These activities include
entering into financial and physical derivative activities. These derivatives are
accounted for in accordance with SFAS No. 149, “Amendment of Statement 133
on Derivative Instruments and Hedging Activities.” SFAS 149 requires Avista
Energy to record all derivatives on the Consolidated Balance Sheet at market value.
Changes in the market value of derivatives are immediately recognized in earnings
unless they are designated as hedges of forecasted transactions. Changes in the
market value of derivatives accounted for as cash flow hedges of forecasted transactions
are deferred and recorded as a component of accumulated other comprehensive income
until the hedged transactions occur and are recognized in earnings. Most derivative
contracts are marked-to-market and changes in their market value, brought upon by
fluctuations in the underlying commodity prices, flow through the Consolidated Statements
of Income. As a result,
9
the Company is unable to predict the impact that its energy marketing
and resource management activities may have on its results of operations or financial
position.
The Company’s deferred power costs are subject
to regulatory review and it will take several years for recovery.
The Company defers the recognition in the
income statement of certain power supply costs that are in excess of the level currently
recovered from its retail customers as authorized by the Washington Utilities and
Transportation Commission (“WUTC”) and the Idaho Public Utilities Commission
(“IPUC”). These excess power supply costs are recorded as a deferred charge
on the balance sheet with certain of these costs remaining subject to future review
and the opportunity for recovery through retail rates.
In Washington, power costs are deferred
under an Energy Recovery Mechanism (“ERM”) as established by WUTC order.
The ERM allows the Company to increase or decrease electric rates periodically with
WUTC approval (subject to prudency review) to reflect changes in power supply costs.
Under the ERM, the Company agreed to make an annual filing on or before April
1st of each year to provide the opportunity for the WUTC and other interested parties
to review the prudence of and audit the ERM deferred power costs transactions for
the prior calendar year.
In Idaho, power costs are deferred under
a Power Cost Adjustment (“PCA”) mechanism, which allows the Company to
modify electric rates periodically with IPUC approval (subject to prudency review)
to recover or rebate a substantial portion of the difference between actual net
power supply costs and the amount included in base retail rates. The IPUC originally
approved a 19.4 percent surcharge in October 2001, which has been extended through
October 2004 for recovery of previously deferred power costs.
Despite the opportunity to eventually recover
a substantial portion of power and natural gas costs in excess of the levels currently
recovered from retail customers, the Company’s cash flows are negatively affected
in the periods in which these costs are paid. Factors that could cause the Company’s
purchased power costs to exceed the levels currently recovered from its customers
include, but are not limited to, higher prices in wholesale markets and/or increased
requirements to purchase power. Factors beyond the Company’s control that could
result in an increased need to purchase power include, but are not limited to, increases
in demand (either due to weather or customer growth), low availability of hydroelectric
resources, outages at generating facilities and failure of third parties to deliver
on energy or capacity contracts. The Company currently expects that the recovery
of current balances of deferred power costs will take several years.
The Company is currently the subject of several regulatory
proceedings and named in multiple lawsuits with respect to its activities in western
energy markets.
Since August 2002, the Company and other
market participants have been subject to an ongoing investigation by the Federal
Energy Regulatory Commission (“FERC”) into certain of the Company’s
trading practices in western energy markets. The Company has entered into an agreement
in resolution that has been certified by the FERC Chief Administrative Law Judge,
which, if approved by the FERC, would resolve all issues in this investigation.
However, certain California parties (the Office of the Attorney General, the California
Public Utilities Commission and the California Electricity Oversight Board, filing
jointly) have filed a motion challenging the resolution and certification of this
agreement.
The FERC is conducting proceedings and
investigations related to market controls within the western United States that
include proposals by certain parties to impose refunds. As a result, certain parties
have asserted claims for significant refunds from the Company, which could result
in liabilities for refunding revenues recognized in prior periods. The Company has
joined other parties in opposing these proposals. On June 25, 2003, the FERC denied
the request of certain parties for retroactive refunds for spot market sales in
the Pacific Northwest during the period from December 25, 2000 to June 20, 2001.
On July 25, 2003, several other parties filed requests for rehearing on the FERC’s
order on the Pacific Northwest refund proceedings. The requests for rehearing were
denied by the FERC in November 2003. A petition for review of the FERC’s decision
was filed by the City of Tacoma on December 24, 2003, with the United States Court
of Appeals for the Ninth Circuit.
There has also been a class action shareholder
lawsuit filed against the Company. On August 19, 2003, the plaintiffs filed their
consolidated amended class action complaint. In their complaint, the plaintiffs
assert violations of the federal securities laws in connection with alleged misstatements
and omissions of material fact pursuant to Sections 10(b)
10
and 20(a) of the Securities Exchange Act of 1934, as amended. In
particular, the plaintiffs allege that the Company did not have adequate risk management
processes, procedures and controls. The plaintiffs further allege that the Company
failed to disclose that it engaged in unlawful energy trading practices and that
it manipulated western power markets. The plaintiffs assert that alleged misstatements
and omissions have occurred in the Company’s filings with the Securities and
Exchange Commission (the “SEC”) and other information made publicly available
by the Company, including press releases. The Company filed a motion to dismiss
this complaint in October 2003 and the plaintiffs filed an answer to this motion
in January 2004. Arguments before the court on the motion are scheduled to be held
in March 2004.
Several parties, including the Port of
Seattle and the Attorney General of the State of Montana, have filed complaints
against numerous companies, including the Company, alleging various violations of
laws with respect to alleged manipulation of western energy markets.
At
this time, the Company cannot predict the outcome or potential impact of
these regulatory proceedings and lawsuits.
The Company has contingent liabilities with respect
to certain environmental matters.
The Company is subject to environmental
regulation by federal, state and local authorities. Current environmental issues
include a lawsuit filed against the owners of the Colstrip Generating Project (Colstrip).
The Company has a 15 percent ownership interest in units 3 and 4 of Colstrip, which
is located in southeastern Montana. The plaintiffs allege damages to buildings as
a result of rising ground water as well as damages from contaminated waters leaking
from the lakes and ponds of Colstrip.
Other environmental issues include contamination
of certain parcels of land that the Company currently owns or has formerly owned,
contamination of certain portions of the Spokane River, issues surrounding the relicensing
of the Company’s hydroelectric facilities on the Spokane River as well as the
levels of dissolved gas in waters downstream of its hydroelectric facilities and
the resulting impact on free ranging fish.
The Company needs to maintain adequate credit with banks.
The Company needs to maintain access to
adequate levels of credit with its banks. On May 13, 2003, the Company amended its
committed line of credit with various banks to increase the amount to $245.0 million
from $225.0 million and extend the expiration date to May 11, 2004. The committed
line of credit is secured by $245.0 million of non-transferable first mortgage bonds
of the Company issued to the agent banks. The Company is currently in discussion
with its banks for the renewal of the committed line of credit for an additional
year beyond the May 11, 2004 expiration date. However, at this time, the Company
cannot predict whether it will have access to credit beyond the expiration date.
The committed line of credit contains customary covenants and default provisions,
including covenants not to permit the ratio of “consolidated total debt”
to “consolidated total capitalization” of the Company to be, at the end
of any fiscal quarter, greater than 65%. As of December 31, 2003, the Company was
in compliance with this covenant. The committed line of credit also has a covenant
requiring the ratio of “earnings before interest, taxes, depreciation and amortization”
to “interest expense” of Avista Utilities for the twelve-month period
ending December 31, 2003 to be greater than 1.6 to 1. As of December 31, 2003, the
Company was in compliance with this covenant.
Although as of December 31, 2003 the Company
was in compliance with the covenants of all of its financing arrangements, any future
default on its committed line of credit or other financing arrangements could result
in cross-defaults to other agreements and could induce vendors and other counterparties
to demand collateral. In the event of default, it would be difficult for the Company
to obtain financing on any reasonable terms to pay creditors or fund operations,
and the Company would likely be prohibited from paying dividends on its common stock.
On July 25, 2003, Avista Energy and its
subsidiary, Avista Energy Canada, Ltd., as co-borrowers, entered into a committed
credit agreement with a group of banks in the aggregate amount of $110.0 million
expiring July 23, 2004. The Avista Energy credit agreement contains customary covenants
and default provisions, including covenants to maintain “minimum net working
capital” and “minimum net worth”, as well as a covenant limiting
the amount of indebtedness which the co-borrowers may incur. The credit agreement
also contains covenants and other restrictions related to Avista Energy’s trading
limits and positions, including Value-at-Risk limits, restrictions with respect
to changes in risk management policies or volumetric limits, and limits on exposure
related to hourly and daily trading of electricity. Also, a reduction in the long-term
credit rating of Avista Corp. to below BB+ or the equivalent thereof by Standard
& Poor’s Ratings Group, a division of McGraw-Hill, Inc., or Ba1 or the
equivalent thereof by Moody’s Investors Services, Inc.
11
would represent an event of default under Avista Energy’s credit
agreement. These covenants, certain counterparty agreements and current market liquidity
conditions result in Avista Energy maintaining certain levels of cash and therefore
effectively limit the amount of cash dividends that are available for distribution
to Avista Capital and ultimately Avista Corp. At this time, the Company cannot predict
whether Avista Energy will have access to credit beyond the July 23, 2004 expiration
date of its committed line of credit.
SAFE HARBOR FOR FORWARD-LOOKING
STATEMENTS
The Company is 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, the Company or
the Trust. 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, the Company 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 the Company
or the Trust, are also expressly qualified by these cautionary statements.
Such statements are inherently subject
to a variety of risks and uncertainties that could cause actual results to differ
materially from those expressed. Most of these uncertainties are beyond the Company’s
control. Such risks and uncertainties include, among others:
12
The Company’s expectations, beliefs and projections
are expressed in good faith and are believed by the Company to have a reasonable
basis including, without limitation, management’s examination of historical
operating trends, data contained in the Company’s records and other data available
from third parties. However, there can be no assurance that the Company’s 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. The Company
undertakes no obligation to update any forward-looking statement or statements to
reflect events or circumstances that occur after the date on which such statement
is made 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 such factors,
nor can it assess the impact of each such factor on the Company’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.
13
AVISTA CORPORATION AND SELECTED FINANCIAL
INFORMATION
Selected Financial Information
Set forth below is certain audited consolidated
financial information for the years ended December 31, 2003, 2002 and 2001. This
financial information has been derived from the consolidated financial statements
of the Company, which are incorporated herein by reference. The following material
should be read in conjunction with the Company’s consolidated financial statements
and related notes, management’s discussion and analysis of results of operations
and other financial information which are incorporated by reference herein.
General
The Company, which was incorporated in
the State of Washington in 1889, is an energy company engaged in the generation,
transmission and distribution of energy as well as other energy-related businesses.
The Company’s corporate headquarters are in Spokane, Washington, which serves
as the Inland Northwest center for manufacturing, transportation, health care, education,
communication, agricultural, financial and service businesses.
The Company has four business segments:
Avista Utilities is an operating division of the
Company comprising the regulated utility operations that started in 1889. Avista
Utilities generates, transmits and distributes electricity and distributes natural
gas. Avista Utilities also engages in wholesale purchases and sales of electric
capacity and energy. Avista Capital, a wholly-owned subsidiary of the Company, is
the parent company of all of the subsidiary companies in the non-utility business
segments.
Avista Utilities
Avista Utilities generates, transmits and
distributes electricity and distributes natural gas. Retail electric and natural
gas customers include residential, commercial and industrial classifications. Avista
Utilities also engages in wholesale purchases and sales of electric capacity and
energy as part of its resource management and load-serving obligations.
Avista Utilities provides electric distribution
and transmission as well as natural gas distribution services in a 26,000 square
mile area in eastern Washington and northern Idaho with a population of approximately
850,000. It also provides natural gas distribution service in a combined 4,000 square
mile area in northeast and southwest Oregon and the South Lake Tahoe region of California
with a population of approximately 495,000. At the end of 2003, Avista
14
Utilities supplied retail electric service to a total of 325,000
customers and retail natural gas service to a total of 298,000 customers across
its entire service territory.
In addition to providing electric transmission
and distribution services, Avista Utilities generates electricity from its owned
facilities. Avista Utilities owns and operates eight hydroelectric projects, a wood-waste
fueled generating station, a two-unit natural gas-fired combustion turbine (“CT”)
generating facility and two small generating facilities. In July 2003, the combined
cycle natural gas-fired Coyote Springs 2 Generation Project (“Coyote Springs
2”) was placed into operation. Avista Utilities has a 50 percent ownership
interest in Coyote Springs 2. Avista Utilities also owns a 15 percent share in a
two-unit coal-fired generating facility and leases and operates a two-unit natural
gas-fired CT generating facility. WP Funding LP, an entity that is included in the
Company’s consolidated financial statements and included in the Avista Utilities
business segment, owns the two-unit natural gas-fired CT generating facility that
is leased by Avista Utilities. In addition to company-owned resources, Avista Utilities
has a number of long-term power purchase and exchange contracts that increase its
available resources.
Energy Marketing and Resource Management
The Energy Marketing and Resource Management
business segment includes Avista Energy, Inc. (“Avista Energy”) and Avista
Power, LLC (“Avista Power”), both subsidiaries of Avista Capital.
Avista Energy is an electricity and natural
gas marketing, trading and resource management business, operating primarily within
the Western Electricity Coordinating Council geographic area, which is comprised
of eleven western states as well as the provinces of British Columbia and Alberta,
Canada. Avista Energy focuses on optimization of combustion turbines and hydroelectric
assets owned by other entities, long-term electric supply contracts, natural gas
storage, and electric and natural gas transmission and transportation arrangements.
Avista Energy is also involved in trading electricity and natural gas, including
derivative commodity instruments.
Avista Power is an investor in certain
generation assets, primarily its 49 percent interest in a 270-megawatt natural gas-fired
combustion turbine plant in northern Idaho (Lancaster Project), which commenced
commercial operation in September 2001. All of the output from the Lancaster Project
is contracted to Avista Energy through 2026.
Avista Advantage
Avista Advantage is a provider of utility
bill processing, payment and information services to multi-site customers throughout
North America. Avista Advantage’s solutions are designed to provide multi-site
companies with critical and easy-to-access information that enables them to proactively
manage and reduce their facility-related expenses.
Other
The Other business segment includes several
subsidiaries, including Avista Ventures, Inc., Pentzer Corporation, Avista Development
and certain other operations of Avista Capital. The Company continues to limit its
future investment in the Other business segment. Over time as opportunities arise,
the Company plans to dispose of assets and phase out of operations in the Other
business segment.
Discontinued Operations
In July and September 2003, the Company
announced total investments of $12.2 million by private equity investors in a new
entity, AVLB, Inc., which acquired the assets previously held by the Company’s
fuel cell manufacturing and development subsidiary, Avista Labs. As of December
31, 2003, Avista Corp. had an ownership interest of approximately 17.5 percent in
AVLB, Inc., with the opportunity but no further obligation to fund or invest in
this business.
Avista Communications, Inc., provided local
dial tone, data transport, internet services, voice messaging and other telecommunications
services to several communities in the western United States. In September 2001,
the Company decided to dispose of substantially all of the assets of Avista Communications,
Inc. The divestiture of operating assets was completed by the end of 2002.
15
AVA CAPITAL TRUST III
The Trust is a statutory trust created
under Delaware law by the filing of a certificate of trust with the Delaware Secretary
of State on November 4, 1996. The original name of the Trust was Washington Water
Power Capital III. The Trust’s name was changed to AVA Capital Trust III pursuant
to an amended and restated certificate of trust filed with the Delaware Secretary
of State on March 9, 2004. The Trust’s business is defined in a declaration
of trust, dated November 4, 1996, executed by the Company, as Sponsor, and the Securities
Trustees thereunder. This declaration was amended on March 9, 2004 to reflect the
change of the name of the Trust and to appoint new Securities Trustees. The declaration
of trust will be further amended and restated in its entirety on the Issue Date
substantially in the form filed as an exhibit to the Registration Statement of which
this Prospectus forms a part (the “Declaration”). The Declaration will
be qualified as an indenture under the Trust Indenture Act of 1939, as amended (the
“1939 Act”). The Trust exists for the exclusive purposes of (i) issuing
the Trust Securities representing undivided beneficial interests in the assets of
the Trust; (ii) investing the gross proceeds of the Trust Securities in the Subordinated
Debt Securities; (iii) maintaining its status as a grantor trust for federal income
tax purposes; (iv) making Distributions; and (v) engaging in only those other activities
necessary, appropriate, convenient or incidental thereto. The Trust has a term of
approximately 40 years, but may terminate earlier as provided in the Declaration.
Upon issuance of the Preferred Securities
offered by this Prospectus, the purchasers thereof will own all of the Preferred
Securities issued by the Trust. The Company will acquire all of the Common Securities,
which will have an aggregate liquidation amount equal to at least 3% of the total
capital of the Trust. The Common Securities will rank on a parity with, and payments
will be made thereon pro rata with, the Preferred Securities, except that upon the
occurrence and continuance of an Indenture Event of Default (as defined below),
the rights of the holders of Common Securities to payment in respect of distributions
and payments upon liquidation, redemption and otherwise will be subordinated to
the rights of the holders of the Preferred Securities.
The Trust’s business and affairs will
be conducted by the Securities Trustees, which shall be appointed by the Company
as the holder of the Common Securities. Two officers of the Company initially will
serve as the Regular Trustees. Union Bank of California, N.A. will serve as Institutional
Trustee and will hold legal title to the Subordinated Debt Securities issued by
the Company on behalf of the Trust and the holders of the Trust Securities. SunTrust
Delaware Trust Company will serve as Delaware Trustee. In certain circumstances,
the holders of a majority in liquidation amount of the Preferred Securities will
be entitled to appoint a substitute institutional trustee. See Description of
the Preferred Securities–Voting Rights.
The Institutional Trustee will hold legal
title to the Subordinated Debt Securities for the benefit of the Trust and the holders
of the Trust Securities and will have the power to exercise all rights, powers and
privileges under the Indenture as the holder of the Subordinated Debt Securities.
The Institutional Trustee will make payments of Distributions and payments on liquidation,
redemption and otherwise to the holders of the Trust Securities. Subject to the
right of the holders of the Preferred Securities to appoint a substitute Institutional
Trustee in certain instances, the Company, as the holder of all the Common Securities,
will have the right to appoint, remove or replace all the Securities Trustees.
The Subordinated Debt Securities will constitute
substantially all of the assets of the Trust. Other assets that may constitute “Trust
Property” (as that term is defined in the Declaration) include any cash on
deposit in, or owing to, the payment account as established under the Declaration,
as well as any other property or assets held by the Institutional Trustee pursuant
to the Declaration. In addition, the Trust may, from time to time, receive cash
pursuant to the Agreement as to Expenses and Liabilities.
The rights of the holders of the Preferred
Securities, including economic rights, rights to information and voting rights,
are as set forth in the Declaration, the Delaware Statutory Trust Act and the 1939
Act. See Description of the Preferred Securities.
The principal place of business of the
Trust shall be c/o the Company, 1411 East Mission Avenue, Spokane, Washington 99202,
telephone number (509) 489-0500.
16
CAPITALIZATION
The following table sets forth the Company’s
consolidated capitalization as of December 31, 2003, as well as the Company’s
consolidated cash balance and short-term debt (including the current portion of
long-term debt). The following data are qualified in their entirety by the Company’s
financial statements and other information incorporated herein by reference. The
“As Adjusted” column reflects the sale of the Preferred Securities, the
Company’s receipt of proceeds of approximately $ million from this offering
(after discounts and commissions and estimated offering expenses) and the application
of $ million of the proceeds as discussed under “Use of Proceeds”.
USE OF PROCEEDS
The Trust will invest the proceeds received
from the sale of the Trust Securities in the Subordinated Debt Securities. The net
proceeds received by the Company from such investment, together with other available
funds, will be used by the Company to redeem $60 million in aggregate outstanding
principal amount of the Company’s 7 7/8% Junior Subordinated Deferrable Interest
Debentures, Series A, due 2037 which will, in turn, cause the redemption of the
Avista Capital I 7 7/8% Trust Originated Preferred Securities, Series A.
ACCOUNTING TREATMENT
For financial reporting purposes, the Subordinated
Debt Securities issued by the Company to the Trust will be included as a liability
on the Company’s consolidated balance sheet under Long-Term Debt to Affiliated
Trusts. The Company’s investment in the Common Securities of the Trust will
be included as an asset on the Company’s consolidated balance sheet as an Investment
in Affiliated Trusts. Interest payments on the Subordinated Debt Securities will
be included in interest expense on the consolidated statement of income. Distributions
on the Common Securities held by the Company will be included in interest income
on the consolidated statements of income.
DESCRIPTION OF THE PREFERRED
SECURITIES
The Preferred Securities will be issued
pursuant to the terms of the Declaration. The Declaration will be qualified as an
indenture under the 1939 Act. The Institutional Trustee will act as the Indenture
Trustee with respect to the Trust, as well as the Guarantee, for purposes of compliance
with the provisions of the 1939 Act. The terms of the Preferred Securities will
include those stated in the Declaration and the Delaware Statutory Trust Act and
those made part of the Declaration by the 1939 Act. The following summary of the
principal terms and provisions of the Preferred Securities does not purport to be
complete and is subject to, and qualified in its entirety by reference to, the Declaration,
the form of which is filed as an exhibit to the Registration Statement of which
this Prospectus is a part, as well as the Delaware Statutory Trust Act and 1939
Act.
17
General
The Declaration authorizes the Regular
Trustees, on behalf of the Trust, to issue the Preferred Securities, which represent
preferred undivided beneficial interests in the assets of the Trust, and the Common
Securities, which represent common undivided beneficial interests in the assets
of the Trust. All of the Common Securities will be owned by the Company. The Common
Securities rank on a parity with, and payments will be made thereon on a pro rata
basis with, the Preferred Securities, except that upon the occurrence of an Indenture
Event of Default, the rights of the holders of the Common Securities to receive
payment of periodic Distributions and payments upon liquidation, redemption and
otherwise will be subordinated to the rights of the holders of the Preferred Securities.
The Declaration does not permit the issuance by the Trust of any securities other
than the Trust Securities or the incurrence of any indebtedness by the Trust. Pursuant
to the Declaration, the Institutional Trustee will own and hold the Subordinated
Debt Securities for the benefit of the Trust and the holders of the Trust Securities.
The payment of Distributions out of money held by the Trust, and payments upon redemption
of the Preferred Securities or liquidation of the Trust, are guaranteed by the Company
on a subordinated basis as and to the extent described under the captions Risk
Factors–Risks Relating to the Preferred Securities–The Company’s
obligations under the Guarantee and the Subordinated Debt Securities are subordinated
and Description of the Guarantee. The Guarantee does not cover payment of
Distributions on the Preferred Securities when the Trust does not have funds available
on hand sufficient to make such Distributions. In such event, the remedy of a holder
of Preferred Securities is to direct the Institutional Trustee to enforce its rights
on the Subordinated Debt Securities. In addition, a holder of Preferred Securities
may institute a legal proceeding directly against the Company, without first instituting
a legal proceeding against the Institutional Trustee or any other person or entity,
for enforcement of payment to such holder of principal of or interest on the Subordinated
Debt Securities having a principal amount equal to the aggregate stated liquidation
amount of the Preferred Securities of such holder on or after the due dates specified
in the Subordinated Debt Securities. The above mechanisms and obligations, together
with the Company’s obligations under the Agreement as to Expenses and Liabilities,
constitute a full and unconditional guarantee by the Company of payments due on
the Preferred Securities.
Distributions
General
The Initial Distribution Rate on the Preferred
Securities will be % per annum, payable semiannually in arrears, for the
Initial Fixed Rate Period.
The Company and the Trust will have the
option to remarket the Preferred Securities prior to the expiration of the Initial
Fixed Rate Period to establish a new Fixed Rate with respect to the Preferred Securities
(to be in effect after the Initial Fixed Rate Period). Any new Fixed Rate so established
will be in effect for such Fixed Rate Period as the Company and the Trust determine
in connection with the remarketing, provided that a Fixed Rate Period must be for
a duration of at least six months, may not extend beyond the stated maturity of
the Subordinated Debt Securities and may not end on a day other than a day immediately
preceding a Distribution Payment Date. Distributions on Preferred Securities during
any Fixed Rate Period will be payable semiannually in arrears. Prior to expiration
of any Fixed Rate Period, the Company and the Trust will have the option to again
remarket the Preferred Securities to establish a new Fixed Rate for a new Fixed
Rate Period (to be in effect after the expiration of the then current Fixed Rate
Period). In a Fixed Rate Period subsequent to the Initial Fixed Rate Period, the
Company and the Trust also have the option to remarket the Preferred Securities
for the purpose of establishing a new Fixed Rate for a new Fixed Rate Period prior
to any Distribution Payment Date during a time in which Preferred Securities are
redeemable.
If the Company and the Trust do not remarket
the Preferred Securities prior to expiration of the Initial Fixed Rate Period or
any subsequent Fixed Rate Period, or if they are unable to successfully remarket
all Preferred Securities tendered for sale in a remarketing, Distributions on the
Preferred Securities will thereafter be payable at the Floating Rate, subject to
the right of the Company and the Trust to subsequently remarket Preferred Securities
to again establish a Fixed Rate for a new Fixed Rate Period. During any Floating
Rate Period, Distributions on the Preferred Securities will be payable quarterly
in arrears. The Company and the Trust may elect to remarket the Preferred Securities
prior to any Distribution Payment Date relating to a Floating Rate Period in order
to again establish a new Fixed Rate for a new Fixed Rate Period (to be in effect
after the expiration of the then current Distribution Period).
During the Initial Fixed Rate Period, Distributions
will be payable semiannually in arrears on and of each year, commencing
on ,
2004. In any subsequent Fixed Rate Period, Distributions
will be payable semi-
18
annually in arrears determined based on the Remarketing Date (if
the Preferred Securities are remarketed for a new Fixed Rate Period that begins
on or , Distributions will be payable on and of each year, and if the Preferred
Securities are remarketed for a new Fixed Rate Period that begins on or , Distributions will be payable on and of each year).
Distributions during any Floating Rate Period will be payable on ,
, and of each year. Distributions not paid on a Distribution
Payment Date will (to the extent permitted by law) accumulate and be compounded
semiannually at the Fixed Rate or quarterly at the Floating Rate, as applicable,
then in effect.
If any Distribution Payment Date with respect
to a Fixed Rate Period is not a Business Day, then Distributions will be payable
on the first Business Day following such Distribution Payment Date with the same
force and effect as if payment had been made on the date such payment was originally
payable (and without the accrual of any additional amount of Distributions). If
any Distribution Payment Date with respect to a Floating Rate Period is not a Business
Day, then Distributions will be payable on the first Business Day following such
Distribution Payment Date and Distributions will accrue to the actual payment date
(except for a Distribution Payment Date that coincides with the Redemption Date).
Distributions will be payable on the Distribution
Payment Date to holders of record as of the opening of business on the Business
Day immediately preceding such Distribution Payment Date (the “Record Date”).
The amount of Distributions per Preferred
Security payable on each semiannual Distribution Payment Date relating to a Fixed
Rate Period will be computed on the basis of a 360-day year of twelve 30-day months.
The amount of Distributions per Preferred Security payable on each quarterly Distribution
Payment Date in respect of a Floating Rate Period will be computed by multiplying
the per annum Distribution Rate in effect for such Distribution Period by a fraction,
the numerator of which will be the actual number of days in such Distribution Period
(or portion thereof) (determined by including the first day thereof and excluding
the last thereof) and the denominator of which will be 360, and multiplying the
rate so obtained by $1,000.
Distributions on the Preferred Securities
must be paid on the Distribution Payment Dates to the extent that the Trust has
funds on hand available for the payment of such Distributions. The Trust’s
funds available for distribution to the holders of the Preferred Securities will
be limited to payments received on the Subordinated Debt Securities. See Description
of the Subordinated Debt Securities.
Determining the Floating Rate
On the Floating Rate Determination Date
(as defined below) for any Floating Rate Period, the Calculation Agent (as defined
below) will calculate the Floating Rate and the amount of Distributions payable
on each quarterly Distribution Payment Date relating to a Floating Rate Period.
Promptly upon such determination, the Calculation Agent will notify the Company,
the Indenture Trustee and the Institutional Trustee, if the Institutional Trustee
or the Indenture Trustee is not then serving as the Calculation Agent, of the Floating
Rate for the new Distribution Period. The Floating Rate determined by the Calculation
Agent, absent manifest error, will be binding and conclusive upon the beneficial
owners and holders of the Preferred Securities, the Company and the Securities Trustees.
Except as provided below, the Floating
Rate for any Floating Rate Period for the Preferred Securities will be equal to
the Adjustable Rate (as defined below) plus % (the “Initial Credit Spread”).
The “Adjustable Rate” for any Distribution Period will be equal to the
highest of the 3-month LIBOR Rate, the 10-year Treasury CMT and the 30-year Treasury
CMT (each as defined below and collectively referred to as the “Benchmark Rates”)
for such Distribution Period during the Floating Rate Period. In the event that
the Calculation Agent determines in good faith that for any reason:
The “3-month LIBOR Rate” means, for
each Distribution Period, the arithmetic average of the two most recent weekly quotes
for deposits for U.S. Dollars having a term of three months, as published on the
first Business Day of each week immediately preceding the Distribution Period for
which the Floating Rate is being determined. Such quotes will be taken from Telerate
Page 3750 at approximately 11:00 a.m. London time on the relevant date. If such
rate does not appear on Telerate Page 3750 on the Floating Rate Determination Date,
the 3-month LIBOR Rate will be the arith
19
metic mean of the rates quoted by three major banks in New York City
selected by the Calculation Agent, at approximately 11:00 a.m., New York City time,
on the Floating Rate Determination Date for loans in U.S. Dollars to leading European
banks for a period of three months.
The “10-year Treasury CMT” means
the rate determined in accordance with the following provisions:
The “30-year Treasury CMT” has the meaning
specified under the definition of 10-year Treasury CMT, except that the Designated
CMT Maturity Index for the 30-year Treasury CMT shall be 30 years.
20
CALCULATION OF
REGISTRATION FEE
Proposed maximum
Proposed maximum
Amount to
offering price
aggregate offering
be registered
price
per unit(1)(2)
$20,000,000
(1)
Estimated solely for the purpose
of calculating the registration fee pursuant to Rule 457.
(2)
Exclusive of accrued interest and
dividends, if any.
(3)
Pursuant to Rule 457(n), no separate
consideration is to be received for the Guarantees.
(4)
Includes the obligations of Avista
Corporation under the Declaration of Trust, the applicable indenture, the related
series of Subordinated Debt Securities, the Guarantee and the Agreements as to Expenses
and Liabilities, which include Avista Corporation’s covenant to pay any indebtedness,
expenses or liabilities of the Trust (other than obligations pursuant to the terms
of the Preferred Securities or other similar interests), all as described in this
Registration Statement.
60,000 Preferred Securities
Flexible Trust Preferred Securities
(T-FLEXSM)
(Five Year Initial Fixed Rate Period)
(Liquidation Amount $1,000 per Preferred
Security)
Per
Preferred
Initial public
offering price(1)
$
$
Underwriting
commissions to be paid by Avista Corporation
$
$
Proceeds to AVA Capital Trust
III
$
Page
Summary
Information – Q&A
1
Risk Factors
6
Safe Harbor for Forward-Looking
Statements
12
Avista Corporation
and Selected Financial Information
14
AVA Capital Trust III
16
Capitalization
17
Use of Proceeds
17
Accounting
Treatment
17
Description of the Preferred
Securities
17
Description
of the Guarantee
34
Description of the Subordinated
Debt Securities
36
Relationship
Among the Preferred Securities, the Subordinated Debt Securities and the Guarantee
47
Certain United States Federal
Income Tax Consequences
48
Certain ERISA
Considerations
50
Where You Can Find More Information
52
Underwriting
53
Legal Opinions
54
Experts
54
Glossary of Terms Used in the
Prospectus
A-1
•
declare or pay any
dividend on, make any distribution or liquidation payment with respect to, or redeem,
purchase or exchange any of its capital stock, or
•
make any payment of
principal, premium, if any, or interest, if any, on or repay, repurchase or redeem
any of its debt securities that rank pari passu with or junior in right of payment
to the Subordinated Debt Securities, or
•
make any guarantee
payments with respect to the foregoing (other than pursuant to the Guarantee).
•
•
•
its obligations under
the Declaration of Trust and the Agreement as to Expenses and Liabilities between
the Company and the Trust (the “Agreement as to Expenses and Liabilities”).
•
subordinate and junior
in right of payment to all of its other liabilities, including the Subordinated
Debt Securities, except those obligations or liabilities made pari passu or subordinate
by their terms;
•
pari passu with its
most senior preferred or preference stock, now or hereafter issued by it and with
any guarantee now or hereafter entered into by it in respect of any preferred or
preference securities by any of its affiliates; and
•
senior to its common
stock.
•
subordinate and junior
in right of payment to all of its other liabilities, including the Subordinated
Debt Securities, except those obligations or liabilities made pari passu or subordinate
by their terms;
•
pari passu with its
most senior preferred or preference stock, now or hereafter issued by it and with
any guarantee now or hereafter entered into by it in respect of any preferred or
preference securities by any of its affiliates; and
•
senior to its common
stock.
•
may directly sue
the Company or seek other remedies to collect your pro rata share of payments
owed;
or
•
may rely on the Institutional Trustee to enforce
the Trust’s rights under the Subordinated Debt Securities.
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Year
Ended December 31,
2003
2002
2001
(in millions of dollars,
except ratios)
Operating
Revenues
$1,123
$1,063
$1,512
Operating Income
172
157
184
Income From
Continuing Operations
51
42
68
Net Income
45
31
12
Income for
Common Stock
43
29
10
Ratios of Earnings to Fixed Charges(1)
1.88
1.69
1.98
(1)
The ratios for the years 2000 and
1999 were 3.62 and 1.71, respectively. The ratios are computed using the consolidated
earnings and fixed charges of the Company and its subsidiaries. Earnings consist
of Income from Continuing Operations increased by, income tax expense and fixed
charges. Fixed charges consist of interest on debt and preferred trust securities,
net amortization of debt expense and premium, and the interest portion of rentals.
•
Avista Utilities;
•
Energy Marketing and
Resource Management;
•
Avista Advantage,
Inc. (“Avista Advantage”); and
•
Other.
As
of December 31, 2003
Actual
Short-Term
Debt (including current portion of long-term debt)(1)
110
110
Long-Term Debt(1)
925
925
Long-Term Debt to Affiliated
Trusts
113
113
Preferred Stock
(including current portion)
32
32
Common Equity
751
751
Total
Capitalization
$1,931
$1,931
(1)
Long-term debt includes $343 million
of first mortgage bonds. Short-term debt includes indebtedness outstanding under
the Company’s $245 million revolving credit agreement, $80 million outstanding
at December 31, 2003 and $80 million, as adjusted. The Company has delivered $245
million of non-transferable first mortgage bonds to the agent bank in order to secure
its obligations under the revolving credit agreement. Short-term debt also includes
approximately $29 million of maturing unsecured medium-term notes.
•
•
•
•
•
•
•
•
•
The 3-month LIBOR Rate, the 10-year Treasury CMT and the 30-year Treasury CMT shall each be rounded to the nearest hundredth of a percent.
The Floating Rate with respect to each Floating Rate Period will be calculated as promptly as practicable by the Calculation Agent according to the appropriate method described above.
“Business Day” means a day other than (i) a Saturday or Sunday; (ii) a day on which banks in New York, New York are authorized or obligated by law or executive order to remain closed; or (iii) a day on which the Indenture Trustee’s corporate trust office is closed for business.
“Calculation Agent” means Union Bank of California, N.A., or its successor appointed by the Company and the Trust, acting as calculation agent.
“Designated CMT Maturity Index” means the original period to maturity of the U.S. Treasury securities (10 years) with respect to which the 10-year Treasury CMT will be calculated.
“Floating Rate Determination Date” means the second London Business Day immediately preceding the first day of the relevant Distribution Period in the Floating Rate Period.
“London Business Day” means a
day that is a Business Day and a day on which dealings in deposits in U.S.
dollars are transacted, or with respect to any future date are expected to
be transacted,
in the London interbank market.
“Telerate Page 3750” means the
display designated on page 3750 on MoneyLine Telerate (or such other page as may
replace the 3750 page on the service or such other service as may be nominated by
the British Bankers’ Association for the purpose of displaying London interbank
offered rates for U.S. Dollars deposits).
“Telerate Page 7051” means the
display on MoneyLine Telerate (or any successor service), on such page (or any other
page as may replace such page on that service), for the purpose of displaying Treasury
Constant Maturities as reported in H.15(519).
Deferred Distributions
The Company has the right under the Indenture
to defer payments of interest on the Subordinated Debt Securities by extending the
interest payment period from time to time on the Subordinated Debt Securities which,
if exercised, would defer Distributions on the Preferred Securities. During any
Extension Period, Distributions will continue to accrue on the Preferred Securities
at the then applicable Distribution Rate.
If the Company elects to defer interest
during a Fixed Rate Period, Distributions will continue to accrue and be compounded
semiannually at the Fixed Rate until the expiration of the Fixed Rate Period. Upon
expiration of such Fixed Rate Period and any subsequent Fixed Rate Period during
the Extension Period, the Company and the Trust will have the option to remarket
the Preferred Securities for a new Fixed Rate Period. If the Company and the Trust
do not remarket the Preferred Securities, the Floating Rate during the Extension
Period will not be less than the Fixed Rate for the Fixed Rate Period just ended.
If the Company elects to defer interest
during a Floating Rate Period, Distributions will continue to accrue and be compounded
quarterly at the applicable Floating Rate, reset quarterly, subject to the right
of the Company and the Trust to remarket the Preferred Securities prior to any Distribution
Payment Date in order to establish a new Fixed Rate for a new Fixed Rate Period.
An Extension Period will not extend beyond
the stated maturity of the Subordinated Debt Securities. Prior to the termination
of any Extension Period, the Company may further defer payments of interest provided
that the Extension Period, together with all such previous and further extensions
thereof, may not exceed five years. The Company may only terminate an Extension
Period on an Interest Payment Date (as defined below). Upon the termination of any
Extension Period and the payment of all amounts then due, the Company may select
a new Extension Period, subject to the above requirements. There could be multiple
Extension Periods of varying lengths throughout the term of the Subordinated Debt
Securities.
Deferred installments of interest on the
Subordinated Debt Securities will bear interest, compounded on each Interest Payment
Date, at a rate per annum equal to the applicable Distribution Rate. Any deferred
Distributions and accumulations thereof will be payable to holders of record of
the Preferred Securities as they appear on the books and records
21
of the Trust on the Record Date next preceding the termination of
such Extension Period. See Description of the Subordinated Debt Securities–Interest
and –Option to Extend Interest Payment Period.
Redemption
The Preferred Securities are subject to
mandatory redemption upon repayment of the Subordinated Debt Securities at stated
maturity, their earlier redemption or when they are otherwise due.
The Subordinated Debt Securities will mature
on . The Subordinated Debt Securities may be redeemed, in whole, but not in part,
at the option of the Company at the Debt Securities Redemption Price:
Upon the payment of the Subordinated Debt Securities,
whether at maturity, upon redemption or when they are otherwise due, the proceeds
from such payment will simultaneously be applied to redeem a like amount of Trust
Securities upon not less than 30 nor more than 60 days’ notice at the Preferred
Securities Redemption Price. See Description of the Subordinated Debt Securities–Redemption.
Special Event Redemption; Distribution of Subordinated
Debt Securities
As described above, upon the occurrence
of a Special Event at any time, the Company will have the option to redeem the Subordinated
Debt Securities in whole (and thus cause the redemption of the Preferred Securities
in whole) (a “Special Event Redemption”). A Special Event is either an
Investment Company Act Event or a Tax Event.
An “Investment Company Act Event”
means the receipt by the Regular Trustees and the Company of an opinion of independent
counsel (which may be counsel to the Company) to the effect that, as a result of
a change in law or regulation or a written change (including any announced prospective
change) in interpretation or application of law or regulation by any legislative
body, court, governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or will be considered an investment company
that is required to be registered under the Investment Company Act of 1940, as amended
(the “1940 Act”), which change or prospective change becomes effective
or would become effective, as the case may be, after the Issue Date.
“Tax Event” means the receipt
by the Regular Trustees and the Company of an opinion from independent tax counsel
experienced in such matters (which may be counsel to the Company) to the effect
that, as a result of (a) any amendment to, or change (including any announced proposed
change) in, the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority thereof or therein or (b) any amendment
to, or change in, an interpretation or application of such laws or regulations,
there is more than an insubstantial risk that (i) the Trust would be subject to
United States federal income tax with respect to income accrued or received on the
Subordinated Debt Securities; (ii) interest payable on the Subordinated Debt Securities
would not be deductible, in whole or in part, by the Company for United States federal
income tax purposes; or (iii) the Trust would be subject to more than a de minimis
amount of other taxes, duties or other governmental charges, which change or amendment
becomes effective on or after the Issue Date.
The Company will have the right at any
time to terminate the Trust and, after satisfaction of liabilities to creditors
of the Trust, if any, cause the Subordinated Debt Securities to be distributed to
the holders of the Preferred Securities in liquidation of the Trust. See –Termination
of Trust; Liquidation Distribution below. This right is optional and wholly
within the discretion of the Company. Circumstances under which the Company may
determine to exercise such right could include the occurrence of an Investment Company
Act Event or a Tax Event, adverse tax consequences to the Company or the Trust that
are not within the definition of a Tax Event because they do not result from an
amendment or change described in such definition or changes in the accounting requirements
applicable to the Preferred Securities as described under Accounting Treatment.
If Subordinated Debt Securities are distributed
to the holders of the Preferred Securities, the Interest Rate, interest payable,
Interest Periods and Interest Payment Dates for the Subordinated Debt Securities
will be determined in
22
the same manner as the Distribution Rate, Distributions, Distribution
Periods and Distribution Payment Dates for the Preferred Securities and the associated
remarketing procedures shall remain the same except (i) the effects of Declaration
Events of Default (as defined below) shall be occasioned only by the Indenture Events
of Default and (ii) the cure and waiver provisions relating to Declaration Events
of Default shall be superceded by the cure and waiver provisions relating to Indenture
Events of Default. See Description of the Subordinated Debt Securities–Indenture
Events of Default. After the date for any distribution of Subordinated Debt
Securities upon termination of the Trust, (i) the Preferred Securities and the Guarantee
will no longer be deemed to be outstanding; (ii) the securities depositary or its
nominee, as the record holder of the Preferred Securities, will receive a registered
global certificate or certificates representing the Subordinated Debt Securities
to be delivered upon such distribution; and (iii) any certificates representing
Preferred Securities and the Guarantee not held by the securities depositary or
its nominee will be deemed to represent Subordinated Debt Securities having an aggregate
principal amount equal to the aggregate stated liquidation amount of, with an Interest
Rate identical to the Distribution Rate of, and accrued and unpaid interest equal
to accrued and unpaid Distributions on, such Preferred Securities, until such certificates
are presented to the Company or its agent for transfer or reissuance.
There can be no assurance as to the market
prices for the Preferred Securities or the Subordinated Debt Securities that may
be distributed in exchange for the Preferred Securities if a termination and liquidation
of the Trust were to occur. Accordingly, the Preferred Securities that an investor
may purchase, or the Subordinated Debt Securities that the investor may receive
on termination and liquidation of the Trust, may trade at a discount to the price
that the investor paid to purchase the Preferred Securities offered hereby.
Redemption Procedures
Redemption of the Preferred Securities
shall be at the Preferred Securities Redemption Price with the proceeds from the
simultaneous redemption of the Subordinated Debt Securities. The Preferred Securities
Redemption Price shall be deemed payable on each Redemption Date only to the extent
that the Trust has funds on hand available for payment of such Preferred Securities
Redemption Price.
If the Trust gives a notice of redemption
in respect of any Preferred Securities, then, by 12:00 noon, New York City time,
on the Redemption Date, to the extent funds are available, in the case of Preferred
Securities held in book-entry form, the Institutional Trustee will deposit irrevocably
with the depository funds sufficient to pay the Preferred Securities Redemption
Price and will give the depository irrevocable instructions and authority to pay
the Preferred Securities Redemption Price to the holders of the Preferred Securities.
With respect to Preferred Securities not held in book-entry form, the Institutional
Trustee, to the extent funds are available, will irrevocably deposit with the paying
agent for the Preferred Securities funds sufficient to pay the Preferred Securities
Redemption Price and will give the paying agent irrevocable instructions and authority
to pay the Preferred Securities Redemption Price to the holders upon surrender of
their certificates evidencing the Preferred Securities. Notwithstanding the foregoing,
Distributions payable on or prior to the Redemption Date for any Preferred Securities
called for redemption will be payable to the holders of the Preferred Securities
on the relevant Record Dates for the related Distribution Dates. If notice of redemption
has been given (or if the Company has given irrevocable instructions to the Institutional
Trustee to give notice of redemption) and if funds have been deposited as required,
then upon the date of the deposit all rights of the holders of the Preferred Securities
so called for redemption will cease, except the right of the holders of the Preferred
Securities to receive the Preferred Securities Redemption Price, and any Distribution
payable in respect of the Preferred Securities, but without interest on the Preferred
Securities Redemption Price, and the Preferred Securities will cease to be outstanding.
In the event that payment of the Preferred Securities Redemption Price in respect
of Preferred Securities called for redemption is improperly withheld or refused
and not paid either by the Trust or by the Company pursuant to the Guarantee as
described under Description of the Guarantee, Distributions on the Preferred
Securities will continue to accumulate at the then applicable rate, from the Redemption
Date originally established by the Trust for the Preferred Securities to the date
the Preferred Securities Redemption Price is actually paid, in which case the actual
payment date will be the date fixed for redemption for purposes of calculating the
Preferred Securities Redemption Price.
Notice of any redemption of the Preferred
Securities will be mailed at least 30 days but not more than 60 days before the
redemption date to each registered holder of Preferred Securities to be redeemed
at its address appearing on the securities register for the Trust Securities. As
provided in the Indenture, any notice of redemption of the Subordinated Debt Securities
at the option of the Company may state that such redemption will be conditional
upon receipt by the paying agent or agents, on or before the date fixed for such
redemption, of money sufficient to pay the principal of and premium, if any, and
interest, if any, on such Subordinated Debt Securities and that if such money has
not been
23
received, such notice will be of no force or effect and the Company
will not be required to redeem such Subordinated Debt Securities. In such case,
the Trust will not be required to redeem the Preferred Securities. Unless the Company
defaults in payment of the Debt Securities Redemption Price on the related Subordinated
Debt Securities, on and after the Redemption Date interest will cease to accrue
on the Subordinated Debt Securities or portions of them called for redemption and
Distributions will cease to accumulate on the Preferred Securities.
Subject to the foregoing and to applicable
law (including, without limitation, United States federal securities laws), the
Company or its affiliates may, at any time and from time to time, purchase outstanding
Preferred Securities by tender, in the open market or by private agreement.
Remarketing
Remarketing Procedures
Set forth below is a summary of the procedures
to be followed in connection with a remarketing of the Preferred Securities (or,
if the Subordinated Debt Securities have been distributed to holders of the Trust
Securities in liquidation of the Trust, the Subordinated Debt Securities):
If the Company and the Trust elect to conduct
a remarketing, not less than 20 nor more than 35 Business Days prior to the related
Election Date, the Trust is required to give the notice of remarketing of the Preferred
Securities to DTC, the Remarketing Agent, the Institutional Trustee, the Indenture
Trustee and the Calculation Agent. Such notice will describe the remarketing and
will indicate the length of the proposed new Fixed Rate Period, the proposed Remarketing
Date and any redemption provisions that will apply during such new Fixed Rate Period.
At any time prior to the Election Date, the Company and the Trust may elect to terminate
a remarketing by giving DTC, the Remarketing Agent, the Institutional Trustee, the
Indenture Trustee and the Calculation Agent notice of such termination.
Not later than 4:00 p.m., New York City
time, on an Election Date, each holder of Preferred Securities may give, through
the facilities of DTC, a notice to the Institutional Trustee of its election (“Notice
of Election”) (i) to retain and not to have all or any portion of the Preferred
Securities owned by it remarketed in the remarketing, or (ii) to tender all or any
portion of such Preferred Securities for purchase in the remarketing (such portion,
in either case, is required to be in the liquidation amount of $1,000 or any integral
multiple thereof). Any Notice of Election given to the Institutional Trustee will
be irrevocable and may not be conditioned upon the level at which the Fixed Rate
is established in the remarketing. Promptly after 4:30 p.m., New York City time,
on such Election Date, the Institutional Trustee, based on the Notices of Election
received by it through DTC prior to such time, will notify the Trust, the Company
and the Remarketing Agent of the number of Preferred Securities to be retained by
holders of Preferred Securities and the number of Preferred Securities tendered
for purchase in the remarketing.
If any holder of Preferred Securities gives
a Notice of Election to tender Preferred Securities as described in clause (ii)
in the prior paragraph, the Preferred Securities so subject to such Notice of Election
will be deemed tendered for purchase in the remarketing, notwithstanding any failure
by such holder to deliver or properly deliver such Preferred Securities to the Remarketing
Agent for purchase. If any holder of Preferred Securities fails timely to deliver
a Notice of Election, as described above, such Preferred Securities will be deemed
tendered for purchase in such remarketing, notwithstanding such failure or the failure
by such holder to deliver or properly deliver such Preferred Securities to the Remarketing
Agent for purchase.
The right of each holder of Preferred Securities
to have Preferred Securities tendered for purchase shall be limited to the extent
that (i) the Remarketing Agent conducts a remarketing pursuant to the terms of the
Remarketing Agreement (as defined below); (ii) Preferred Securities tendered have
not been called for redemption; (iii) the Remarketing Agent is able to find a purchaser
or purchasers for tendered Preferred Securities at a Fixed Rate; and (iv) such purchaser
or purchasers deliver the purchase price therefor to the Remarketing Agent.
Any holder of Preferred Securities that
desires to continue to maintain an investment in a number of Preferred Securities,
but only if the Fixed Rate is not less than a rate per annum specified by such holder,
should submit a Notice of Election to tender such number of Preferred Securities
and separately notify the Remarketing Agent of its interest at the telephone number
set forth in the notice of remarketing. If such holder so notifies the Remarketing
Agent, the Remarketing Agent will give priority to such holder’s purchase of
such number of Preferred Securities in the remarketing, providing that the Fixed
Rate is not less than such specified rate.
24
If holders submit Notices of Election to retain all of the Preferred
Securities then outstanding, the Fixed Rate will be the rate determined by the Remarketing
Agent, in its sole discretion, as the rate that would have been established had
a remarketing been held on the related Remarketing Date.
On any Remarketing Date on which the remarketing
is to be conducted, the Remarketing Agent will use commercially reasonable efforts
to remarket, at a price equal to 100% of the liquidation amount thereof, Preferred
Securities tendered or deemed tendered for purchase.
If, as a result of such efforts, on any
Remarketing Date, the Remarketing Agent has determined that it will be able to remarket
all Preferred Securities tendered or deemed tendered for purchase in the remarketing
at a Fixed Rate and at a price of $1,000 per Preferred Security, prior to 4:00 p.m.,
New York City time, on such Remarketing Date, the Remarketing Agent will determine
the Fixed Rate, which will be the rate per annum (rounded to the nearest one-thousandth
(0.001) of one percent per annum) which the Remarketing Agent determines, in its
sole judgment, to be the lowest Fixed Rate per annum that will enable it to remarket
all Preferred Securities tendered or deemed tendered for sale in the remarketing
at a price of $1,000 per Preferred Security.
If the Remarketing Agent is unable to remarket
by 4:00 p.m., New York City time on the third Business Day prior to the Remarketing
Settlement Date, all Preferred Securities tendered or deemed tendered for purchase
at a price of $1,000 per Preferred Security, the Distribution Rate will be the Floating
Rate. In such case, no Preferred Securities will be sold in the remarketing and
each holder will continue to hold its Preferred Securities.
All Preferred Securities tendered or deemed
tendered in the remarketing will be automatically delivered to the account of the
Remarketing Agent through the facilities of DTC against payment of the purchase
price therefor on the Remarketing Settlement Date. The Remarketing Agent will make
payment to the Participant (as defined below) of each tendering holder of Preferred
Securities in the remarketing through the facilities of DTC by the close of business
on the Remarketing Settlement Date.
In accordance with DTC’s normal procedures,
on the Remarketing Settlement Date, the transactions described above with respect
to each Preferred Security tendered for purchase and sold in the remarketing will
be executed through DTC and the accounts of the Participants (as defined below)
will be debited and credited and such Preferred Securities delivered by book entry
as necessary to effect purchases and sales of such Preferred Securities. DTC is
expected to make payment in accordance with its normal procedures.
If the Preferred Securities are no longer
held by DTC and if any holder selling Preferred Securities in the remarketing fails
to deliver such Preferred Securities, the Participant of such selling holder and
of any other person that was to have purchased Preferred Securities in the remarketing
may deliver to any such other person a number of Preferred Securities that is less
than the number of Preferred Securities that otherwise was to be purchased by such
person. In such event, the number of Preferred Securities to be so delivered will
be determined by such Participant and delivery of such lesser number of Preferred
Securities will constitute good delivery.
The Remarketing Agent is not obligated
to purchase any Preferred Securities that would otherwise remain unsold in a remarketing.
Neither the Trust, any Securities Trustee, the Company nor the Remarketing Agent
shall be obligated in any case to provide funds to make payment upon tender of Preferred
Securities for remarketing.
As used herein:
“Remarketing Date” means any
Business Day no later than the third Business Day prior to any Remarketing Settlement
Date.
“Remarketing Settlement Date”
means (i) the first Business Day of the next Distribution Period following the expiration
of the Initial Fixed Rate Period and any subsequent Fixed Rate Period; (ii) any
Distribution Payment Date during a Floating Rate Period; or (iii) any Distribution
Payment Date during a time in which Preferred Securities are redeemable in a subsequent
Fixed Rate Period.
Remarketing Agent
The Remarketing Agent will be Lehman Brothers
Inc. The Company and the Trust will enter into a Remarketing Agreement (the “Remarketing
Agreement”) with the Remarketing Agent which provides, among other things,
that Lehman Brothers Inc. will act as the exclusive Remarketing Agent and will use
commercially reasonable efforts to remarket Preferred Securities tendered or deemed
tendered for purchase in the remarketing at a price of $1,000 per Preferred Security.
Under
25
certain circumstances, some portion of the Preferred Securities tendered
in the remarketing may be purchased by the Remarketing Agent. See –Remarketing
Procedures above.
The Remarketing Agreement provides that
the Remarketing Agent will incur no liability to the Company or to any holder of
Preferred Securities in its individual capacity or as Remarketing Agent for any
action or failure to act in connection with a remarketing or otherwise, except as
a result of gross negligence or willful misconduct on its part.
The Company has agreed to indemnify the
Remarketing Agent against certain liabilities, including liabilities under the Securities
Act of 1933, as amended (the “Securities Act”) or contribute to payments
that the Remarketing Agent may be required to make, arising out of or in connection
with its duties under the Remarketing Agreement.
The Remarketing Agreement will also provide
that any Remarketing Agent may resign and be discharged from its duties and obligations
thereunder; provided, however, that no such resignation will become effective
until the Company has appointed at least one nationally recognized broker-dealer
as successor Remarketing Agent and such successor Remarketing Agent has entered
into a remarketing agreement with the Company and the Trust. In such case, the Company
and the Trust will use its reasonable best efforts to appoint a successor Remarketing
Agent and enter into such a remarketing agreement with such person as soon as reasonably
practicable.
Book-Entry Only Issuance — The Depository Trust
Company
DTC will act as the initial securities
depositary for the Preferred Securities. The Preferred Securities will be issued
only as fully registered securities registered in the name of Cede & Co., DTC’s
nominee, or such other name as may be requested by an authorized representative
of DTC. One or more fully registered global Preferred Securities certificates will
be issued, representing in the aggregate the total number of Preferred Securities,
and will be deposited with DTC or a custodian therefor.
The following information is based upon
information furnished by DTC:
DTC is a limited-purpose trust company
organized under the New York Banking Law, a “banking organization” within
the meaning of the New York Banking Law, a member of the Federal Reserve System,
a “clearing corporation” within the meaning of the New York Uniform Commercial
Code and a “clearing agency” registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934, as amended. DTC holds and provides
asset servicing for equity issues, corporate and municipal debt issues and money
market instruments from many countries that its participants (“Direct Participants”)
deposit with DTC. DTC also facilitates the post-trade settlement among Direct Participants
of sales and other securities transactions in deposited securities through electronic
computerized book-entry transfers and pledges between Direct Participants’
accounts. This eliminates the need for physical movement of securities certificates.
Direct Participants include both U.S. and non-U.S. securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations. DTC
is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation
(“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of
DTC and members of the National Securities Clearing Corporation, Government Securities
Clearing Corporation, MBS Clearing Corporation and Emerging Markets Clearing Corporation
(NSCC, GSCC, MBSCC and EMCC, also subsidiaries of DTCC), as well as by the New York
Stock Exchange, Inc., the American Stock Exchange LLC and the National Association
of Securities Dealers, Inc. Access to the DTC system is also available to others,
such as both U.S. and non-U.S. securities brokers and dealers, banks, trust companies
and clearing corporations that clear through or maintain a custodial relationship
with a Direct Participant, either directly or indirectly (“Indirect Participants”
and, together with Direct Participants, “Participants”). The DTC Rules
applicable to its Participants are on file with the SEC. More information about
DTC can be found at www.dtcc.com. Information on this website does not constitute
a part of this Prospectus.
Purchases of Preferred Securities under
the DTC system must be made by or through Direct Participants, which will receive
a credit for the Preferred Securities on DTC’s records. The ownership interest
of each actual purchaser of Preferred Securities (“Beneficial Owner”)
is in turn to be recorded on the Participants’ records. Beneficial Owners will
not receive written confirmation from DTC of their purchases, but Beneficial Owners
are expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the Participants through
which the Beneficial Owners purchased the Preferred Securities. Transfers of ownership
interests in the Preferred Securities are to be accomplished by entries made on
the books of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial
26
Owners will not receive certificates representing their ownership
interests in Preferred Securities, except in the event that use of the book-entry
system for the Preferred Securities is discontinued.
To facilitate subsequent transfers, all
Preferred Securities deposited by Direct Participants with DTC are registered in
the name of DTC’s partnership nominee, Cede & Co., or such other name as
may be requested by an authorized representative of DTC. The deposit of Preferred
Securities with DTC and their registration in the name of Cede & Co. or such
other DTC nominee do not effect any change in beneficial ownership. DTC has no knowledge
of the actual Beneficial Owners of the Preferred Securities; DTC’s records
reflect only the identity of the Direct Participants to whose accounts such Preferred
Securities are credited, which may or may not be the Beneficial Owners. The Participants
will remain responsible for keeping account of their holdings on behalf of their
customers.
Notices and other communications by DTC
to Direct Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be governed
by arrangements among them, subject to any statutory or regulatory requirements
as may be in effect from time to time.
Redemption notices shall be sent to DTC.
Although voting with respect to the Preferred
Securities is limited, in those cases where a vote is required, neither DTC nor
Cede & Co. (nor any other DTC nominee) will consent or vote with respect to
Preferred Securities. Under its usual procedures, DTC mails an Omnibus Proxy to
the Trust as soon as possible after the Record Date. The Omnibus Proxy assigns Cede
& Co.’s consenting or voting rights to those Direct Participants to whose
accounts the Preferred Securities are credited on the Record Date (identified in
a listing attached to the Omnibus Proxy).
Distribution payments on the Preferred
Securities will be made to Cede & Co. or such other nominee as may be requested
by an authorized representative of DTC. DTC’s practice is to credit Direct
Participants’ accounts upon DTC’s receipt of funds and corresponding detail
information from the Trust or the Institutional Trustee on the relevant payment
date in accordance with their respective holdings shown on DTC’s records unless
DTC has reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing instructions
and customary practices, as is the case with securities held for the accounts of
customers in bearer form or registered in “street name”, and will be the
responsibility of such Participant and not of DTC nor its nominee, the Trust or
the Institutional Trustee, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of Distributions to Cede & Co. (or
such nominee as may be requested by an authorized representative of DTC) is the
responsibility of the Trust, disbursement of such payments to Direct Participants
is the responsibility of DTC and disbursement of such payments to the Beneficial
Owners is the responsibility of Direct and Indirect Participants.
Except as provided herein, a Beneficial
Owner in a global Preferred Security will not be entitled to receive physical delivery
of Preferred Securities certificates. Accordingly, each Beneficial Owner must rely
on the procedures of DTC to exercise any rights under the Preferred Securities.
The laws of some jurisdictions require that certain purchasers of securities take
physical delivery of Securities in definitive form. Such laws may impair the ability
to transfer beneficial interests in a global Preferred Security.
DTC may discontinue providing its services
as securities depositary with respect to the Preferred Securities at any time by
giving reasonable notice to the Trust. Under such Circumstances, in the event that
a successor securities depositary is not obtained, Preferred Securities certificates
will be printed and delivered to the holders of record. Additionally, the Company
may decide to discontinue use of the system of book-entry transfers through DTC
(or a successor depositary) with respect to the Preferred Securities. In that event,
certificates for the Preferred Securities will be printed and delivered to the holders
of record.
The information in this section concerning
DTC and DTC’s book-entry system has been obtained from sources that the Company
and the Trust believe to be reliable, but the Company and the Trust take no responsibility
for the accuracy thereof. The Company and the Trust have no responsibility for the
performance by DTC or its Participants of their respective obligations as described
herein or under the rules and procedures governing their respective operations.
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Dissolution of Trust; Liquidation Distribution
Pursuant to the Declaration, the Trust
will dissolve on December 31, 2044 or earlier upon (i) the occurrence of a Bankruptcy
Event (as defined in the Declaration) in respect of the Company, dissolution or
liquidation of the Company, or dissolution of the Trust pursuant to a judicial decree;
(ii) the delivery of written direction to the Institutional Trustee by the Company,
as Sponsor, at any time (which direction is optional and wholly within the discretion
of the Company, as Sponsor) to dissolve the Trust and distribute the Subordinated
Debt Securities to the holders of the Preferred Securities in liquidation of the
Trust (see –Special Event Redemption; Distribution of Subordinated Debt
Securities above); or (iii) the payment at maturity, upon redemption, or otherwise
when due of all of the Subordinated Debt Securities, and the consequent payment
of the Trust Securities.
If an early dissolution occurs as described
in clause (i) or (ii) above, the Trust will be liquidated, and the Institutional
Trustee shall distribute to each holder of Preferred Securities and Common Securities
a like amount of Subordinated Debt Securities, unless in the case of an event described
in clause (i) such distribution is determined by the Regular Trustees not to be
practical, in which event such holders will be entitled to receive, out of the assets
of the Trust available for distribution to holders after satisfaction of liabilities
to creditors, an amount equal to the aggregate of the stated liquidation preference
of $1,000 per Trust Security plus accrued and unpaid Distributions thereon to the
date of payment (such amount being the “Liquidation Distribution”). If
such Liquidation Distribution can be paid only in part because the Trust has insufficient
assets available to pay in full the aggregate Liquidation Distribution, then subject
to the next succeeding sentence, the amounts payable directly by the Trust on the
Trust Securities shall be paid on a pro rata basis. The holder of the Common Securities
will be entitled to receive distributions upon any such dissolution pro rata with
the holders of the Preferred Securities, except that if an Indenture Event of Default
has occurred and is continuing, the holders of Preferred Securities shall have a
preference over the holders of Common Securities.
Certain Covenants
For so long as Trust Securities remain
outstanding, the Company agrees:
During any Extension Period, or for so long as
an Indenture Event of Default relating to the payment of principal, premium, if any, or interest,
if any, or any payment default under the Guarantee has occurred
and is continuing, the Company will also agree that it will not, except in limited
circumstances, (1) declare or pay any dividend on, make any distribution or liquidation
payment with respect to, or redeem, purchase or exchange any of its capital stock,
(2) make any payment of principal, premium, if any, or interest, if any, on or repay,
repurchase or redeem any debt securities that rank pari passu with or junior in
right of payment to the Subordinated Debt Securities, or (3) make any guarantee
payments with respect to the foregoing (other than pursuant to the Guarantee); provided,
however, that nothing herein shall be deemed to prohibit:
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Events of Default
Any one of the following events constitutes
an Event of Default under the Declaration (each, a “Declaration Event of Default”)
with respect to the Preferred Securities issued thereunder:
Within 90 days after the occurrence of any Declaration
Event of Default, the Institutional Trustee shall transmit notice of any default
known to the Institutional Trustee to holders of Trust Securities, the Regular Trustees
and the Company, unless the Declaration Event of Default has been cured or waived.
If a Declaration Event of Default occurs
and is continuing, then, pursuant to the Declaration, holders of a majority in aggregate
liquidation amount of Preferred Securities have the right to direct the exercise
of any trust or power conferred upon the Institutional Trustee under the Declaration,
including the right to direct the Institutional Trustee under the Declaration to
exercise the remedies available to it as holder of the Subordinated Debt Securities.
If the Institutional Trustee fails to enforce its rights under the Subordinated
Debt Securities, a holder of Preferred Securities may, to the fullest extent permitted
by applicable law, institute a legal proceeding directly against the Company to
enforce its rights under the Declaration without first instituting any legal proceeding
against the Institutional Trustee or the Trust. Notwithstanding the foregoing, a
holder of Preferred Securities may institute a legal proceeding directly against
the Company, without first instituting a legal proceeding against the Institutional
Trustee or any other person or entity, for enforcement of payment to such holder
of principal of or interest on the Subordinated Debt Securities having a principal
amount equal to the aggregate stated liquidation amount of the Preferred Securities
of such holder on or after the due dates specified in the Subordinated Debt Securities.
See Relationship Among the Preferred Securities, the Subordinated Debt Securities
and the Guarantee herein and Description of the Guarantees—Events of
Default.
The holders of at least a majority in aggregate
liquidation amount of the Preferred Securities may waive any past default under
the Declaration except:
29
The Company must furnish annually to the Institutional Trustee a
statement by an appropriate officer as to that officer’s knowledge of the Company’s
compliance with all conditions and covenants under the Declaration. Also, the Regular
Trustees for the Trust must file, on behalf of the Trust, a statement as to its
compliance with all conditions and covenants under the Declaration.
If an Indenture Event of Default has occurred
and is continuing, the holders of Preferred Securities shall have a preference over
the holders of Common Securities with respect to payments of any amounts in respect
of the Trust as described above. See —Termination of Trust; Liquidation
Distribution.
Voting Rights; Amendment of the Declaration
Except as provided below and under
Description of the Guarantee–Modification of the Guarantee;Assignment
and as otherwise required by law and the Declaration, the holders of the Preferred
Securities will have no voting rights.
The Declaration may be amended from time
to time by the holders of a majority in liquidation amount of its Common Securities
and the Institutional Trustee, without the consent of the holders of the Preferred
Securities:
Without limiting the generality of the foregoing,
if the 1939 Act is amended after the date of the Declaration in such a way as to
require changes to the Declaration or the incorporation therein of additional provisions
or so as to permit changes to, or the elimination of, provisions which, at the date
of the Declaration or at any time thereafter, were required by the 1939 Act to be
contained in the Declaration, the Declaration will be deemed to have been amended
so as to conform to such amendment or to effect such changes or elimination, and
the Company and the Securities Trustees may, without the consent of any holders
of Trust Securities, amend the Declaration to evidence or effect such amendment.
The Declaration may be amended by the holders
of a majority in aggregate liquidation amount of the Common Securities and the Institutional
Trustee with the consent of holders representing not less than a majority in aggregate
liquidation amount of the outstanding Preferred Securities and receipt by the Institutional
Trustee and the Delaware Trustee of an opinion of counsel to the effect that the
amendment or the exercise of any power granted to the trustees in accordance with
the amendment will not affect the trust’s not being taxable other than as a
grantor trust for United States federal income tax purposes or the trust’s
exemption from status as an investment company under the 1940 Act.
Without the consent of each holder of Preferred
Securities affected by the amendment or related exercise of power, the Declaration
may not be amended to change the amount or timing of any distribution on the Trust
Securities or otherwise adversely affect the amount of any distribution required
to be made in respect of the Trust Securities as of a specified date, restrict the
right of a holder of Trust Securities to institute suit for the enforcement of any
payment due or change the consent required to amend the Declaration.
So long as the Subordinated Debt Securities
are held by the Trust, the Institutional Trustee will not:
30
without, in each case, obtaining the prior approval
of the holders of at least a majority in aggregate liquidation amount of the Preferred
Securities, except that, if a consent under the Indenture would require the consent
of each holder of Subordinated Debt Securities affected by the consent, no consent
will be given by the Institutional Trustee without the prior written consent of
each holder of the Preferred Securities.
The Institutional Trustee may not revoke
any action previously authorized or approved by a vote of the holders of the Preferred
Securities issued by the Trust except by subsequent vote of the holders of the Preferred
Securities. The Institutional Trustee will notify each holder of Preferred Securities
of any notice of default with respect to the Subordinated Debt Securities. In addition,
before taking any of the foregoing actions, the Institutional Trustee will obtain
an opinion of counsel experienced in relevant matters to the effect that the trust
will not be taxable other than as a grantor trust for United States federal income
tax purposes on account of the action.
Any required approval of holders of Preferred
Securities may be given at a meeting of holders of those Preferred Securities convened
for the purpose or pursuant to written consent. The Regular Trustees will cause
a notice of any meeting at which holders of Preferred Securities are entitled to
vote to be given to each registered holder of Preferred Securities in the manner
set forth in the Declaration.
No vote or consent of the holders of Preferred
Securities will be required to redeem and cancel those Preferred Securities in accordance
with the Declaration. See—Redemption above.
Notwithstanding that holders of Preferred
Securities are entitled to vote or consent under any of the circumstances described
above, any of those Preferred Securities that are owned by the Company, the Institutional
Trustee or Delaware Trustee, or any affiliate of the Company or the Trust or either
trustee, will, for purposes of the vote or consent, be treated as if they were not
outstanding.
Enforcement of Certain Rights by Holders of Trust Preferred
Securities
If an Indenture Event of Default has occurred
and is continuing, and the Indenture Trustee and the holders of the Subordinated
Debt Securities have failed to declare the principal of the Subordinated Debt Securities
to be immediately due and payable, the holders of at least 33% in aggregate liquidation
amount of the Preferred Securities will have the right to make such declaration.
As described above under —Events
of Default, a holder of Preferred Securities may institute a legal proceeding
directly against the Company, without first instituting a legal proceeding against
the Institutional Trustee or any other person or entity, for enforcement of payment
to such holder of principal or interest on the Subordinated Debt Securities having
a principal amount equal to the aggregate stated liquidation amount of the Preferred
Securities of such holder on or after the due dates specified in the Subordinated
Debt Securities.
Resignation, Removal of Institutional Trustee and Delaware
Trustee; Appointment of Successors
The Institutional Trustee or the Delaware
Trustee may resign at any time by giving written notice to the holders of Preferred
Securities, the Company and the other Securities Trustees. So long as an Indenture
Event of Default has not occurred and is continuing, the Institutional Trustee or
the Delaware Trustee may be removed at any time by the Company. If an Indenture
Event of Default has occurred and is continuing, the Institutional Trustee or Delaware
Trustee may be removed by an action of the holders of a majority in liquidation
amount of the outstanding Preferred Securities delivered to the trustee to be removed.
No resignation or removal of any trustee will become effective until a successor
trustee accepts appointment in accordance with the requirements of the Declaration.
Mergers, Consolidations, Amalgamations or Replacements
of a Trust
The Trust may not merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to any entity, except as described below or as otherwise
set forth in the Declaration. The Trust may, at the request of the holders of its
Common Securities and without the consent of the
31
holders of the outstanding Preferred Securities, merge with or into,
consolidate, amalgamate, or be replaced by or convey, transfer or lease its properties
and assets substantially as an entirety to a trust organized as such under the laws
of any state, so long as:
Notwithstanding the foregoing, the Trust may not,
except with the consent of holders of 100% in aggregate liquidation amount of the
Preferred Securities, consolidate, amalgamate, merge with or into, or be replaced
by or convey, transfer or lease its properties and assets substantially as an entirety
to, any other entity or permit any other entity to consolidate, amalgamate, merge
with or into, or replace it if the consolidation, amalgamation, merger, replacement,
conveyance, transfer or lease would cause the Trust or the successor entity to be
taxable other than as a grantor trust for United States federal income tax purposes.
Co-Institutional Trustees and Separate Institutional
Trustee
At any time or times, for the purpose of
meeting the legal requirements of the 1939 Act or of any jurisdiction in which any
part of the Trust Property may at the time be located, the holder of the Common
Securities and the Institutional Trustee shall have power to appoint, and upon the
written request of the Institutional Trustee, the Company, as Sponsor, shall for
such purpose join with the Institutional Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint, one
or more persons approved by the Institutional Trustee either to act as co-institutional
trustee, jointly with the Institutional Trustee, of all or any part of such Trust
Property, or to act as separate trustee of any such property, in either case with
such powers as may be provided in the instrument of appointment, and to vest in
such person or persons in such capacity, any property, title, right or power deemed
necessary or desirable, subject to the provisions of the Declaration. If the Company,
as Sponsor, does not join in such appointment within 15 days after the receipt by
it of a request so to do, or in case a Indenture Event of Default has occurred and
is continuing, the Institutional Trustee alone shall have power to make such appointment.
32
Registration, Transfer and Exchange
The Preferred Securities will be issued
initially in the form of one or more global securities, in registered form, without
coupons, as described under Book-Entry Only Issuance—The Depository Trust
Company. However, if the Company issues certificates, they will be registered
in the names of the beneficial owners, as directed by DTC and/or its Direct and
Indirect Participants.
Preferred Securities will be exchangeable
for other Preferred Securities of the same series of any authorized denominations
of a like aggregate liquidation amount and tenor. Subject to the terms of the Declaration
and the limitations applicable to global securities, Preferred Securities may be
presented for exchange or registration of transfer—duly endorsed or accompanied
by a duly executed instrument of transfer—at the office of the Institutional
Trustee, without service charges but upon payment of any taxes and other governmental
charges as described in the Declaration. Such transfer or exchange will be effected
upon the Institutional Trustee being satisfied with the documents of title and identity
of the person making the request.
Payment and Paying Agent
Distributions and other payments on the
Preferred Securities issued in book-entry form will be paid in the manner described
under Book-Entry Only Issuance—The Depository Trust Company.
The paying agent initially will be the
Institutional Trustee and any co-paying agent chosen by the Institutional Trustee
and acceptable to the Regular Trustees and the Company. If the Institutional Trustee
is no longer the paying agent, the Institutional Trustee will appoint a successor,
which must be a bank or trust company reasonably acceptable to the Regular Trustees,
to act as paying agent. Such paying agent will be permitted to resign as paying
agent upon 30 days’ written notice to the Institutional Trustee and the Regular
Trustees at which time the paying agent will return all unclaimed funds and all
other funds in its possession to the Institutional Trustee.
Registrar and Transfer Agent
It is anticipated that the Institutional
Trustee, or one of its affiliates, will act as registrar and transfer agent (the
“Securities Registrar”) for the Preferred Securities.
Registration of transfers of Preferred
Securities will be effected without charge by or on behalf of the Trust, but upon
payment in respect of any tax or other governmental charges which may be imposed
in relation to it.
The Securities Registrar will not be required
to register or cause to be registered any transfer of Preferred Securities after
they have been called for redemption.
Information Concerning the Institutional Trustee
The Institutional Trustee, other than during
the occurrence and continuance of an Event of Default, undertakes to perform only
the duties as are specifically set forth in the Declaration and, after an Event
of Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his or her own affairs. Subject to these
provisions, the Institutional Trustee is under no obligation to exercise any of
the powers vested in it by the Declaration at the request of any holder of Preferred
Securities, unless offered reasonable indemnity by such holder against the costs,
expenses and liabilities which might be incurred thereby.
Union Bank of California, N.A., the Institutional
Trustee, also serves as Indenture Trustee and Guarantee Trustee. Union Bank of California,
N.A. is a lender under the Company’s $245.0 million committed line of credit
and serves as trustee of the Company’s Investment and Employee Stock Ownership
Plan.
Governing Law
The Declaration and the Trust Securities
will be governed by, and construed in accordance with, the internal laws of the
State of Delaware.
Miscellaneous
The Regular Trustees are authorized and
directed to operate the Trust so that the Trust will not be deemed to be an investment
company required to be registered under the 1940 Act or taxed as other than a grantor
trust for federal
33
income tax purposes and so that the Subordinated Debt Securities
will be treated as indebtedness of the Company for federal income tax purposes.
In this connection, the Regular Trustees and the Company are authorized to take
any action, not inconsistent with applicable law, the Trust’s certificate of
trust or the Declaration, that the Regular Trustees and the Company determine in
their discretion to be necessary or desirable for such purposes, as long as such
action does not materially and adversely affect the interests of the holders of
the Preferred Securities.
If at any time the Company or its affiliate
is the owner or holder of any Preferred Securities, then effective on any Distribution
Payment Date, the Company or such affiliate will have the right to deliver to the
Institutional Trustee all or a portion of the Preferred Securities in exchange for
a corresponding amount of Subordinated Debt Securities.
Holders of the Preferred Securities have
no preemptive or similar rights.
The Trust may not borrow money or issue
debt or mortgage or pledge any of its assets.
DESCRIPTION OF THE GUARANTEE
Set forth below is a summary of information
concerning the Guarantee which will be executed and delivered by the Company for
the benefit of the holders of Preferred Securities. The Guarantee will be qualified
as an indenture under the 1939 Act. Union Bank of California, N.A. will act as Guarantee
Trustee. The terms of the Guarantee will be those set forth in the Guarantee and
those made part of the Guarantee by the 1939 Act. The summary of the material terms
of the Guarantee does not purport to be complete and is subject in all respects
to the provisions of, and is qualified in its entirety by reference to, the Guarantee
and the 1939 Act. The form of Guarantee is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The Guarantee will be held by the
Guarantee Trustee for the benefit of the holders of the Trust Securities.
General
Pursuant to the Guarantee, the Company
will irrevocably and unconditionally agree, to the extent set forth therein, to
pay in full to the holders of the Preferred Securities issued by the Trust, the
Guarantee Payments (as defined herein) (except to the extent paid by the Trust),
as and when due, regardless of any defense, right of set-off or counterclaim which
the Trust or the Company may have or assert, other than the defense of payment.
The following payments or distributions with respect to Preferred Securities, to
the extent not paid by the Trust (the “Guarantee Payments”), will be subject
to the Guarantee thereon (without duplication): (i) any accrued and unpaid Distributions
that are required to be paid on the Preferred Securities, to the extent that the
Trust shall have funds available therefor; (ii) the Preferred Securities Redemption
Price with respect to any Preferred Securities called for redemption by the Trust,
to the extent the Trust shall have funds available therefor, and (iii) upon a voluntary
or involuntary dissolution, winding-up, liquidation or termination of the Trust
(other than in connection with the distribution of Subordinated Debt Securities
to the holders of Preferred Securities or the redemption of all of the Preferred
Securities of the Trust), the lesser of (a) the aggregate of the liquidation amount
and all accrued and unpaid distributions on the Preferred Securities of the Trust
to the date of payment, to the extent the Trust has funds available therefor and
(b) the amount of assets of the Trust remaining available for distribution to holders
of the Preferred Securities of the Trust in liquidation of the Trust. The Company’s
obligation to make a Guarantee Payment may be satisfied by direct payment of the
required amounts by the Company to the holders of Preferred Securities or by causing
the Trust to pay such amounts to such holders.
If the Company does not make interest payments
on the Subordinated Debt Securities purchased by a Trust, such Trust will not pay
Distributions on the Preferred Securities and will not have funds available therefore.
See Description of the Subordinated Debt Securities—Certain Covenants of
the Company below. The Guarantee, when taken together with the Company’s
obligations under the Subordinated Debt Securities, the Indenture, the Declaration
and the Agreement as to Expenses and Liabilities, will effectively provide a full,
irrevocable and unconditional guarantee, on a subordinated basis, by the Company
of payments due on the Preferred Securities.
Status of the Guarantee
The Guarantee will constitute an unsecured
obligation of the Company and will rank (i) subordinate and junior in right of payment
to all other liabilities of the Company, including the Subordinated Debt Securities,
except those obligations and liabilities made pari passu or subordinate by their
terms and (ii) pari passu with the most senior preferred or preference stock of
the Company now or hereafter issued by the Company and with any guarantee now or
hereafter entered into by the Company with respect to any preferred or preference
securities of any affiliate of the Company
34
and (iii) senior to all common stock of the Company. The Guarantee
does not place a limitation on the amount of additional Senior Indebtedness that
may be incurred by the Company.
The Guarantee will constitute a guarantee
of payment and not of collection (that is, the guaranteed party may institute a
legal proceeding directly against the Company to enforce its rights under the Guarantee
without instituting a legal proceeding against any other person or entity). The
Guarantee will be held by the Guarantee Trustee for the benefit of the holders of
the Preferred Securities.
Modification of the Guarantee; Assignment
Except with respect to any changes which
do not materially adversely affect the rights of holders of Preferred Securities
(in which case no vote will be required), the Guarantee may be amended only with
the prior approval of the holders of a majority in liquidation amount of the outstanding
Preferred Securities. The manner of obtaining any such approval of holders of such
Preferred Securities will be as set forth under Description of the Preferred
Securities—Voting Rights; Amendment of the Declaration. All guarantees
and agreements contained in the Guarantee shall bind the successors, assigns, receivers,
trustees and representatives of the Company and shall inure to the benefit of the
holders of the Preferred Securities of the Trust then outstanding. Except in connection
with a consolidation, merger, conveyance, transfer or lease involving the Company
that is permitted under the Indenture, the Company shall not assign its obligations
under the Guarantee.
Termination
The Guarantee will terminate as to the
Preferred Securities (a) upon full payment of the Preferred Securities Redemption
Price of all Preferred Securities of the Trust, (b) upon distribution of the Subordinated
Debt Securities held by the Trust to the holders of the Preferred Securities of
the Trust or (c) upon full payment of the amounts payable in accordance with the
Declaration of the Trust upon liquidation of the Trust. The Guarantee will continue
to be effective or will be reinstated, as the case may be, if at any time any holder
of Preferred Securities issued by the Trust must restore payment of any sums paid
under the Preferred Securities or the Guarantee.
Events of Default
An event of default under the Guarantee
will occur upon the failure of the Company to perform any of its payment obligations
under the Guarantee, or to perform any other obligations thereunder if such default
remains unremedied for 30 days.
The holders of a majority in liquidation
amount of the Preferred Securities relating to the Guarantee have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Guarantee Trustee in respect of the Guarantee or to direct the exercise of
any trust or power conferred upon the Guarantee Trustee under the Guarantee. Any
holder of Preferred Securities may institute a legal proceeding directly against
the Company to enforce its rights under the Guarantee without first instituting
a legal proceeding against the Guarantee Trustee or any other person or entity.
The Company, as guarantor, is required
to file annually with the Guarantee Trustee a certificate as to whether or not the
Company is in compliance with all the conditions and covenants applicable to it
under the Guarantee.
Information Concerning the Guarantee Trustee
The Guarantee Trustee, other than during
the occurrence and continuance of a default with respect to the Guarantee, undertakes
to perform only such duties as are specifically set forth in the Guarantee and,
after a default with respect to the Guarantee, shall exercise the same degree of
care as a prudent individual would exercise in the conduct of his or her own affairs.
Subject to this provision, the Guarantee Trustee is under no obligation to exercise
any of the powers vested in it by the Guarantee at the request of any holder of
Preferred Securities, unless offered reasonable indemnity against the costs, expenses
and liabilities which might be incurred thereby.
Governing Law
The Guarantee will be governed by and construed
in accordance with the laws of the State of New York.
35
Agreement as to Expenses and Liabilities
Pursuant to the Agreement as to Expenses
and Liabilities entered into by the Company under the Declaration, the Company agrees
with the Trust, and with each person or entity to whom the Trust becomes indebted
or liable (“Beneficiaries”), that the Company will make full payment,
when and as due, of any and all Expenses to such Beneficiaries and will reimburse
the Trust for any Expenses paid by it. As used in this paragraph, “Expenses”
means any expenses, indebtedness or liabilities of the Trust, including, without
limitation, any and all taxes, duties, assessments or other governmental charges
of whatever nature (other than United States federal withholding taxes) imposed
by the United States or any other taxing authority, so that the net amounts received
and retained by the Trust after paying all Expenses will be equal to the amounts
the Trust would have received and retained had no such Expenses been incurred by
or imposed on the Trust. “Expenses” does not include the amounts to be
distributed to the holders of the Trust Securities pursuant to the terms of the
Trust Securities or such other similar interests, as the case may be.
DESCRIPTION OF THE SUBORDINATED DEBT SECURITIES
The Subordinated Debt Securities will be
issued under the Indenture. The terms of the Subordinated Debt Securities will include
those stated in the Indenture and those made part of the Indenture by the 1939 Act.
The Subordinated Debt Securities, together with all other subordinated debt securities
that may be issued under the Indenture, are hereinafter called, collectively, the
“Indenture Securities”. The following description does not purport to
be complete and is subject to, and is qualified in its entirety by reference to,
the Indenture, the form of which is filed as an exhibit to the Registration Statement
of which this Prospectus forms a part. Capitalized terms used under this heading
which are not otherwise defined in this Prospectus have the meanings set forth in
the Indenture.
General
The Subordinated Debt Securities will be
issued as a series of Indenture Securities under the Indenture. The Subordinated
Debt Securities will be limited in aggregate principal amount to $ , such amount
being the approximate aggregate liquidation amount of the Trust Securities. The
Indenture does not limit the incurrence or issuance of other secured or unsecured
debt of the Company, whether under the Indenture, any other indenture that the Company
may enter into in the future or otherwise.
The entire principal amount of the Subordinated
Debt Securities will mature and become due and payable, together with any accrued
and unpaid interest thereon, on . The Subordinated Debt Securities are not subject
to any sinking fund provision.
The terms of the Subordinated Debt Securities
correspond to those of the Preferred Securities, as described herein.
Interest
Each Subordinated Debt Security will bear
interest at a rate equal to the Distribution Rate payable on the Preferred Securities
(the “Interest Rate”). The periods for which interest is payable shall
be the same as the semiannual or quarterly Distribution Periods for the Preferred
Securities (each, an “Interest Period”). Interest shall be payable on
the same dates as Distributions are payable on the Preferred Securities (each, an
“Interest Payment Date”) to the person in whose name such Subordinated
Debt Security is registered on the Record Date. The Interest Rate payable on each
Interest Payment Date and the length of each Interest Period shall be determined
and shall be computed in the same manner as Distributions and Distribution Periods
are computed for the Preferred Securities.
Option to Extend Interest Payment Period
So long as no Indenture Event of Default
has occurred and is continuing, the Company will have the right at any time, and
from time to time, to defer payments of interest on the Subordinated Debt Securities
by extending the interest payment period for up to five years, but not beyond the
stated maturity date. During any Extension Period, Distributions and interest will
continue to accrue on the Preferred Securities and the Subordinated Debt Securities.
If the Company elects to defer interest during a Fixed Rate Period, interest will
continue to accrue at the Fixed Rate until the expiration of the Fixed Rate Period.
Upon expiration of such Fixed Rate Period and any Fixed Rate Period during the Extension
Period, the Company and the Trust will have the option to remarket the Preferred
Securities for a new Fixed Rate Period. If the Company and the Trust do not remarket
the Preferred Securities, the Floating Rate during the Extension Period shall not
be less than the Fixed Rate for the Fixed Rate Period just ended. If the Company
elects 36
to defer interest during a Floating Rate Period, interest will continue
to accrue at the applicable Floating Rate, reset quarterly, subject to the right
of the Company and the Trust to remarket the Preferred Securities prior to any Interest
Payment Date in order to establish a new Fixed Rate for a new Fixed Rate Period.
If the Company decides to defer interest
payments on the Subordinated Debt Securities, the Extension Period will not exceed
five years. An Extension Period shall not extend beyond the stated maturity of the
Subordinated Debt Securities. Prior to the termination of any Extension Period,
the Company may further defer payments of interest, provided that the Extension
Period, together with all such previous and further extensions thereof, may not
exceed five years. The Company may only terminate an Extension Period on an Interest
Payment Date. Upon the termination of any Extension Period and the payment of all
amounts then due, the Company may select a new Extension Period, subject to the
above requirements. There could be multiple Extension Periods of varying lengths
throughout the term of the Subordinated Debt Securities.
At the end of an Extension Period, the
Company will pay all interest then accrued and unpaid (together with interest thereon
at the prevailing Interest Rate, to the extent permitted by law, compounded on each
Interest Payment Date). For a description of certain restrictions on the Company
during an Extension Period, see Description of the Preferred Securities—Certain
Covenants.
The Company has no present intention of
exercising its rights to defer payments of interest by extending the interest payment
period on the Subordinated Debt Securities. See Certain United States Federal
Income Tax Consequence—Payments of Interest.
The Company will give the holder or holders
of the Subordinated Debt Securities, the Indenture Trustee, the Remarketing Agent
and the Calculation Agent notice of its selection or extension of an Extension Period
at least one Business Day prior to the earlier of (i) the Record Date relating to
the Interest Payment Date on which the Extension Period is to commence or relating
to the Interest Payment Date on which an Extension Period that is being extended
would otherwise terminate, or (ii) the date the Company or the Trust is required
to give notice to any applicable self-regulatory organization of the Record Date
or the date such interest or Distributions are payable.
Payment and Paying Agents
The Company will pay interest, if any,
on each Subordinated Debt Security on each Interest Payment Date to the person in
whose name such Subordinated Debt Security is registered (for the purposes of this
section of the Prospectus, the registered holder of any Indenture Security is herein
referred to as a “Holder”) as of the close of business on the regular
Record Date relating to such Interest Payment Date; provided, however, that
the Company will pay interest at maturity (whether at stated maturity, upon redemption
or otherwise, hereinafter “Maturity”) to the person to whom principal
is paid. However, if there has been a default in the payment of interest on any
Subordinated Debt Security, such defaulted interest may be payable to the Holder
of such Subordinated Debt Security as of the close of business on a date selected
by the Indenture Trustee which is not more than 30 days and not less than 10 days
before the date proposed by the Company for payment of such defaulted interest or
in any other lawful manner, if the Indenture Trustee deems such manner of payment
practicable.
The Company will pay the principal of and
premium, if any, and interest, if any, on the Subordinated Debt Securities at maturity
upon presentation of the Subordinated Debt Securities at the corporate trust office
of Union Bank of California, N.A., as paying agent for the Company. The Company
may change the place of payment of the Subordinated Debt Securities, may appoint
one or more additional paying agents (including the Company) and may remove any
paying agent, all at its discretion.
Registration and Transfer
Holders may register the transfer of Subordinated
Debt Securities, and may exchange Subordinated Debt Securities for other Subordinated
Debt Securities of the same series and tranche, of authorized denominations and
having the same terms and aggregate principal amount, at the corporate trust office
of Union Bank of California, N.A., in San Francisco, California, as security registrar
for the Subordinated Debt Securities. The Company may change the place for registration
of transfer and exchange of the Subordinated Debt Securities, may appoint one or
more additional security registrars (including the Company) and may remove any security
registrar, all at its discretion.
37
No service charge will be made for any transfer or exchange of the
Subordinated Debt Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of the Subordinated Debt Securities.
The Company will not be required to execute or to provide for the registration of
transfer or the exchange of (a) any Subordinated Debt Security during a period of
15 days before giving any notice of redemption or (b) any Subordinated Debt Security
selected for redemption in whole or in part, except the unredeemed portion of any
Subordinated Debt Security being redeemed in part.
Redemption
The Company shall have the right to redeem
the Subordinated Debt Securities, in whole, but not in part, without premium, from
time to time, on the last Interest Payment Date relating to the Initial Fixed Rate
Period, on such dates with respect to any other Fixed Rate Period as the Company
and the Trust may determine prior to the remarketing establishing such Fixed Rate
Period, or any Interest Payment Date relating to a Floating Rate Period or upon
the occurrence of a Special Event as described under Description of the Preferred
Securities–Special Event Redemption; Distribution of Subordinated Debt Securities,
upon not less than 30 nor more than 60 days’ notice, at the Debt Securities
Redemption Price.
Any notice of redemption at the option
of the Company may state that such redemption will be conditional upon receipt by
the paying agent or agents, on or before the date fixed for such redemption, of
money sufficient to pay the principal of and premium, if any, and interest, if any,
on such Subordinated Debt Securities and that if such money has not been so received,
such notice will be of no force or effect and the Company will not be required to
redeem such Subordinated Debt Securities.
Subordination
In the Indenture, the Company has covenanted
and agreed that the payment of principal of and premium, if any, and interest, if
any, on each and all of the Subordinated Debt Securities is expressly subordinated
and subject to the extent and in the manner set forth in the Indenture, in right
of payment to the prior payment in full of all Senior Indebtedness of the Company.
In the event:
38
erwise, directly to the holders
of such Senior Indebtedness of the Company or their representative
or representatives or to the trustee or trustees under any indenture
under which any instruments evidencing any of such Senior Indebtedness
of the Company may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of such Senior Indebtedness of
the Company held or represented by each, to the extent necessary
to make payment in full of all Senior Indebtedness of the Company
remaining
unpaid after giving effect to any concurrent payment or distribution
(or provision therefor) to the holders of such Senior Indebtedness
of the Company, before any payment or distribution is made to the
Holders of the indebtedness evidenced by the Subordinated Debt Securities
or
to the Indenture Trustee under the Indenture; and (3) in the event that,
notwithstanding the foregoing, any payment by, or distribution
of assets of, the Company
of any
kind or character, whether in cash, property or securities, in respect of
principal of or interest on the Subordinated Debt Securities or in
connection
with any repurchase
by the Company of the Subordinated Debt Securities, shall be received by
the Indenture Trustee or any Holder before all Senior Indebtedness
of
the Company is paid in full,
or provision is made for such payment in money or money’s worth, such
payment or distribution in respect of principal of or interest on the Subordinated
Debt
Securities or in connection with any repurchase by the Company of the Subordinated
Debt Securities shall be paid over to the holders of such Senior Indebtedness
of the Company or their representative or representatives or to the trustee
or trustees under any indenture under which any instruments evidencing any
such
Senior Indebtedness of the Company may have been issued, ratably as aforesaid,
for application to the payment of all Senior Indebtedness of the Company remaining
unpaid until all such Senior Indebtedness of the Company shall have been paid
in full, after giving effect to any concurrent payment or distribution (or
provision therefore) to the holders
of such Senior Indebtedness of the Company.
The term Senior Indebtedness is defined in the
Indenture to mean, with respect to any Person, (a) indebtedness (including premium,
if any, and interest, if any, thereon) of such Person for money borrowed or for
the deferred purchase price of property or services in transactions not in the ordinary
course of business; (b) all other indebtedness (including premium, if any, and interest,
if any, thereon) evidenced by bonds, debentures, notes or other similar instruments
(other than Subordinated Debt Securities) issued by such Person; (c) all obligations
of such Person under lease agreements designating such person as lessee, irrespective
of the treatment of any such lease agreement for accounting, tax or other purposes;
(d) all obligations of such person for reimbursement (including premium, if any,
and interest, if any, thereon) in respect of any letter of credit, banker’s
acceptance, security purchase facility or similar credit transaction; (e) all obligations
of the character referred to in clauses (a) through (d) above of other persons for
the payment of which such Person is responsible or liable as obligor, guarantor
or otherwise; and (f) all obligations of the character referred to in clauses (a)
through (d) above of other Persons secured by any lien on any property or asset
of such person (whether or not such obligation is assumed by such Person); provided,
however, that Senior Indebtedness shall not include (x) any such indebtedness
that is by its terms subordinated to or pari passu with the Subordinated Debt Securities;
(y) any indebtedness between or among such Person and its affiliates, including
all other debt securities and guarantees in respect of such debt securities, issued
to (i) the Trust or (ii) any other trust, or a trustee of such trust, partnership
or other entity which is a financing vehicle of such Person in connection with the
issuance by such financing vehicle of preferred securities or (z) indebtedness for
goods or materials purchased in the ordinary course of business or for services
obtained in the ordinary course of business or indebtedness consisting of trade
payables.
The Indenture places no limitation on the
amount of additional Senior Indebtedness that may be incurred by the Company. The
Company expects from time to time to incur additional indebtedness constituting
Senior Indebtedness.
Satisfaction and Discharge
Any Indenture Securities, or any portion
of the principal amount thereof, will be deemed to have been paid for purposes of
the Indenture and, at the Company’s election, the entire indebtedness of the
Company in respect thereof will be deemed to have been satisfied and discharged,
if there shall have been irrevocably deposited in trust with the Indenture Trustee
or any paying agent (other than the Company):
(a) money in an amount which will be sufficient;
or
(b) in the case of a deposit made before
the maturity of such Indenture Securities, Eligible Obligations (as defined below),
which do not contain provisions permitting the redemption or other prepayment thereof
at the option of the issuer thereof, the principal of and the interest on which
when due, without any regard to reinvestment thereof, will
39
provide moneys which, together with the money, if any, deposited
with or held by the Indenture Trustee or such paying agent, will be sufficient;
or
(c) a combination of (a) and (b) which
will be sufficient;
to pay when due the principal of and premium,
if any, and interest, if any, due and to become due on such Indenture Securities.
For this purpose, Eligible Obligations include direct obligations of, or obligations
unconditionally guaranteed by, the United States entitled to the benefit of the
full faith and credit thereof and certificates, depositary receipts or other instruments
which evidence a direct ownership interest in such obligations or in any specific
interest or principal payments due in respect thereof.
The Indenture will be deemed to have been
satisfied and discharged when no Indenture Securities remain outstanding thereunder
and the Company has paid or caused to be paid all other sums payable by the Company
under the Indenture.
Indenture Events of Default
Any one or more of the following events
with respect to the Indenture Securities that has occurred and is continuing will
constitute an “Indenture Event of Default” with respect to such series
of Indenture Securities:
Remedies
Acceleration of Maturity
If an Indenture Event of Default applicable
to the Indenture Securities of any series occurs and is continuing, then either
the Indenture Trustee or the Holders of not less than 33% in aggregate principal
amount of the outstanding Indenture Securities of such series may declare the principal
amount (or, if any of the outstanding Indenture Securities of such series are Discount
Securities (as defined in the Indenture), such portion of the principal amount thereof
as may be specified in the terms thereof) of all of the outstanding Indenture Securities
of such series to be due and payable immediately (subject to the subordination provisions
of the Indenture) by written notice to the Company (and to the Indenture Trustee
if given by the Holders); provided, however, that if an Indenture Event of
Default occurs and is continuing with respect to more than one series of Indenture
Securities, the Indenture Trustee or the Holders of not less than 33% in
40
aggregate principal amount of the outstanding Indenture Securities
of all such series, considered as one class, may make such declaration of acceleration
and not the Holders of any one such series.
At any time after such a declaration of
acceleration with respect to the Indenture Securities of any series has been made,
but before a judgment or decree for payment of the money due has been obtained,
such declaration and its consequences will, without further act, be deemed to have
been rescinded and annulled, if
Right to Direct Proceedings
If an Indenture Event of Default with respect
to the Indenture Securities of any series occurs and is continuing, the Holders
of a majority in principal amount of the outstanding Indenture Securities of such
series will have the right to direct the time, method and place of conducting any
proceedings for any remedy available to the Indenture Trustee in exercising any
trust or power conferred on the Indenture Trustee; provided, however, that
if an Indenture Event of Default occurs and is continuing with respect to more than
one series of Indenture Securities, the Holders of a majority in aggregate principal
amount of the outstanding Indenture Securities of all such series, considered as
one class, will have the right to make such direction, and not the Holders of any
one of such series; and provided, further, that (a) such direction does not
conflict with any rule of law or with the Indenture, and could not involve the Indenture
Trustee in personal liability in circumstances where indemnity would not, in the
Indenture Trustee’s sole discretion, be adequate and (b) the Indenture Trustee
may take any other action deemed proper by the Indenture Trustee which is not inconsistent
with such direction.
Limitation on Right to Institute Proceedings
No Holder will have any right to institute
any proceeding, judicial or otherwise, with respect to the Indenture or for the
appointment of a receiver or for any other remedy thereunder unless:
Furthermore, no Holder of any series will be entitled
to institute any such action if and to the extent that such action would disturb
or prejudice the rights of other Holders of such series.
41
No Impairment of Right to Receive Payment
Notwithstanding that the right of a Holder
to institute a proceeding with respect to the Indenture is subject to certain conditions
precedent, each Holder will have the right, which is absolute and unconditional,
to receive payment of the principal of and premium, if any, and interest, if any,
on such Indenture Security when due and to institute suit for the enforcement of
any such payment. Such rights may not be impaired or affected without the consent
of such Holder.
Notice of Default
The Indenture Trustee is required to give
the Holders notice of any default under the Indenture to the extent required by
the 1939 Act, unless such default shall have been cured or waived, except that no
such notice to Holders of a default of the character described in the third bulleted
paragraph under —Indenture Events of Default may be given until at least
75 days after the occurrence thereof. For purposes of the preceding sentence, the
term “default” means any event which is, or after notice or lapse of time,
or both, would become, an Indenture Event of Default. The 1939 Act currently permits
the Indenture Trustee to withhold notices of default (except for certain payment
defaults) if the Indenture Trustee in good faith determines the withholding of such
notice to be in the interests of the Holders.
Action by Holders of Preferred Securities
If the Subordinated Debt Securities shall
be held by the Institutional Trustee of the Trust and if such Institutional Trustee,
as such holder, shall have failed to exercise any of the rights and remedies available
under the Indenture to the holders of such Subordinated Debt Securities, the holders
of the Preferred Securities of the Trust shall have and may exercise all such rights
and remedies, to the same extent as if such holders of such Preferred Securities
held a principal amount of Subordinated Debt Securities equal to the liquidation
amount of such Preferred Securities, without first proceeding against such trustee
or trust. Notwithstanding the foregoing, in the case of an Indenture Event of Default
described above in the first or second bulleted paragraphs under —Indenture
Events of Default, each holder of such Preferred Securities shall have and may
exercise all rights available to the Institutional Trustee as the holder of such
Subordinated Debt Securities. If action shall have been taken by both the holder
of such Subordinated Debt Securities and the holders of such Preferred Securities
to exercise such rights, the action taken by the holders of the Preferred Securities
shall control.
Consolidation, Merger, Sale of Assets and Other Transactions
The Company may not consolidate with or
merge into any other Person, or convey or otherwise transfer, or lease, all of its
properties, as or substantially as an entirety, to any Person, unless:
In the case of the conveyance or other transfer
of all of the properties of the Company, as or substantially as an entirety, to
any person as contemplated above, the Company would be released and discharged from
all obligations under the Indenture and on all Indenture Securities then outstanding
unless the Company elects to waive such release and discharge. Upon any such consolidation
or merger or any such conveyance or other transfer of properties of the Company,
the successor, transferee or lessee would succeed to, and be substituted for, and
would be entitled to exercise every power and right of, the Company under the Indenture.
For purposes of the Indenture, the conveyance,
transfer or lease by the Company of all of its facilities (a) for the generation
of electric energy, (b) for the transmission of electric energy, (c) for the distribution
of electric energy and/or natural gas, in each case considered alone, (d) all of
its facilities described in clauses (a) and (b), considered together, or (e) all
of its facilities described in clauses (b) and (c), considered together, shall in
no event be deemed to constitute a conveyance or other transfer of all the properties
of the Company, as or substantially as an entirety, unless, immedi-
42
ately following such conveyance, transfer or lease, the Company owns
no unleased properties in the other such categories of property not so conveyed
or otherwise transferred or leased.
The Indenture will not prevent or restrict:
If the Company conveys or otherwise transfers
any part of its properties which does not constitute the entirety, or substantially
the entirety, thereof to another Person meeting the requirements set forth in the
first paragraph under this heading, and if:
then the Company would be released and discharged
from all obligations and covenants under the Indenture and on all Indenture Securities
then outstanding unless the Company elects to waive such release and discharge.
In such event, the transferee would succeed to, and be substituted for, and would
be entitled to exercise every right and power of, the Company under the Indenture.
Modification of Indenture
Modifications Without Consent
The Company and the Indenture Trustee may
enter into one or more supplemental indentures, without the consent of any Holders,
for any of the following purposes:
43
Without limiting the generality of the foregoing,
if the 1939 Act is amended after the date of the Indenture in such a way as to require
changes to the Indenture or the incorporation therein of additional provisions or
so as to permit changes to, or the elimination of, provisions which, at the date
of the Indenture or at any time thereafter, were required by the 1939 Act to be
contained in the Indenture, the Indenture will be deemed to have been amended so
as to conform to such amendment or to effect such changes or elimination, and the
Company and the Indenture Trustee may, without the consent of any Holders, enter
into one or more supplemental indentures to evidence or effect such amendment.
Modifications Requiring Consent
Except as provided above, the consent of
the Holders of a majority in aggregate principal amount of the Indenture Securities
of all series then outstanding, considered as one class, is required for the purpose
of adding any provisions to, or changing in any manner, or eliminating any of the
provisions of, the Indenture pursuant to one or more supplemental indentures; provided,
however, that if less than all of the series of Indenture Securities outstanding
are directly affected by a proposed supplemental indenture, then the consent only
of the Holders of a majority in aggregate principal amount of outstanding Indenture
Securities of all series so directly affected, considered as one class, will be
required; and provided, further, that if the Indenture Securities of any
series have been issued in more than one tranche and if the proposed supplemental
indenture directly affects the rights of the Holders of one or more, but less than
all, such tranches, then the consent only of the Holders of a majority in aggregate
principal amount of the outstanding Indenture Securities of all tranches so directly
affected, considered as one class, will be required; and provided, further,
that no such amendment or modification may:
44
A supplemental indenture which changes or eliminates
any covenant or other provision of the Indenture which has expressly been included
solely for the benefit of the Holders of, or which is to remain in effect only so
long as there shall be outstanding, Indenture Securities of one or more specified
series, or one or more tranches thereof, or modifies the rights of the Holders of
such series or tranches with respect to such covenant or other provision, will be
deemed not to affect the rights under the Indenture of the Holders of any other
series or tranche.
Notwithstanding the foregoing, so long
as the Subordinated Debt Securities are held by the Trust, the Indenture Trustee
may not consent to a supplemental indenture contemplated in the second preceding
paragraph without the prior consent, obtained as provided in the Declaration of
the holders of a majority in aggregate liquidation amount of all Preferred Securities,
or, in the case of changes described in the bulleted paragraphs above, of each holder
of outstanding Preferred Securities.
Certain Covenants of the Company
If at any time (a) there shall have occurred
and be continuing a payment default with respect to Indenture Securities of a series,
(b) the Company shall have given notice of its election of an Extension Period as
provided in the Indenture with respect to the Indenture Securities of a series,
and any such period, as so extended, shall be continuing, or (c) the Company shall
be in default with respect to its payment or other obligations under the Guarantee
relating to the Trust to which Indenture Securities of a series have been issued,
then the Company shall not:
provided, however, that nothing herein
shall be deemed to prohibit (i) dividends or distributions payable in shares of
the Company’s capital stock, or in the form of warrants, options or other rights,
where the dividend or distributed stock issuable upon exercise of the warrants,
options or other rights are the same stock as that on which the dividend is being
paid or is pari passu or junior to the stock, (ii) reclassification of the Company’s
capital stock or exchange or conversion of shares of one class or series of the
Company’s capital stock into shares of another class or series of the Company’s
capital stock, (iii) purchases or other acquisitions of fractional interests in
shares of the Company’s capital stock pursuant to the conversion or exchange
provisions of the capital stock or the security being converted or exchanged, (iv)
redemption, purchases or other acquisitions of shares of the Company’s capital
stock in connection with the satisfaction by the Company of its obligations under
provisions of the Company’s Restated Articles of Incorporation, as amended,
under any direct purchase, dividend reinvestment, customer purchase or employee
benefit plans or under any contract or security requiring the Company to purchase
shares of its capital stock, or (v) payments under any trust securities guarantee
executed and delivered by the Company concurrently with the issuance of any preferred
securities.
So long as the Trust Securities remain
outstanding the Company will (a) maintain 100% direct ownership of the Common Securities
of the Trust by the Company or any affiliate thereof, except as otherwise provided
below under —Consolidation, Merger, Sale of Assets and Other Transactions,
and (b) use all reasonable efforts to cause the Trust (i) to maintain its existence
as a statutory trust, except in connection with a distribution of Subordinated Debt
Securities, with the redemption, purchase or other acquisition and retirement of
all Trust Securities of such trust or with certain mergers, consolidations or other
business combinations, in each case as permitted by the Declaration, and (ii) to
otherwise continue not to be treated as an association taxable as a corporation
for United States federal income tax purposes.
The Indenture provides that the Company
will cause (or, with respect to property owned in common with others, make reasonable
effort to cause) all its properties used or useful in the conduct of its businesses,
considered as
45
a whole, to be maintained and kept in good condition, repair and
working order and shall cause (or, with respect to property owned in common with
others, make reasonable effort to cause) to be made such repairs, renewals, replacements,
betterments and improvements thereof, as, in the judgment of the Company, may be
necessary in order that the operation of such properties, considered as a whole,
may be conducted in accordance with common industry practice; provided, however,
that nothing in the Indenture shall prevent the Company from selling, transferring
or otherwise disposing of, or causing the sale, transfer or other disposition of,
any of its properties.
Book-Entry and Issuance
If distributed to holders of Trust Securities
in connection with the voluntary or involuntary dissolution, winding-up or liquidation
of the Trust, the Subordinated Debt Securities are expected to be issued in the
form of one or more global certificates registered in the name of the securities
depositary or its nominee. In such event, the procedures applicable to the transfer
and payment of the Subordinated Debt Securities are expected to be substantially
similar to those described with respect to the Preferred Securities in Description
of the Preferred Securities–Book-Entry Only Issuance–The Depository Trust
Company.
Duties of the Indenture Trustee; Resignation; Removal
The Indenture Trustee will have, and will
be subject to, all the duties and responsibilities specified with respect to an
indenture trustee under the 1939 Act. Subject to such provisions, the Indenture
Trustee will be under no obligation to exercise any of the powers vested in it by
the Indenture at the request of any Holder, unless such Holder offers it reasonable
indemnity against the costs, expenses and liabilities which might be incurred thereby.
The Indenture Trustee will not be required to expend or risk its own funds or otherwise
incur personal financial liability in the performance of its duties if the Indenture
Trustee reasonably believes that repayment or adequate indemnity is not reasonably
assured to it.
The Indenture Trustee may resign at any
time with respect to the Indenture Securities of one or more series by giving written
notice thereof to the Company or may be removed at any time with respect to the
Indenture Securities of one or more series by act of the Holders of a majority in
principal amount of the outstanding Indenture Securities of such series delivered
to the Indenture Trustee and the Company. No resignation or removal of the Indenture
Trustee and no appointment of a successor trustee will become effective until the
acceptance of appointment by a successor trustee in accordance with the requirements
of the Indenture. So long as no Indenture Event of Default or event which, after
notice or lapse of time, or both, would become an Indenture Event of Default has
occurred and is continuing, if the Company has delivered to the Indenture Trustee
with respect to one or more series an instrument executed by an authorized officer
of the Company appointing a successor trustee with respect to that or those series
and such successor has accepted such appointment in accordance with the terms of
the Indenture, the Indenture Trustee with respect to that or those series will be
deemed to have resigned and the successor will be deemed to have been appointed
as trustee in accordance with the Indenture.
Evidence of Compliance
Compliance with the Indenture provisions
is evidenced by written statements of Company officers or persons selected by the
Company. In certain cases, the Company must furnish opinions of counsel and certifications
of an engineer, appraiser or other expert (who in some cases must be independent).
In addition, the Indenture requires that the Company give the Indenture Trustee,
not less than annually, a brief statement as to the Company’s compliance with
the conditions and covenants under the Indenture.
Governing Law
The Indenture and the Indenture Securities
will be governed by and construed in accordance with the laws of the State of New
York, except to the extent that the 1939 Act shall be applicable.
46
RELATIONSHIP AMONG THE PREFERRED SECURITIES,
As long as payments of interest and other
payments are made when due on the Subordinated Debt Securities, such payments will
be sufficient to cover Distributions and payments due on the Trust Securities primarily
because (i) the aggregate principal amount of Subordinated Debt Securities will
be equal to the sum of the aggregate stated liquidation amount of the Trust Securities;
(ii) the interest rate and interest and other payment dates on the Subordinated
Debt Securities will match the Distribution Rate and distribution and other payment
dates for the Preferred Securities; (iii) the Company will pay for all costs and
expenses of the Trust pursuant to the Agreement as to Expenses and Liabilities;
and (iv) the Declaration provides that the Securities Trustees shall not cause or
permit the Trust to, among other things, engage in any activity that is not consistent
with the purposes of the Trust.
Payments of Distributions (to the extent
funds therefor are on hand available) and other payments due on the Preferred Securities
(to the extent funds therefor are on hand available) are guaranteed by the Company
as and to the extent set forth under Description of the Guarantee. If the
Company does not make interest payments on the Subordinated Debt Securities, it
is not expected that the Trust will have sufficient funds to pay Distributions on
the Preferred Securities. The Guarantee is a guarantee from the time of its issuance,
but does not apply to any payment of Distributions unless and until the Trust has
sufficient funds on hand available for the payment of such Distributions.
If the Company fails to make interest or
other payments on the Subordinated Debt Securities when due (taking into account
any Extension Period), the Declaration provides a mechanism whereby the holders
of the Preferred Securities may appoint a substitute Institutional Trustee. Such
holders may also direct the Institutional Trustee to enforce its rights under the
Subordinated Debt Securities, including proceeding directly against the Company
to enforce the Subordinated Debt Securities. If the Institutional Trustee fails
to enforce its rights under the Subordinated Debt Securities, to the fullest extent
permitted by applicable law, any holder of Preferred Securities may institute a
legal proceeding directly against the Company to enforce the Institutional Trustee’s
rights under the Subordinated Debt Securities without first instituting any legal
proceeding against the Institutional Trustee or any other person or entity. Notwithstanding
the foregoing, a holder of Preferred Securities may institute a legal proceeding
directly against the Company, without first instituting a legal proceeding against
the Institutional Trustee or any other person or entity, for enforcement of payment
to such holder of principal of or interest on the Subordinated Debt Securities having
a principal amount equal to the aggregate stated liquidation amount of the Preferred
Securities of such holder on or after the due dates specified in the Subordinated
Debt Securities.
If the Company fails to make payments under
the Guarantee, the Guarantee provides a mechanism whereby the holders of the Preferred
Securities may direct the Guarantee Trustee to enforce its rights thereunder. In
addition, any holder of Preferred Securities may institute a legal proceeding directly
against the Company to enforce the Guarantee Trustee’s rights under the Guarantee
without first instituting a legal proceeding against the Guarantee Trustee or any
other person or entity.
The Guarantee, the Indenture, the Subordinated
Debt Securities, the Declaration and the Agreement as to Expenses and Liabilities,
taken together, collectively, constitute a full and unconditional guarantee by the
Company, on a subordinated basis, of the payments due on the Preferred Securities.
Upon any voluntary or involuntary dissolution,
winding-up or termination of the Trust, unless the Subordinated Debt Securities
are distributed in connection therewith, the holders of Preferred Securities will
be entitled to receive, out of assets legally available for distribution to holders,
the Liquidation Distribution in cash. See Description of the Preferred Securities–Termination
of Trust; Liquidation Distribution.
Upon any voluntary or involuntary liquidation
or bankruptcy of the Company, the Institutional Trustee, as holder of the Subordinated
Debt Securities, would be a subordinated creditor of the Company, subordinated in
right of payment to all Senior Indebtedness, but entitled to receive payment in
full of principal and interest, before any stockholders of the Company receive payments
or distributions. Because the Company is guarantor under the Guarantee and has agreed
to pay for all costs, expenses and liabilities of the Trust (other than the Trust’s
obligation to holders of the Preferred Securities) pursuant to the Agreement as
to Expenses and Liabilities, the positions of a holder of Preferred Securities and
a holder of Subordinated Debt Securities relative to other creditors and to stockholders
of the Company in the event of liquidation or bankruptcy of the Company would be
substantially the same.
47
A default or event of default under any Senior Indebtedness would
not constitute a default or Indenture Event of Default. However, in the event of
payment defaults under, or acceleration of, Senior Indebtedness, the subordination
provisions of the Subordinated Debt Securities provide that no payments may be made
in respect of the Subordinated Debt Securities until such Senior Indebtedness has
been paid in full or any payment default thereunder has been cured or waived. Failure
to make required payments on the Subordinated Debt Securities would constitute an
Indenture Event of Default, except that failure to make interest payments on the
Subordinated Debt Securities will not be an Indenture Event of Default during an
Extension Period; provided, however, that any Extension Period may not exceed
five years or extend beyond the stated maturity of the Subordinated Debt Securities.
CERTAIN UNITED STATES
FEDERAL INCOME TAX CONSEQUENCES
The following is a discussion of the material
U.S. federal income tax considerations to a holder with respect to the purchase,
ownership and disposition of the Preferred Securities. This discussion is based
on current provisions of the Internal Revenue Code of 1986, as amended (the “Code”),
Treasury regulations promulgated thereunder, and administrative and judicial interpretations
thereof, all as in effect on the date hereof and all of which are subject to change,
possibly on a retroactive basis. The authorities on which this discussion is based
are subject to various interpretations, and it is therefore possible that the U.S.
federal income tax treatment of the ownership and disposition of the Preferred Securities
may differ from the treatment described below. This discussion does not address
the tax consequences arising under any state, local or foreign law.
This discussion applies only to initial
beneficial owners that purchase Preferred Securities upon original issuance at the
initial offering price and that hold Preferred Securities as capital assets (generally,
property held for investment). This discussion does not address all of the U.S.
federal income tax consequences that may be important to particular beneficial owners
in light of their individual circumstances, or to certain types of beneficial owners.
Such beneficial owners may include banks and other financial institutions, insurance
companies, tax-exempt entities, dealers in securities, traders in securities who
elect to use a mark-to-market method of accounting, holders subject to the U.S.
federal alternative minimum tax, certain former citizens or former long-term residents
of the United States, beneficial owners that are not “U.S. holders,” partnerships
or other entities classified as partnerships or flow-through entities for U.S. federal
income tax purposes, certain trusts, hybrid entities, persons holding the Preferred
Securities as part of a hedging or conversion transaction, a straddle or other risk
reduction transaction for U.S. federal income tax purposes or “U.S. holders”
that have a functional currency other than the U.S. dollar.
As used herein, the term “U.S. holder”
means a beneficial owner of Preferred Securities that is, for U.S. federal income
tax purposes, a citizen or resident of the United States, a corporation, or other
entity taxable as a corporation for U.S. federal income tax purposes, created or
organized in or under the laws of the United States or any State thereof, or the
District of Columbia, or an estate or trust that is a United States person as defined
in the Code.
If a partnership is the beneficial owner
of Preferred Securities, the treatment of a partner in the partnership will generally
depend upon the status of the partner and the activities of the partnership. A beneficial
owner of Preferred Securities that is a partnership and partners in such a partnership
should consult their tax advisors about the U.S. federal, state, local, foreign,
and other tax consequences of the acquisition, ownership and disposition of the
Preferred Securities.
Prospective purchasers are urged to
consult their own tax advisors as to the particular U.S. federal income and estate
tax consequences to them of the acquisition, ownership and disposition of the Preferred
Securities as well as any tax consequences under state, local and foreign tax laws,
and the possible effects of changes in tax laws.
Classification of the Subordinated Debt Securities
The Company will treat the Subordinated
Debt Securities as indebtedness of the Company for U.S. federal income tax purposes
under current law, and each holder, by acceptance of a beneficial ownership interest
in the Preferred Securities, covenants to treat the Subordinated Debt Securities
as indebtedness, and to treat the Preferred Securities as evidence of an indirect
beneficial ownership interest in the Subordinated Debt Securities. No assurance
can be given, however, that the classification of the Subordinated Debt Securities
as debt will not be challenged by the Internal Revenue Service (the “IRS”)
or that any such challenge will not be successful. The discussion herein assumes
that the Subordinated Debt Securities will be classified as indebtedness of the
Company for U.S. federal income tax purposes.
48
Classification of the Trust
It is a condition to the issuance of the
Preferred Securities that Dewey Ballantine LLP, tax counsel to the Company, renders
its opinion generally to the effect that under then current U.S. federal income
tax law, and assuming full compliance with the Declaration and based on certain
facts and assumptions contained in such opinion, the Trust will be classified as
a grantor trust and will not be classified as an association taxable as a corporation
for U.S. federal income tax purposes. Accordingly, for U.S. federal income tax purposes,
each holder of Preferred Securities generally will be considered the owner of an
undivided interest in the Subordinated Debt Securities, and each holder will be
required to include in its gross income any interest with respect to its allocable
share of those Subordinated Debt Securities.
Payments of Interest
Under the Indenture, the Company has the
right to defer the payment of interest on the Subordinated Debt Securities at any
time or from time to time for one or more deferral periods not exceeding five years,
provided that no deferral period shall end on a date other than an interest payment
date or extend beyond the stated maturity of the Subordinated Debt Securities (or
the date on which they are redeemed). Under applicable Treasury regulations, debt
instruments such as the Subordinated Debt Securities which are issued at face value
generally will not be considered issued with OID, even if the issuer can defer payment
of the interest, if the likelihood of deferral is “remote.” The Company
does not presently intend to exercise its right to deferral, and believes the likelihood
of deferral is remote. Accordingly, the Company intends to take the position that
the Subordinated Debt Securities will not be issued with OID and, accordingly, stated
interest on the Subordinated Debt Securities generally will be taxable to a U.S.
holder as ordinary income at the time it is paid or accrued in accordance with such
U.S. holder’s method of accounting.
The regulations have not yet been addressed
in any rulings or other interpretations by the IRS, and the IRS could take the position
that the likelihood of deferral of interest payments is not remote, or that the
Subordinated Debt Securities are otherwise issued with OID. Under OID principles,
a holder generally is required to include OID in gross income for U.S. federal income
tax purposes in advance of the receipt of the cash payment to which such income
is attributable. In particular, if the IRS were to assert successfully that the
stated interest on the Subordinated Debt Securities were OID regardless of whether
the Company exercises its right to defer payments of interest on such Subordinated
Debt Securities, a holder would be required to include the OID on the Subordinated
Debt Securities in ordinary income on a daily economic accrual basis, regardless
of the holder’s method of tax accounting and in advance of receipt of the cash
attributable to such interest income. Under the OID economic accrual rules, a holder
would accrue an amount of interest income each year that approximates the stated
interest payments called for under the Subordinated Debt Securities, and actual
cash payments of interest on the Subordinated Debt Securities would not be reported
separately as taxable income. Similarly, even if the IRS were not to take such a
view, but the Company nonetheless were actually to exercise its rights to defer
interest payments, the Subordinated Debt Securities would be treated for U.S. federal
income tax purposes as “reissued” with OID on the date of the exercise
of such rights, and the results would be the same as those discussed above.
In addition, it is possible that the IRS
could disagree with the treatment described above and take the position that the
Subordinated Debt Securities are contingent payment debt instruments, or become
contingent payment debt instruments upon a deferral of interest payments. In such
case, the amount, timing and character of income you recognize may be substantially
different than as discussed above. In particular, you may be required to recognize
taxable income in each year significantly in excess of interest payments actually
received in that year and to recognize ordinary income on the gain, if any, realized
on a sale, exchange or other disposition of the Preferred Securities. You should
consult your own tax advisor in this regard.
A U.S. holder of Preferred Securities will
not be entitled to a dividends received deduction with respect to any income earned
on the Preferred Securities.
Sales of Preferred Securities
Upon a sale, exchange or other disposition
of the Preferred Securities (including a distribution of cash in redemption
of a
U.S. holder’s Preferred Securities upon redemption or repayment of the
underlying Subordinated Debt Securities, but excluding the distribution of
Subordinated Debt
Securities), the U.S. holder will be considered to have disposed of all or
part of its pro rata share of the Subordinated Debt Securities, and will recognize
gain
or loss equal to the difference between the amount realized and the U.S. holder’s
adjusted tax basis in its pro rata share of the under-
49
lying Subordinated Debt Securities deemed disposed of. The amount
realized will be equal to the amount of cash and the fair market value of any other
property received (other than amounts representing accrued but unpaid interest,
which will be treated as interest and taxable as provided under —Payments
of Interest). Such gain or loss will be capital gain or loss and generally will
be long-term capital gain or loss if the Preferred Securities have been held for
more than one year. Long-term capital gains of noncorporate taxpayers are generally
taxed at a lower maximum marginal tax rate than the maximum marginal tax rate applicable
to ordinary income. The deductibility of capital losses is subject to limitations.
Distribution of the Subordinated Debt Securities to
a U.S. Holder of Preferred Securities
Under current law, and assuming the treatment
of the Trust as a grantor trust is respected, a distribution by the Trust of the
Subordinated Debt Securities as described under the caption Description of the
Preferred Securities—Special Event Redemption; Distribution of Subordinated
Debt Securities will be non-taxable and will result in a U.S. holder’s
receiving directly its pro rata share of the Subordinated Debt Securities previously
held indirectly through the Trust, with a holding period and tax basis equal to
the holding period and adjusted tax basis such U.S. holder was considered to have
had in its pro rata share of the underlying Subordinated Debt Securities prior to
such distribution. If, however, the exchange is caused by a Tax Event that has occurred
and is continuing, which results in the Trust being treated as an association taxable
as a corporation, the distribution would likely constitute a taxable event to the
Trust and a U.S. holder of the Preferred Securities.
Backup Withholding and Information Reporting
In general, a U.S. holder will be subject
to U.S. federal backup withholding tax at the applicable rate with respect to interest,
principal, or premium, if any, paid on Preferred Securities and the proceeds from
the sale, exchange, redemption, or other disposition of Preferred Securities if
the U.S. holder fails to provide its taxpayer identification number to the paying
agent and comply with certain certification procedures or otherwise establish an
exemption from backup withholding. In addition, such payments of interest, principal
or premium and the proceeds of a sale, redemption, or other disposition by the U.S.
holder will generally be subject to information reporting requirements. The amount
of any backup withholding from a payment to the U.S. holder will be allowed as a
credit against such U.S. holder’s U.S. federal income tax liability and may
entitle such U.S. holder to a refund, provided the required information is furnished
to the IRS.
This discussion of material U.S. federal
income tax considerations is for general information only and is not tax advice.
Accordingly, holders should consult their own tax advisors as to the particular
tax consequences to them of the acquisition, ownership and disposition of the Preferred
Securities including the applicability and effect of any state, local or foreign
tax laws, and of any proposed changes in applicable laws.
CERTAIN ERISA CONSIDERATIONS
The following is a summary of certain considerations
associated with the purchase of the Preferred Securities by employee benefit plans
that are subject to Title I of the U.S. Employee Retirement Income Security Act
of 1974, as amended (“ERISA”), plans, individual retirement accounts and
other arrangements that are subject to Section 4975 of the Code or provisions under
any federal, state, local, non-U.S. or other laws or regulations that are similar
to such provisions of the Code or ERISA (collectively, “Similar Laws”),
and entities whose underlying assets are considered to include “plan assets”
of such plans, accounts and arrangements (each, a “Plan”).
General Fiduciary Matters
ERISA and the Code impose certain duties
on persons who are fiduciaries of a Plan subject to Title I of ERISA or Section
4975 of the Code (an “ERISA Plan”) and prohibit certain transactions involving
the assets of an ERISA Plan and its fiduciaries or other interested parties. Under
ERISA and the Code, any person who exercises any discretionary authority or control
over the administration of such an ERISA Plan or the management or disposition of
the assets of such an ERISA Plan, or who renders investment advice for a fee or
other compensation to such a Plan, is generally considered to be a fiduciary of
the ERISA Plan.
In considering an investment of a portion
of the assets of any Plan in the Preferred Securities, a fiduciary should determine
whether the investment is in accordance with the documents and instruments
governing
the Plan and the applicable provisions of ERISA, the Code or any Similar Law
relating
to a fiduciary’s duties to the Plan including, with-
50
out limitation, the prudence, diversification, delegation of control
and prohibited transaction provisions of ERISA, the Code and any other applicable
Similar Laws.
Prohibited Transaction Issues
Section 406 of ERISA and Section 4975 of
the Code prohibit ERISA Plans from engaging in specified transactions involving
plan assets with persons or entities who are “parties in interest,” within
the meaning of ERISA, or “disqualified persons,” within the meaning of
Section 4975 of the Code, unless an exemption is available. A party in interest
or disqualified person who engaged in a non-exempt prohibited transaction may be
subject to excise taxes and other penalties and liabilities under ERISA and the
Code. In addition, the fiduciary of the ERISA Plan that engaged in such a non-exempt
prohibited transaction may be subject to penalties and liabilities under ERISA and
the Code.
Whether or not the underlying assets of
the Trust were deemed to include “plan assets,” as described below, the
acquisition, holding and/or participation in the remarketing of the Preferred Securities
by an ERISA Plan with respect to which the Trust, the Company, the Indenture Trustee,
the Guarantee Trustee or any of the Securities Trustees is considered a party in
interest or a disqualified person may constitute or result in a direct or indirect
prohibited transaction under Section 406 of ERISA and/or Section 4975 of the Code,
unless the investment is acquired and is held in accordance with an applicable statutory,
class or individual prohibited transaction exemption. In this regard, the U.S. Department
of Labor (the “DOL”) has issued prohibited transaction class exemptions
(“PTCE”) that may apply to the acquisition, holding and remarketing of
the Preferred Securities. These class exemptions include, without limitation, PTCE
84-14 respecting transactions determined by independent qualified professional asset
managers, PTCE 90-1 respecting insurance company pooled separate accounts, PTCE
91-38 respecting bank collective investment funds, PTCE 95-60 respecting life insurance
company general accounts and PTCE 96-23 respecting transactions determined by in-house
asset managers, although there can be no assurance that all of the conditions of
any such exemptions will be satisfied with respect to the acquisition, holding and
remarketing of the Preferred Securities.
Plan Asset Issues
ERISA and the Code do not define “plan
assets.” However, regulations (the “Plan Asset Regulations”) promulgated
under ERISA by the DOL generally provide that when an ERISA Plan acquires an equity
interest in an entity that is neither a “publicly-offered security” nor
a security issued by an investment company registered under the Investment Company
Act, the ERISA Plan’s assets include both the equity interest and an undivided
interest in each of the underlying assets of the entity unless it is established
either that equity participation in the entity by “benefit plan investors”
is not significant or that the entity is an “operating company,” in each
case as defined in the Plan Asset Regulations. The Plan Asset Regulations define
an “equity interest” as any interest in an entity, including a beneficial
interest in a trust, other than an instrument that is treated as indebtedness under
applicable local law and which has no substantial equity features. Although for
U.S. Federal income tax purposes the Company will treat the Preferred Securities
as indebtedness, it is possible that the Preferred Securities could be deemed equity
interests for purposes of the Plan Asset Regulations.
It is not anticipated that the Preferred
Securities would qualify as “publicly offered” securities for purposes
of the Plan Asset Regulations. Also for purposes of the Plan Asset Regulations,
equity participation in an entity by benefit plan investors will not be significant
if they hold, in the aggregate, less than 25% of the value of any class of such
entity’s equity, excluding equity interests held by persons (other than benefit
plan investors) with discretionary authority or control over the assets of the entity
or who provide investment advice for a fee (direct or indirect) with respect to
such assets, and any affiliates thereof. For purposes of this 25% test, “benefit
plan investors” include all employee benefit plans, whether or not subject
to ERISA or the Code, including “Keogh” plans, individual retirement accounts
and pension plans maintained by foreign corporations, as well as any entity whose
underlying assets are deemed to include “plan assets” under the Plan Asset
Regulations (e.g., an entity of which 25% or more of the value of any class of equity
interests is held by benefit plan investors and which does not satisfy another exception
under the Plan Asset Regulations). There can be no assurance that equity participation
by benefit plan investors in the Trust will not be significant, and it is not anticipated
that the Trust will qualify as an operating company.
Plan Asset Consequences
If the assets of the Trust were deemed
to be “plan assets” under ERISA, this would result, among other things,
in (i) the application of the prudence and other fiduciary responsibility
standards
of ERISA to investments made by the Trust, and (ii) the possibility that certain
transactions in which the Trust might seek to engage could constitute “pro-
51
hibited transactions” under ERISA and the Code. Because of the
foregoing, the Preferred Securities should not be purchased or held by any person
investing “plan assets” of any Plan, unless such purchase and/or holding
is (and participation in any remarketing will be) eligible for the exemptive relief
available under PTCE 96-23 (for certain transactions determined by in-house asset
managers), PTCE 95-60 (for certain transactions involving insurance company general
accounts), PTCE 91-38 (for certain transactions involving bank collective investment
funds), PTCE 90-1 (for certain transactions involving insurance company separate
accounts) or PTCE 84-14 (for certain transactions determined by independent qualified
professional asset managers).
Representation
Accordingly, by acceptance of the Preferred
Securities, each purchaser and subsequent transferee of the Preferred Securities
will be deemed to have represented and warranted that either (i) no portion of the
assets used by such purchaser or transferee to acquire and hold the Preferred Securities
(or interest therein) constitutes assets of any Plan, or (ii) the purchase and holding
of the Preferred Securities (or interest therein) by such purchaser or transferee
is (and the participation in any remarketing of the Preferred Securities will be)
eligible for the exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1
or 84-14.
The foregoing discussion is general in
nature and is not intended to be all-inclusive. Due to the complexity of these rules
and the penalties that may be imposed upon persons involved in non-exempt prohibited
transactions, it is particularly important that fiduciaries, or other persons considering
purchasing the Preferred Securities on behalf of, or with the assets of, any Plan,
consult with their counsel regarding the potential applicability of ERISA, Section
4975 of the Code and any Similar Laws to such investment and whether an exemption
would be applicable to the purchase, holding and remarketing of the Preferred Securities.
Employee benefit plans which are governmental plans (as defined in Section 3(32)
of ERISA) and certain church plans (as defined in Section 3(33) of ERISA) generally
are not subject to ERISA requirements but may he subject to comparable requirements.
WHERE YOU CAN FIND MORE
INFORMATION
The Company is subject to the informational
reporting requirements of the Securities Exchange Act of 1934, as amended. The Company
files annual, quarterly and special reports, proxy statements and other documents
with the SEC (File No. 1-3701). These documents contain important business and financial
information. You may read and copy any materials the Company files with the SEC
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. The Company’s 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.
Incorporation of Documents by Reference
The SEC allows the Company to incorporate
by reference the information that it files with the SEC. This allows the Company
to disclose important information to you by referring you to those documents rather
than repeating them in full in this Prospectus. The Company is incorporating into
this Prospectus by reference:
You may request copies of any of the Incorporated
Documents, at no cost, by contacting the Company at the address or telephone
number
provided on page 1 of this Prospectus. The Company maintains an Internet site
at
http://www.avistacorp.com which contains information concerning the Company
and its affiliates. The information contained at the
52
Company’s Internet site is not incorporated in this Prospectus
by reference and you should not consider it a part of this Prospectus.
UNDERWRITING
The Company and the Trust have entered
into an underwriting agreement (the “Underwriting Agreement”) with Lehman
Brothers Inc. as representative (the “Representative”) of the several
underwriters named below (the “Underwriters”). In the Underwriting Agreement,
each Underwriter has severally, but not jointly, agreed, subject to the terms and
conditions set forth therein, to purchase all of the Preferred Securities set opposite
its name below if any of the Preferred Securities are purchased.
Because the Trust will invest the proceeds from
the sale of the Preferred Securities in the Subordinated Debt Securities issued
by the Company, the Underwriting Agreement provides that the Company will pay an
underwriting commission of $ per Preferred Security (or $ for all Preferred Securities)
to the Representative for the account of the several Underwriters, as compensation.
The Underwriters propose to offer the Preferred
Securities directly to the public at the initial public offering price set forth
on the cover page of this Prospectus and may offer them to certain securities dealers
at such price less a concession not in excess of % of the liquidation amount per
Preferred Security. The Underwriters may allow, and such dealers may reallow, a
concession not in excess of % of the liquidation amount per Preferred Security to
certain brokers and dealers. After the Preferred Securities are released for sale
to the public, the offering price and other selling terms may from time to time
be varied by the Underwriters.
Prior to this offering, there has been
no public market for the Preferred Securities. The Preferred Securities will not
be listed on a securities exchange. The Representative has advised the Company that
the Underwriters intend to make a market in the Preferred Securities. The Underwriters
will have no obligation to make a market in the Preferred Securities, however, and
may cease market making activities, if commenced, at any time.
The Company has agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the Securities
Act or contribute to payments that each Underwriter may be required to make in respect
thereof.
The Company’s expenses associated
with the offer and sale of the Preferred Securities are estimated to be $ .
In order to facilitate the offering of
the Preferred Securities, the Underwriters may engage in transactions that stabilize,
maintain or otherwise affect the price of the Preferred Securities. Specifically,
the Underwriters may over-allot in connection with the offering, creating short
positions in the Preferred Securities for their own account. In addition, to cover
over-allotments or to stabilize the price of the Preferred Securities, the Underwriters
may bid for, and purchase, Preferred Securities in the open market. The Underwriters
may reclaim selling concessions allowed to an Underwriter or dealer for distributing
Preferred Securities in the offering, if the Underwriters repurchase previously
distributed Preferred Securities in transactions to cover short positions, in stabilization
transactions or otherwise. Any of these activities may stabilize or maintain the
market price of the Preferred Securities above independent market levels. The Underwriters
are not required to engage in these activities, and may end any of these activities
at any time.
In general, purchases of a security for
the purpose of stabilization or to reduce a short position could cause the price
of the security to be higher than it might be in the absence of such purchases.
The imposition of a penalty bid might also have an effect on the price of a security
to the extent that it were to discourage resales of the security.
Neither the Company, the Trust nor the
Underwriters makes any representation or prediction as to the direction or magnitude
of any effect that the transactions described above may have on the price of the
Preferred Securities. In addition, neither the Company, the Trust nor the Underwriters
makes any representation that the Underwriters will engage in such transactions
or that such transactions once commenced will not be discontinued without notice.
53
The offering is being made in compliance with Rule 2810 of the Conduct
Rules of the National Association of Securities Dealers, Inc. (the “NASD”).
The Preferred Securities will be sold in compliance with the suitability requirements
of NASD Rule 2310.
The Underwriters and their affiliates engage
in transactions with, and from time to time, have performed services for, the Company
and its affiliates in the ordinary course of business.
LEGAL OPINIONS
Certain matters of Delaware law relating
to the validity of the Preferred Securities, the enforceability of the Declaration
and the creation of the Trust will be passed upon on behalf of the Trust by Richards,
Layton & Finger, P.A., Wilmington, Delaware, special Delaware counsel to the
Company and the Trust. Certain matters of New York law and of federal securities
laws relating to the validity of the Subordinated Debt Securities and the Guarantee
and certain matters relating thereto will be passed upon for the Company by Dewey
Ballantine LLP, New York, New York, counsel to the Company, and by David J. Meyer,
Esq., Vice President and Chief Counsel for Regulatory and Governmental Affairs of
the Company. Certain matters of Washington corporate law and matters relating to
public utility regulatory approvals under Washington, Idaho, Montana, Oregon and
California law relating to the authorization of the Subordinated Debt Securities
and the Guarantee will be passed upon for the Company by Heller Ehrman White &
McAuliffe LLP, counsel for the Company. Certain United States federal income taxation
matters will be passed upon for the Company and the Trust by Dewey Ballantine LLP,
counsel to the Company and the Trust. The validity of the Preferred Securities will
be passed upon for the Underwriters by Sullivan & Cromwell LLP, New York, New
York. In giving their opinions Dewey Ballantine LLP and Sullivan & Cromwell
LLP may assume the conclusions of Washington, California, Idaho, Montana and Oregon
law set forth in the opinion of Heller Ehrman White & McAuliffe LLP and the
conclusions of Delaware law set forth in the opinion of Richards, Layton & Finger,
P.A.
EXPERTS
The financial statements and the related
financial statement schedules incorporated in this Prospectus by reference from
the Company’s most recent Annual Report on Form 10-K 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.
54
GLOSSARY OF TERMS USED IN THE PROSPECTUS
A-1
60,000 Preferred Securities
AVISTA
CORPORATION
AVA Capital Trust III
PROSPECTUS ,
2004 LEHMAN BROTHERS
MCDONALD INVESTMENTS
INC.
PIPER JAFFRAY
PART II
Item 14. Other Expenses of Issuance and Distribution
(estimated).
The expenses in connection with the issuance
and distribution of the securities being registered are estimated as follows:
Item 15. Indemnification of Directors and Officers.
Article Seventh of the Company’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 Company 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 Company’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.
Section 8.06 of the Declaration provides
with respect to the Trust established thereby that the Company agrees:
(c) to indemnify each of the
Trustees for, and to hold each of the Trustees harmless against, any and
all loss, damage, claims, liability or expense incurred without willful
misconduct, negligence (gross negligence, in the case of the Delaware Trustee)
or bad faith on their part, arising out of or in connection with the accep
II-1
tance or administration of this Declaration,
including the costs and expenses of defending themselves against any claim
(whether by the Sponsor, any Securityholder or any other person) or liability
in connection with the exercise or performance of any of their powers or
duties hereunder.
The obligation to indemnify as set forth in Section
8.06 will survive the termination of the Declaration.
Section 3.03 of the Guarantee Agreement
provides with respect to the Trust that the Company agrees:
(c) to indemnify the Trustee
for, and to hold the Trustee harmless against, any and all loss, damage,
claims, liability or expense incurred without negligence or bad faith on
its part, arising out of or in connection with the acceptance or administration
of this Guarantee Agreement, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of
any of its powers or duties hereunder.
The obligation to indemnify as set forth in Section
3.03 will survive the termination of the Guarantee Agreement.
Item 16. Exhibits.
Reference is made to the Exhibit Index
on p. II-6 hereof.
Item 17. Undertakings.
Each of the undersigned Registrants hereby
undertakes that:
(a) That, for purposes of determining any liability
under the Securities Act, each filing of the
registrant’s annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act (and, where applicable, each 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;
(b) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as
part of this registration statement in reliance upon Rule 430A and contained
in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(c) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that contains a form
of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and controlling
persons of either of the Registrants pursuant to the foregoing provisions, or otherwise,
such Registrant has been advised that in the opinion of the SEC 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 such Registrant of expenses incurred or paid by a director, officer
or controlling person of such Registrant in the successful defense of any action,
suit or proceeding) is asserted against the Registrant by such director, officer
or controlling person in connection with the securities being registered, such Registrant
will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities Act
and will be governed by the final adjudication of such issue.
II-2
POWER OF ATTORNEY
The Registrant hereby appoints each Agent
for Service named in this Registration Statement as its attorney-in-fact to sign
in their name and behalf, and to file with the Securities and Exchange Commission
any and all amendments, including post-effective amendments, to this Registration
Statement, and each director and/or officer of the Registrant whose signature appears
below hereby appoints each such Agent for Service as his attorney-in-fact with like
authority to sign in his name and behalf, in any and all capacities stated below,
and to file with the Securities and Exchange Commission, any and all such amendments.
II-3
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements for filing on Form S-3 and 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 March, 2004.
AVISTA CORPORATION Malyn K. Malquist Pursuant to the requirements of the Securities
Act of 1933, this Registration Statement has been signed by the following persons
in the capacities and on the date indicated.
II-4
SIGNATURES
Pursuant to the requirements of the Securities
Act of 1933, AVA Capital Trust III certifies that it has reasonable grounds
to believe
that it meets all of the requirements for filing on Form S-3 and has duly caused
this Registration Statement to be signed on their behalf by the undersigned,
thereunto
duly authorized, in the City of Spokane and State of Washington on the 11th
day of March, 2004.
II-5
EXHIBIT INDEX
•
on the last Distribution
Payment Date relating to the Initial Fixed Rate Period;
•
on such dates with
respect to any other Fixed Rate Period as the Company and the Trust may determine
prior to the commencement of such Fixed Rate Period; or
•
on any Distribution
Payment Date relating to a Floating Rate Period or at any time in whole, but not
in part, upon the occurrence of a Special Event (as discussed below).
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
THE SUBORDINATED DEBT SECURITIES AND THE GUARANTEE
•
•
•
Name
_____
Lehman
Brothers Inc.
McDonald Investments Inc.
Piper Jaffray
& Co.
Total
60,000
_________
Term
Defined on Page
_____
______________
10-year Treasury CMT
20
1939 Act
16
1940 Act
22
3-month LIBOR
Rate
19
30-year Treasury CMT
20
Adjustable
Rate
2
Agreement as to Expenses and
Liabilities
4
Avista Advantage
14
Avista Energy
15
Avista Power
15
Benchmark Rates
19
Beneficial
Owner
26
Beneficiaries
36
Business Day
21
Calculation Agent
21
Code
48
Common Securities
1
Company
1
Coyote Springs 2
15
CT
15
Debt Securities Redemption Price
4
Declaration
16
Declaration Event of Default
29
Delaware Trustee
1
Designated CMT Maturity Index
21
Direct Participants
26
Distribution Payment Date
3
Distribution
Period
2
Distribution Rate
1
Distributions
1
DOL
51
DTC
5
DTCC
26
Election Date
2
ERISA
50
ERISA Plan
50
ERM
10
Expenses
36
Extension Period
3
FERC
10
Fixed Rate
1
Fixed Rate
Period
1
Floating Rate
2
Floating Rate
Determination Date
21
Floating Rate Period
2
Guarantee
1
Guarantee Payments
34
Guarantee Trustee
1
Holder
37
Incorporated
Documents
52
Indenture
1
Indenture Event
of Default
29
Indenture Securities
36
Indenture Trustee
1
Indirect Participants
26
Initial Credit
Spread
2
Initial Distribution Rate
1
Initial Fixed
Rate Period
1
Institutional Trustee
1
Interest Payment
Date
36
Interest Period
36
Interest Rate
36
Investment Company Act Event
22
IPUC
10
IRS
48
Issue Date
1
Liquidation Distribution
28
London Business
Day
21
Maturity
37
NASD
54
Notice of Election
24
OID
3
Participants
26
PCA
10
Plan
50
Plan Asset
Regulations
51
Preferred Securities
1
Preferred Securities
Redemption Price
7
PTCE
51
Record Date
19
Redemption Date
4
Reference Dealer
20
Regular Trustees
1
Remarketing
Agent
2
Remarketing Agreement
25
Remarketing
Date
25
Remarketing Settlement Date
25
Representative
53
SEC
11
Securities
Act
26
Securities Registrar
33
Securities
Trustees
1
Similar Laws
50
Special Event
Redemption
22
Subordinated Debt Securities
1
Tax Event
22
Telerate Page 3750
21
Telerate Page
7051
21
Treasury Debentures
20
Trust
1
Trust Property
16
Trust Securities
4
U.S. holder
48
Underwriters
53
Underwriting Agreement
53
WUTC
10
Flexible Trust Preferred Securities
(T-FLEXSM)
(Five Year Initial Fixed Rate Period)
(Liquidation Amount $1,000 per Preferred
Security)
Fully and unconditionally guaranteed,
as described herein
Filing
fee – Securities and Exchange Commission
$2,534
Fees of state
regulatory authorities
1,000
Legal counsel fees
300,000
Trustees’
fees
25,000
Auditors’ fees
25,000
Fees of rating
agencies
100,000
Printing expenses
25,000
Miscellaneous
expenses
21,466
Total Estimated Expenses
$500,000
By /s/ MALYN K. MALQUIST
______________________
Senior Vice President
and
Principal Financial Officer
Signature
Title
Date
AVA CAPITAL TRUST III
By: AVISTA CORPORATION, as Sponsor
By: /s/ MALYN K.
MALQUIST
_______________________________________
Malyn K. Malquist
Senior
Vice President and
Principal
Financial Officer
| Exhibit | Description |
| ______ | __________ |
| 1 | Form of Underwriting Agreement
for Preferred Securities. |
| 4(a)(1) | Amended
and Restated Certificate of Trust of Washington Water Power Capital III. |
| 4(a)(2) | Declaration of Trust of Washington
Water Power Capital III (filed with Registration number 333-16353) |
| 4(a)(3) | Removal
and Appointment of Trustees and Amendment of Declaration of Trust
of Washington Water Power
Capital III. |
| 4(a)(4) | Form of Amended and
Restated Declaration of Trust of AVA Capital Trust III. |
| 4(b)(1) | Form of Indenture between
Avista Corporation and Union Bank of California, N.A., as Trustee. |
| 4(b)(2) | Form
of Officer’s Certificate
to be used in connection with the issuance of Subordinated Debt Securities. |
| 4(c) | Form of Preferred Security
(contained in Exhibit 4(a)(4)). |
| 4(d) | Form of Subordinated Debt
Security (contained in Exhibit 4(b)(2)). |
| 4(e) | Form of Guarantee issued by
Avista Corporation for the benefit of the holders of the Securities
of AVA Capital Trust III. |
| 4(f) | Form
of Agreement as to Expenses and Liabilities between Avista Corporation
and AVA Capital Trust III
(contained in Exhibit in 4(a)(4)). |
| 5(a) | Opinion
and Consent of Heller Ehrman White & McAuliffe LLP. |
| 5(b) | Opinion and Consent of Dewey
Ballantine LLP. |
| 5(c) | Opinion
and Consent of Richards, Layton & Finger, P.A. |
| 8 | Tax Opinion of Dewey Ballantine
LLP (contained in Exhibit 5(b)). |
| 12 | Computation of Ratio of Earnings
to Fixed Charges of Avista Corporation (contained in Incorporated Documents). |
| 23(a) | Consent
of Heller Ehrman White & McAuliffe
LLP (contained in Exhibit 5(a)). |
| 23(b) | Consent of Dewey Ballantine
LLP (contained in Exhibit 5(b)). |
| 23(c) | Consent
of Richards, Layton & Finger,
P.A. (contained in Exhibit 5(c)). |
| 23(d) | Consent
of Deloitte & Touche
LLP. |
| 24 | Power of Attorney (included
on page II-3). |
| 25(a) | Statement of Eligibility under
the Trust Indenture Act of 1939, as amended, of Union Bank of California,
N.A., as Trustee under the Indenture. |
| 25(b) | Statement of Eligibility under
the Trust Indenture Act of 1939, as amended, Union Bank of California,
N.A., as Trustee under the Amended and Restated Declaration of Trust
for AVA Capital Trust III. |
| 25(c) | Statement of Eligibility
under the Trust Indenture Act of 1939, as amended, of Union Bank of
California, N.A., as Guarantee Trustee under the Securities Guarantee
issued by Avista Corporation for the benefit of the holders of the
Securities of AVA Capital
Trust III. |
II-6
Exhibit 1
AVA CAPITAL TRUST III
(A DELAWARE STATUTORY TRUST)
FLEXIBLE TRUST PREFERRED SECURITIES
(FIVE YEAR INITIAL FIXED RATE PERIOD)
(LIQUIDATION AMOUNT $1,000 PER PREFERRED SECURITY)
-----------------
UNDERWRITING AGREEMENT
March __, 2004
Lehman Brothers Inc.
As Representative of the several Underwriters
named in Schedule I hereto,
745 7th Avenue
New York, NY 10019
Ladies and Gentlemen:
AVA CAPITAL TRUST III, a statutory trust (the "Trust") organized
under the Delaware Statutory Trust Act, 12 DEL. C. ss.3801, ET SEQ. (the
"Delaware Act"), and Avista Corporation, a Washington corporation (the
"Company", and together with the Trust, the "Offerors"), propose, subject to the
terms and conditions stated herein, to issue and sell to the Underwriters named
in Schedule I hereto (collectively, the "Underwriters") for whom you are acting
as representative (in such capacity, the "Representative"), with respect to the
sale by the Trust and the purchase by the Underwriters, acting severally and not
jointly, of the respective numbers of Flexible Trust Preferred Securities
(liquidation amount $1,000 per Preferred Security) of the Trust (the "Preferred
Securities") set forth in Schedule I.
The Preferred Securities will be guaranteed by the Company with
respect to distributions and payments upon liquidation, redemption and otherwise
(to the extent that the Trust shall have funds available therefor) (the
"Guarantee") pursuant to the Guarantee Agreement, to be dated as of March __,
2004 (the "Guarantee Agreement"), between the Company and Union Bank of
California, N.A. a California banking corporation, as trustee (the "Guarantee
Trustee") (the Preferred Securities and the related Guarantee under the
Guarantee Agreement being hereinafter called, collectively, the "Securities");
and
The entire net proceeds from the sale of the Securities will be
combined with the entire net proceeds from the sale by the Trust to the Company
of its common securities (the "Common Securities") and will be used by the Trust
to purchase
$_______,000 aggregate principal amount of Subordinated Debt Securities, Series
__ (the "Subordinated Debt Securities") to be issued by the Company; and
The Preferred Securities and the Common Securities will be issued
pursuant to the Amended and Restated Declaration of Trust, to be dated as of
March __, 2004 (the "Declaration of Trust"), among the Company, as Sponsor,
Malyn K. Malquist and Diane C. Thoren (the "Regular Trustees"), SunTrust
Delaware Trust Company (the "Delaware Trustee"), Union Bank of California, N.A.
a national banking association duly organized under the laws of the United
States of America (the "Institutional Trustee" and, together with the Delaware
Trustee and the Regular Trustees, the "Trustees") and the holders, from time to
time, of undivided beneficial interests in the assets of the Trust; and
The Subordinated Debt Securities will be issued pursuant to an
Indenture, dated as of March __, 2004 between the Company and Union Bank of
California, N.A., as trustee (the "Indenture Trustee"), as supplemented by an
Officer's Certificate to be dated as of March __, 2004 setting forth the terms
of the Subordinated Debt Securities (such Indenture, as so supplemented, being
hereinafter called the "Indenture") between the Company and the Indenture
Trustee; and
The Company and the Trust will enter into an Agreement as to
Expenses and Liabilities, to be dated as of March __, 2004 (the "Agreement as to
Expenses and Liabilities"), pursuant to which the Company will guarantee on a
subordinated basis to each person or entity to which the Trust may be indebted
or liable, the full payment of such obligations; and
The Company and the Trust will enter into a Remarketing Agreement,
to be dated as of March __, 2004 (the "Remarketing Agreement") with Lehman
Brothers Inc. as remarketing agent (the "Remarketing Agent"), pursuant to which,
among other things, the Remarketing Agent will conduct certain remarketing
procedures relating to the Preferred Securities; and
The Company and the Trust will enter into a Calculation Agent
Agreement, to be dated as of March __, 2004 (the "Calculation Agent Agreement")
with ______________, as calculation agent (the "Calculation Agent"), pursuant to
which, among other things, the Calculation Agent will conduct certain procedures
relating to the Preferred Securities; and
In connection with the foregoing, the Offerors have filed with the
Securities and Exchange Commission (the "Commission") a registration statement
on Form S-3 (registration no. 333-________) for the registration under the
Securities Act of 1933, as amended (the "Act"), of the Securities, and the
Subordinated Debt Securities. A prospectus setting forth the terms of the
Securities and the Subordinated Debt Securities and of their sale and
distribution has been or will be prepared and will be filed or transmitted for
filing pursuant to Rule 424 under the Act. Such registration statement (as
amended, if applicable) and the prospectus constituting a part thereof, as from
time to time amended or supplemented pursuant to the Act, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise, are
hereinafter referred to as the
2
"Registration Statement" and the "Prospectus", respectively. Any reference
herein to the Registration Statement or the Prospectus shall be deemed to refer
to and include, in each case, all documents incorporated or deemed to be
incorporated by reference therein pursuant to Item 12 of Form S-3 under the Act
and the information, if any, deemed to be part thereof pursuant to Rule 430A(b)
under the Act; except that, if any revised prospectus shall be provided to the
Underwriters by the Offerors for use in connection with the offering of the
Preferred Securities which differs from the Prospectus on file at the Commission
at the time the Registration Statement becomes effective (whether or not such
revised prospectus is required to be filed by the Offerors pursuant to Rule
424(b) under the Act), the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to the Underwriters for
such use.
Pursuant to Rule 429 under the Act, the Prospectus will be used as
a combined prospectus relating to the Registration Statement and to the
registration statement filed by the Company with the Commission on November 19,
1996 (registration no. 333-16353) which, as subsequently amended, became
effective on January 9, 1997; unless the context otherwise requires, all
references in this Agreement to the Registration Statement shall be deemed to
include such prior registration statement.
1. The Offerors jointly and severally represent and warrant to, and
agree with, each of the Underwriters that:
(a) (i) The Registration Statement has been prepared and
filed in accordance with the provisions of the Act, with the Commission;
such Registration Statement has been declared effective by the
Commission, and no other document with respect to the Registration
Statement or documents incorporated by reference therein has heretofore
been filed or transmitted for filing with the Commission (other than
prospectuses filed pursuant to Rule 424(b) of the rules and regulations
of the Commission under the Act, each in the form heretofore delivered to
the Underwriters);
(ii) Any reference herein to the Registration Statement
or the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under
the Act, as of the effective date or the date thereof, as the case may
be; any reference to any amendment to the Registration Statement shall be
deemed to refer to and include any annual report of the Company filed
pursuant to Section 13(a) or 15(d) of the Exchange Act after the
effective date of the Registration Statement that is incorporated by
reference in the Registration Statement; and any reference to any
amendment or supplement to the Prospectus shall be deemed to refer to and
include any documents filed after the date of such Prospectus, under the
Exchange Act, and incorporated by reference in such Prospectus;
(b) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose
has been initiated or, to the best knowledge of the Offerors, threatened
by the Commission; and no
3
order preventing or suspending the use of any preliminary prospectus or
the Prospectus has been issued by the Commission;
(c) The Registration Statement, when it became effective,
conformed, and any further amendments thereto, when they become
effective, will conform, in all material respects to the requirements of
the Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), and the Prospectus and any amendments or supplements
thereto, when filed with the Commission, will conform in all material
respects to the requirements of the Act and the Trust Indenture Act;
(d) The Registration Statement, when it became effective, and
any further amendments thereto when they become effective, did not 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 the Prospectus and any amendments
and supplements thereto, when they are filed or transmitted for filing
with the Commission and at the Time of Delivery, will not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties contained in this
subsection (d) shall not apply to statements or omissions made in
reliance upon and in conformity with information furnished in writing by
an Underwriter through the Representative expressly for use in the
Registration Statement, the Prospectus or any amendment or supplement to
either thereof;
(e) The documents incorporated by reference in the Prospectus,
when they were filed with the Commission, and any further documents so
filed and incorporated by reference, when they are filed with the
Commission or become effective, as the case may be, (i) conformed and
will conform in all material respects to the requirements of the Exchange
Act or the Act, as the case may be, and the rules and regulations of the
Commission thereunder and (ii) did not and will not include an untrue
statement of a material fact or omit to state a material fact necessary
in order to make the statements made, in light of the circumstances under
which they were made, not misleading;
(f) Except as set forth in or contemplated by the Prospectus,
(i) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been (A) any
material adverse change in or affecting the business, financial
condition, shareholders' equity or results of operations of the Company
and its subsidiaries, considered as a whole, or any development
reasonably expected to result in such a material adverse change (in each
case, a "Material Adverse Change"), (B) any transaction entered into by
the Company or any subsidiary thereof which is material to the Company
and its subsidiaries as a whole other than transactions in the ordinary
course of business, and (C) any change in the capital stock or long-term
debt of the Company or any of its subsidiaries (except for shares of
common stock issued under the
4
Company's Dividend-Reinvestment and Stock Purchase Plan and employee
stock plans and except for scheduled maturities of long-term debt) and
(ii) neither the Company nor any of its subsidiaries has any contingent
obligation which is material to the Company and its subsidiaries as a
whole;
(g) The Company has been duly incorporated and is validly
existing in good standing as a corporation under the laws of the State of
Washington, is duly qualified to do business and in good standing as a
foreign corporation under the laws of the States of California, Idaho,
Montana and Oregon, and has corporate and other power and authority and
has all material required approvals and authorizations to own, lease and
operate its properties, and to transact an electric and/or gas public
utility business in such jurisdictions;
(h) Each of Avista Capital, Avista Energy, Inc. and Avista
Advantage, Inc. is duly incorporated and validly existing in good
standing under the laws of the State of Washington;
(i) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully paid
and non-assessable;
(j) The Subordinated Debt Securities have been duly authorized
by all necessary corporate action on the part of the Company, and have
been duly executed by the Company and, when duly authenticated and
delivered by the Indenture Trustee under the Indenture, and issued,
delivered and paid for in accordance with this Agreement, will be duly
authenticated, issued and delivered by the Company and will constitute
valid and binding obligations of the Company, entitled to the benefits
provided by the Indenture and enforceable against the Company in
accordance with their terms, subject, as to enforcement, (i) to
bankruptcy, insolvency, reorganization, arrangement, moratorium and other
laws of general applicability relating to or affecting creditors' rights,
and (ii) by general principles of equity, whether such enforceability is
considered a proceeding in equity or at law, and by rules of law
governing specific performance, injunction relief, foreclosure,
receivership and other equitable remedies (the "Enforceability
Exceptions"), and are entitled to the benefits provided by the Indenture;
the Subordinated Debt Securities will be substantially in the form
previously delivered to the Representative; and the Subordinated Debt
Securities will conform in all material respects to the description
thereof contained in the Prospectus;
(k) The Indenture has been duly authorized and the Indenture
has been duly executed, delivered and recorded, and constitutes a valid
and legally binding instrument, enforceable in accordance with its terms,
subject to the Enforceability Exceptions; the Indenture has been duly
qualified under the Trust Indenture Act; and the Indenture will conform
in all material respect to the description thereof contained in the
Prospectus;
5
(l) The issue and sale of the Securities, the Common Securities
and the Subordinated Debt Securities and the compliance by the Offerors
with all of the provisions of the Securities, the Common Securities, the
Subordinated Debt Securities, the Declaration of Trust, the Guarantee
Agreement, the Indenture, the Remarketing Agreement, the Calculation
Agent Agreement, the Agreement as to Expenses and Liabilities and this
Agreement and the consummation by the Offerors of the transactions herein
and therein contemplated will not (i) violate (A) the Company's Restated
Articles of Incorporation, as amended, or By-laws, as amended, or (B) the
Declaration of Trust or certificate of trust of the Trust, filed with the
Secretary of State of the State of Delaware on November 4, 1996, as
amended and restated on March [ ], 2004 (the "Certificate of Trust") or
(ii) result in a breach or violation of any of the terms or provisions
of, or constitute a default under, (A) any statute or, to the knowledge
of the Offerors, any order, rule or regulation of any court or any
federal or state regulatory authority or other governmental agency or
body having jurisdiction over the Offerors or any of its subsidiaries or
any of their properties, or (B) any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which each of the
Offerors or any of the Company's subsidiaries is a party or by which each
of the Offerors or any of the Company's subsidiaries is bound or to which
any of the property or assets of each of the Offerors or any of the
Company's subsidiaries is subject, which breach, violation or default
referred to in this clause (ii) would individually, or in the aggregate,
have, or would be reasonably expected to have, a material adverse effect
on the business, financial condition, shareholders' equity or results of
operations of the Company and its subsidiaries considered as a whole (in
each case, a "Material Adverse Effect");
(m) No consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the issue and sale of the Common Securities or the issue,
sale and offering of the Securities or the Subordinated Debt Securities
or the consummation by the Offerors of the transactions contemplated by
this Agreement, the Indenture, the Declaration, the Guarantee Agreement,
the Agreement as to Expenses and Liabilities, the Remarketing Agreement
or the Calculation Agent Agreement, except the registration under the 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 purchase and distribution of the
Securities by the Underwriters, and such consents, approvals,
authorizations, filings or registrations as may be required by the
Washington Utilities and Transportation Commission (the "WUTC"), the
California Public Utilities Commission (the "CPUC"), the Idaho Public
Utilities Commission (the "IPUC"), the Public Service Commission of the
State of Montana (the "MPSC") and the Public Utility Commission of Oregon
(the "OPUC"), in each case in the manner contemplated hereby;
(n) None of the Offerors, Avista Energy, Inc. and Avista
Advantage, Inc. is currently in violation of its Restated Articles of
Incorporation, as amended, or By-laws, as amended, or Declaration of
Trust or the Certificate of Trust, as the
6
case may be, or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any
material indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it or
any of its properties may be bound, except for the performance or
observance of any such obligation, agreement, covenant or condition that
has been waived in accordance with the applicable agreement;
(o) Other than as set forth in the Prospectus, neither the
Company nor any of its subsidiaries (i) is in violation of any statute,
or any rule, regulation, decision or order of any governmental agency or
body or any court relating to the use, disposal or release of hazardous
or toxic substances or relating to the protection or restoration of the
environmental or human exposure to hazardous or toxic substances
(collectively, "environmental laws"), (ii) does not own or operate any
real property which to its knowledge is contaminated with any substance
that is subject to any environmental laws, (iii) is not to its knowledge
liable for any off-site disposal or contamination pursuant to any
environmental laws, and (iv) is not subject to any claim relating to any
environmental laws and the Company is not aware of any pending
investigation which could reasonably be expected to lead to such a claim,
which, in the case of (i), (ii), (iii), or (iv), would reasonably be
expected to result in a Material Adverse Effect;
(p) The statements set forth in the Prospectus under the
caption "Description of the Preferred Securities" insofar as it purports
to constitute a summary of the terms of the Preferred Securities, under
the caption "Description of the Subordinated Debt Securities," insofar as
it purports to constitute a summary of the terms of the Subordinated Debt
Securities, under the caption "Description of the Guarantee," insofar as
it purports to constitute a summary of the terms of the Guarantee, and
under the caption "Underwriting", insofar as it purports to describe the
provisions of the laws and documents referred to therein, are accurate
and fairly present the information purported to be given;
(q) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Offerors or any of
the Company's subsidiaries is a party or of which any property of the
Offerors or any of the Company's subsidiaries is the subject, which, if
determined adversely to the Offerors or any of the Company's
subsidiaries, would individually or in the aggregate have a Material
Adverse Effect; and, to the best of the Offerors' knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others;
(r) The Offerors are not, and, after giving effect to the
offering and sale of the Securities, will not be "investment companies"
or an entity "controlled" by an "investment company", as such terms are
defined in the United States Investment Company Act of 1940, as amended
(the "Investment Company Act");
7
(s) The Offerors are subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act;
(t) Deloitte & Touche LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(u) The Trust has been duly created and is validly existing and
in good standing as a statutory trust under the Delaware Act with the
power and authority to own property and to conduct its business as
described in the Registration Statement and Prospectus and to enter into
and perform its obligations under this Agreement and the Declaration of
Trust; the Trust has no subsidiaries and is duly qualified to transact
business as a foreign company and is in good standing in any other
jurisdiction in which such qualification is necessary, except to the
extent that the failure to so qualify or be in good standing would not
have a Material Adverse Effect on the Trust; the Trust is not a party to
or otherwise bound by any agreement other than those described in the
Prospectus; the Trust is and will be classified for United States federal
income tax purposes as a grantor trust and not as an association taxable
as a corporation; and the Trust is and will be accounted for pursuant to
generally accepted accounting principles;
(v) The Declaration of Trust has been duly authorized by the
Company and, at the Time of Delivery, will have been duly executed and
delivered by the Company and the Regular Trustees, and assuming due
authorization, execution and delivery of the Declaration of Trust by the
Delaware Trustee and the Institutional Trustee, the Declaration of Trust
will, at the Time of Delivery, be a valid and binding obligation of the
Company and the Regular Trustees, enforceable against the Company and the
Regular Trustees in accordance with its terms, except to the extent that
enforcement thereof may be limited by the Enforceability Exceptions and
will conform in all material respects to all statements relating thereto
in the Prospectus; and, at the Time of Delivery, the Declaration of Trust
will have been duly qualified under the Trust Indenture Act;
(w) The Preferred Securities have been duly authorized by the
Declaration of Trust and, when issued and delivered by the Trust pursuant
to this Agreement against payment of the consideration set forth herein,
will be validly issued and (subject to the terms of the Declaration of
Trust) fully paid and non-assessable undivided beneficial interests in
the assets of the Trust, will be entitled to the benefits of the
Declaration of Trust and will conform in all material respects to all
statements relating thereto contained in the Prospectus; the issuance of
the Preferred Securities is not subject to preemptive or other similar
rights; (subject to the terms of the Declaration of Trust) holders of
Preferred Securities will be entitled to the same limitation of personal
liability under Delaware law as extended to stockholders of private
corporations for profit;
8
(x) The Common Securities have been duly authorized by the
Declaration of Trust and, when issued and delivered by the Trust to the
Company against payment therefor as described in the Registration
Statement and Prospectus, will be validly issued and (subject to the
terms of the Declaration of Trust) fully paid undivided beneficial
interests in the Trust and will conform in all material respects to all
statements relating thereto contained in the Prospectus; the issuance of
the Common Securities is not subject to preemptive or other similar
rights; and, at the Time of Delivery, all of the issued and outstanding
Common Securities of the Trust will be directly owned by the Company,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equitable right;
(y) The Guarantee Agreement, the Remarketing Agreement, the
Calculation Agent Agreement and the Agreement as to Expenses and
Liabilities have been duly authorized by the Company and, at the Time of
Delivery, will have been duly executed and delivered by the Company, and,
assuming due authorization, execution and delivery of the Guarantee
Agreement, the Remarketing Agreement, the Calculation Agent Agreement and
the Agreement as to Expenses and Liabilities by the other respective
parties thereto, each of the Guarantee Agreement, Remarketing Agreement,
the Calculation Agent Agreement and the Agreement as to Expenses and
Liabilities will, at the Time of Delivery, constitute a valid and binding
obligation of the Company, enforceable against the Company in accordance
with their respective terms except to the extent that enforcement thereof
may be limited by the Enforceability Exceptions, and each of the
Guarantee, the Guarantee Agreement, Remarketing Agreement, the
Calculation Agent Agreement and the Agreement as to Expenses and
Liabilities will conform in all material respects to all statements
relating thereto contained in the Prospectus; and, at the Time of
Delivery, the Guarantee Agreement will have been duly qualified under the
Trust Indenture Act;
(z) The Company's obligations under the Guarantee (i) are
subordinate and junior in right of payment to all liabilities of the
Company, except those obligations or liabilities made PARI PASSU or
subordinate by their terms, (ii) are PARI PASSU with the most senior
preferred or preference stock issued by the Company and with any
guarantee entered into by the Company with respect to any preferred or
preference securities of any affiliate of the Company and (iii) are
senior to all common stock of the Company;
(aa) The Subordinated Debt Securities are subordinated and
junior in right of payment to all "Senior Indebtedness" (as defined in
the Indenture) of the Company; and
(bb) Each of the Regular Trustees of the Trust is an officer of
the Company and has been duly authorized by the Company to execute and
deliver the Declaration of Trust;
9
2. Subject to the terms and conditions herein set forth, the Trust
agrees to sell to each of the Underwriters, severally and not jointly, and each
of the Underwriters agrees, severally and not jointly, to purchase from the
Trust, the number of Preferred Securities set forth opposite the name of such
Underwriter in Schedule I hereto at a price per security equal to the public
offering price set forth in Schedule II hereto.
As compensation to the Underwriters for their commitments
hereunder and in view of the fact that the proceeds of the sale of the Preferred
Securities will be used to purchase the Subordinated Debt Securities of the
Company, the Company hereby agrees to pay at the Time of Delivery (as defined
below) to the Representative, for the accounts of the several Underwriters, a
commission per Preferred Security as set forth on Schedule II for the Preferred
Securities to be delivered by the Trust hereunder at the Time of Delivery.
3. Upon the authorization by the Representative of the release of the
Securities, the several Underwriters propose to offer the Securities for sale
upon the terms and conditions set forth in this Agreement and the Prospectus.
4. (a) The Preferred Securities to be purchased by each
Underwriter hereunder will be represented by one or more definitive global
securities in book-entry form to be deposited with The Depository Trust Company
("DTC") or its designated custodian and will have the Guarantee duly endorsed
thereon. The Trust will deliver the global securities to DTC or such custodian
to be credited to the account of the Representative, for the account of each
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefore by wire transfer of Federal (same day) funds. The Trust will
cause the certificates representing the Securities to be made available to the
Representative for checking at least twenty-four hours prior to the Time of
Delivery (as defined below) at the office of DTC or its designated custodian
(the "Designated Office"). The time and date of such delivery and payment shall
be ____ a.m., New York City time, on _______, 2004 or such other time and date
as the Offerors and the Representative may agree upon in writing. Such time and
date are herein called the "Time of Delivery";
(b) The documents to be delivered at the Time of Delivery by or
on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross receipt for the Securities and any additional documents requested by the
Underwriters pursuant to Section 7(m) hereof, will be delivered at the offices
of Dewey Ballantine LLP, 1301 Avenue of the Americas, New York, New York 10019
(the "Closing Location"), and the Securities will be delivered at the Designated
Office, all at the Time of Delivery. A meeting will be held at the Closing
Location at ____ p.m., New York City time, on the New York Business Day next
preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Agreement, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday,
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
10
5. The Offerors agree with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by the
Representative and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on the second
business day following the execution and delivery of this Agreement; to
make no further amendment or any supplement to the Registration Statement
or Prospectus prior to the last Time of Delivery which shall be
reasonably disapproved by the Representative promptly after reasonable
notice thereof; to advise the Representative, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed and to furnish the
Representative with copies thereof; to file promptly all reports and any
definitive proxy or information statements required to be filed by the
Offerors with the Commission pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of the Prospectus and
for so long as the delivery of a prospectus is required in connection
with the offering or sale of the Securities; to advise the
Representative, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing
or suspending the use of any prospectus, of the suspension of the
qualification of the Securities for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such purpose,
or of any request by the Commission for the amending or supplementing of
the Registration Statement or the Prospectus or for additional
information; and, in the event of the issuance of any stop order or of
any order preventing or suspending the use of any prospectus or
suspending any such qualification, promptly to use its best efforts to
obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as the
Representative may reasonably request to qualify the Securities for
offering and sale under the securities laws of such jurisdictions as the
Representative may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distribution of the
Securities, provided that in connection therewith the Offerors shall not
be required to qualify as foreign corporations or to file general
consents to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York
business day succeeding the date of this Agreement, or as soon thereafter
as may be reasonably practicable, to furnish the Underwriters with
written and electronic copies of the Prospectus in such quantities as the
Representative may from time to time reasonably request, and, if the
delivery of a prospectus is required at any time prior to the expiration
of nine months after the time of issue of the Prospectus in connection
with the offering or sale of the Securities and if at such time any event
shall have occurred as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein,
11
in the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it
shall be necessary during such period to amend or supplement the
Prospectus or to file under the Exchange Act any document incorporated by
reference in the Prospectus in order to comply with the Act, the Exchange
Act or the Trust Indenture Act, to notify the Representative and upon
their reasonable request to file such document and to prepare and furnish
without charge to each Underwriter and to any dealer in securities as
many written and electronic copies as the Representative may from time to
time reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Securities at any time
nine months or more after the time of issue of the Prospectus, upon their
request but at the expense of such Underwriter, to prepare and deliver to
such Underwriter as many written and electronic copies as such
Underwriter may request of an amended or supplemented Prospectus
complying with Section 10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after the
effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) covering a period of at least 12 months
beginning after the later of (i) the effective date of the Registration
Statement or of the most recent post-effective amendment to the
Registration Statement to become effective prior to the date of this
Agreement, whichever is later, and (ii) the date of the Company's most
recent Annual Report on Form 10-K filed with the Commission prior to the
date of this Agreement, which will satisfy the provisions of Section
11(a) of the Act and the rules and regulations thereunder including Rule
158;
(e) During the period beginning from the date hereof and
continuing to and including the later of (i) the completion of the
distribution of the Securities, as shall be promptly notified to the
Offerors by the Representative upon such completion, but in no event
shall such period exceed 90 days from the Time of Delivery, and (ii) the
Time of Delivery, not to offer, sell, contract to sell or otherwise
dispose of, except as provided hereunder, any securities of the Company
that are substantially similar to the Securities, without the prior
written consent of the Representative (it being understood that this
paragraph shall not prohibit the issuance of commercial paper or other
debt securities with scheduled maturities of less than one year, debt
securities issued in connection with any credit facility, or debt
securities issued as collateral for other obligations);
(f) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds".
6. The Company hereby covenants and agrees with the several
Underwriters that the Company will pay or cause to be paid the following: (i)
the fees, disbursements
12
and expenses of the Company's counsel and accountants in connection with the
registration of the Securities under the Act and all other expenses in
connection with the preparation, printing and filing of the Registration
Statement, any preliminary prospectus and the Prospectus and amendments and
supplements thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) the cost of printing or producing any agreement
among Underwriters, this Agreement, the Indenture, the Declaration, the
Guarantee Agreement, the Agreement as to Expenses and Liabilities, the
Remarketing Agreement, the Calculation Agent Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Securities;
(iii) any expenses in connection with the qualification of the Securities for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey,
if any; (iv) any fees charged by securities rating services for rating the
Securities; (v) any filing fees incident to, and the fees and disbursements of
counsel for the Underwriters in connection with any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of the
Securities; (vi) the cost of preparing the Securities; and (vii) the fees and
expenses of the Trustees and any agent of the Trustees and the fees and
disbursements of counsel for the Trustees, and (viii) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section. It is understood, however,
that, except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees of
their counsel, transfer taxes on resale of any of the Securities by them, and
any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder shall be subject, in
the discretion of the Representative, to the condition that all representations
and warranties and other statements of the Offerors herein are, at and as of the
Time of Delivery, true and correct, the condition that the Offerors shall have
performed all of their obligations hereunder theretofore to be performed, and
the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) under the Act within the applicable time period
prescribed for such filing by the rules and regulations under the Act and
in accordance with Section 5(a) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall
have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been
complied with to the reasonable satisfaction of the Representative;
(b) There shall have been issued and there shall be in full
force and effect, (i) appropriate orders of the WUTC, the IPUC and the
OPUC permitting the issuance and sale of the Securities on the terms
herein set forth or contemplated, and containing no provision reasonably
unacceptable to the Representatives, it being understood that no such
order in effect on the date of this
13
Agreement contains any such unacceptable provision, and (ii) appropriate
exemptive orders of the MPSC and the CPUC;
(c) Sullivan & Cromwell LLP, counsel for the Underwriters,
shall have furnished to the Representative such written opinion or
opinions, dated the Time of Delivery, with respect to the incorporation
of the Company and the formation of the Trust, the Declaration of Trust,
the Guarantee Agreement and the Securities, the Indenture, the
Registration Statement and the Prospectus, as well as such other related
matters as the Representative may reasonably request, and such counsel
shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters. In rendering such
opinion or opinions, Sullivan & Cromwell LLP may rely, as to the
incorporation of the Company and as to all other matters governed by
Washington, California, Idaho, Montana or Oregon law, upon the opinion of
Heller Ehrman White & McAuliffe LLP referred to below and as to the
creation of the Trust and as to other matters governed by Delaware law,
upon the opinion of Richards, Layton & Finger, P.A., referred to below;
(d) David J. Meyer, Senior Vice President and Chief Counsel for
Regulatory and Governmental Affairs for the Company, shall have furnished
to the Representative his written opinion or opinions, dated the Time of
Delivery, to the effect set forth in Exhibit A hereto;
(e) At the Time of Delivery, Heller Ehrman White & McAuliffe
LLP and Dewey Ballantine LLP shall have furnished to the Representative
opinions, each dated as of the Time of Delivery, to the effect set forth
in Exhibit A hereto;
(f) At the Time of Delivery, Richards, Layton & Finger, P.A.,
Delaware counsel for the Trust, shall have furnished to the
Representative opinions, each dated as of the Time of Delivery as the
Representative may reasonably request to the effect set forth in Exhibit
B hereto;
(g) At the Time of Delivery, ____________________, Delaware
counsel for the Delaware Trustee, shall have furnished to the
Representative opinions, each dated as of the Time of Delivery as the
Representative may reasonably request to the effect set forth in Exhibit
C hereto;
(h) At the Time of Delivery, Seed Mackall LLP, counsel to the
Institutional Trustee, the Guarantee Trustee, the Indenture Trustee and
the Calculation Agent, shall have furnished to the Representative
opinions, each dated as of the Time of Delivery as the Representative may
reasonably request to the effect set forth in Exhibit D hereto;
(i) On the date of the Prospectus at a time prior to the
execution of this Agreement and at the Time of Delivery, Deloitte &
Touche LLP shall have furnished to the Representative a letter or
letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to the Representative;
14
(j) Except as set forth in or contemplated by the Prospectus,
(i) since the respective dates as of which information is given in the
Prospectus there shall not have been (A) any Material Adverse Change, (B)
any transaction entered into by the Company or any subsidiary thereof
which is material to the Company and its subsidiaries as a whole other
than transactions in the ordinary course of business, or (C) any change
in the capital stock or long-term debt of the Company or any of its
subsidiaries (except for shares of common stock issued under the
Company's Dividend-Reinvestment and Stock Purchase Plan and employee
stock plans and except for scheduled maturities of long-term debt) and
(ii) neither the Company nor any of its subsidiaries shall have any
contingent obligation which is material to the Company and its
subsidiaries as a whole, the effect of which, in the case of any such
event specified in clauses (i) or (ii) above, is in the judgment of the
Representative so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or delivery of the
Preferred Securities on the terms and in the manner contemplated in this
Agreement or in the Prospectus;
(k) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities or
preferred securities by any "nationally recognized statistical rating
organization", as such term is defined by the Commission for purposes of
Rule 436(g)(2) under the Act, and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Company's debt
securities or preferred securities;
(l) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in trading
in securities generally on the New York Stock Exchange or on the Pacific
Stock Exchange; (ii) a suspension or material limitation in trading in
the Company's securities on any securities exchange or in any
over-the-counter market; (iii) a general moratorium on commercial banking
activities in New York declared by either Federal or New York State
authorities or a material disruption in commercial banking or securities
settlement or clearance services in the United States; or (iv) the
outbreak of hostilities or the escalation of existing hostilities
involving the United States or the declaration by the United States of a
national emergency or war, or the occurrence of any other national or
international calamity or crises, including without limitation, acts of
terrorism, or any change in financial, political or economic conditions
in the United States or elsewhere, if the effect of any such event
specified in this clause (iv) in the judgment of the Representative,
makes it impracticable or inadvisable to proceed with the public offering
or delivery of the Securities on the terms and in the manner contemplated
in the Prospectus;
(m) The Offerors shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses; and
(n) The Offerors shall have furnished or caused to be furnished
to the Representative at the Time of Delivery certificates of officers of
the Offerors
15
satisfactory to the Representative as to the accuracy of the
representations and warranties of the Offerors herein at and as of the
Time of Delivery, as to the performance by the Offerors of all of their
obligations hereunder to be performed at or prior to the Time of
Delivery, as to the matters set forth in subsection (a) and (i) of this
Section and as to such other matters as the Representative may reasonably
request.
8. (a) The Company will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the 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 preliminary prospectus, the
Registration Statement or the Prospectus, 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 each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; PROVIDED, HOWEVER, that the Company shall not be liable
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 any preliminary prospectus, the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representative expressly for use therein
and PROVIDED, FURTHER, that the Company shall not be liable to any Underwriter
under this subsection in respect of any such loss, claim, damage or liability
arising out of or based upon an untrue statement or alleged untrue statement in,
or an omission or alleged omission from, any preliminary prospectus if (i) such
Underwriter sold securities to a person to whom it delivered a copy of such
preliminary prospectus, (ii) no copy of the Prospectus was delivered to such
person with or prior to the written confirmation of the sale involved, (iii) the
Company had previously furnished copies of the Prospectus in sufficient
quantities and sufficiently in advance of the Time of Delivery to allow for the
distribution thereof prior to the Time of Delivery and (iv) the defect in such
preliminary prospectus was corrected in the Prospectus;
(b) Each Underwriter will indemnify and hold harmless the
Offerors against any losses, claims, damages or liabilities to which the
Offerors may become subject, under the 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 preliminary prospectus, the Registration Statement or the
Prospectus, 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 any
preliminary prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the
16
Offerors by such Underwriter through the Representative expressly for use
therein; and will reimburse the Offerors for any legal or other expenses
reasonably incurred by the Offerors in connection with investigating or
defending any such action or claim as such expenses are incurred;
(c) Promptly after receipt by an indemnified party under
subsection (a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; 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 such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the 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 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, the indemnifying party shall
not be liable to such indemnified party under such subsection 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. Notwithstanding the foregoing, in any
such proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. The indemnifying party shall not, 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. The indemnified party shall not, without the
written consent of the indemnifying party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any such pending or
threatened action or claim;
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above 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
17
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Securities. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (c) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other 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 benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company on the one hand
or the Underwriters on the other and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined by PRO
RATA allocation (even if the Underwriters 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 above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall, except as limited by subsection (c) above, be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the 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 Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint;
(e) The obligations of the Company under this Section 8 shall
be in addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Offerors and to each
person, if any, who controls the Offerors within the meaning of the Act.
18
9. (a) If any Underwriter shall default in its obligation to
purchase the Securities which it has agreed to purchase hereunder at a Time of
Delivery, the Representative may in their discretion arrange for themselves or
another party or other parties to purchase such Securities on the terms
contained herein. If within thirty-six hours after such default by any
Underwriter the Representative does not arrange for the purchase of such
Securities, then the Offerors shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
reasonably satisfactory to the Representative to purchase such Securities on
such terms. In the event that, within the respective prescribed periods, the
Representative notifies the Offerors that they have so arranged for the purchase
of such Securities, or the Offerors notify the Representative that it has so
arranged for the purchase of such Securities, the Representative or the Offerors
shall have the right to postpone the Time of Delivery for a period of not more
than seven days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Offerors agree to file promptly any
amendments to the Registration Statement or the Prospectus which, in the
reasonable judgment of the Representative, may thereby be made necessary. The
term "Underwriter" as used in this Agreement shall include any person
substituted under this Section 9 with like effect as if such person had
originally been a party to this Agreement with respect to such Securities;
(b) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters by the
Representative and the Offerors as provided in subsection (a) above, the
aggregate principal amount of such Securities which remains unpurchased does not
exceed one-tenth of the aggregate principal amount of all the Securities to be
purchased at the Time of Delivery, then the Offerors shall have the right to
require each non-defaulting Underwriter to purchase the principal amount of
Securities which such Underwriter agreed to purchase hereunder at the Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its PRO RATA share (based on the principal amount of Securities which
such Underwriter agreed to purchase hereunder) of the Securities of such
defaulting Underwriter or Underwriters for which such arrangements have not been
made; but nothing herein shall relieve a defaulting Underwriter from liability
for its default;
(c) If, after giving effect to any arrangements for the
purchase of the Securities of a defaulting Underwriter or Underwriters by the
Representative and the Offerors as provided in subsection (a) above, the
aggregate principal amount of such Securities which remains unpurchased exceeds
one-tenth of the aggregate principal amount of all the Securities to be
purchased at the Time of Delivery, or if the Offerors shall not exercise the
right described in subsection (b) above to require non-defaulting Underwriters
to purchase Securities of a defaulting Underwriter or Underwriters, then this
Agreement shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Offerors, except for the expenses to be borne
by the Offerors and the Underwriters as provided in Section 6 hereof and the
indemnity and contribution agreements in Section 8 hereof; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
19
10. The respective indemnities, agreements, representations,
warranties and other statements of the Offerors and the several Underwriters, as
set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, or the
Offerors, or any officer or director or controlling person of the Offerors, and
shall survive delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, the Offerors shall not then be under any liability to any Underwriter
except as provided in Sections 6 and 8 hereof; but, if this Agreement is not
consummated for any other reason, the Offerors will reimburse the Underwriters
through the Representative for all out-of-pocket expenses approved in writing by
the Representative, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Securities not so delivered, but the Offerors shall then be
under no further liability to any Underwriter except as provided in Sections 6
and 8 hereof.
12. In all dealings hereunder, the Representative shall act on behalf
of each of the Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by such Representative.
All statements, requests, notices and agreements hereunder shall
be in writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to the Representative at 745 7th Avenue, New
York, NY 10019, Attention: Debt Capital Markets, Power Group (with a copy to the
General Counsel at the same address); and if to the Offerors shall be delivered
or sent by mail to the address of the Offerors set forth in the Registration
Statement, Attention: Treasurer. Any such statements, requests, notices or
agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Offerors and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Offerors and each
person who controls the Offerors or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Securities from any Underwriter shall be deemed a successor or assign
by reason merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
----------------------
20
If the foregoing is in accordance with your understanding, please
sign and return to us 8 counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this Agreement and such acceptance
hereof shall constitute a binding agreement between each of the Underwriters and
the Offerors. It is understood that the acceptance by you of this letter on
behalf of each of the Underwriters is pursuant to the authority set forth in the
Agreement Among Underwriters, a copy of which shall be submitted to the Offerors
for examination, but without warranty on the part of the Representative as to
the authority of the signers thereof (other than the Representative).
Very truly yours,
AVA CAPITAL TRUST III
By: Avista Corporation, as Sponsor
By:
----------------------------------------
Name:
Title:
AVISTA CORPORATION
By:
----------------------------------------
Name: Malyn K. Malquist
Title: Senior Vice President and Chief Financial Officer
Accepted as of the date hereof:
LEHMAN BROTHERS INC.
By:
----------------------------------------
Name:
Title:
On behalf of each of the Underwriters
21
SCHEDULE I
NUMBER OF PREFERRED SECURITIES
UNDERWRITER TO BE PURCHASED
------------------------------
Lehman Brothers Inc....................................
McDonald Investments, Inc..............................
Piper Jaffray & Co.....................................
Total.............................................
22
SCHEDULE II
Initial public offering price per
Preferred Security (and purchase
price per security to be paid by
the several Underwriters): $_______
Compensation per Preferred Security
to be paid by the Company to the
several Underwriters in respect of
their commitments: $_______ per
Preferred Security
23
EXHIBIT A
CONTENTS OF OPINIONS OF COUNSEL
AMENDED AND RESTATED
CERTIFICATE OF TRUST
OF
WASHINGTON WATER POWER CAPITAL III
THIS Amended and Restated Certificate of Trust of Washington Water
Power Capital III (the "Trust") is being duly executed and filed by the
undersigned, as trustee of the Trust, to amend and restate the original
Certificate of Trust of the Trust (the "Certificate of Trust"), which was filed
with the Secretary of State of the State of Delaware (the "Secretary of State")
on November 4, 1996, under the Delaware Statutory Trust Act (12 DEL. C.ss.3801,
ET SEQ.) (the "Act").
1. NAME. The name of the statutory trust is AVA Capital Trust III.
2. DELAWARE TRUSTEE. The name and business address of the trustee of
the Trust in the State of Delaware are SunTrust Delaware Trust Company, 1011
Centre Road, Suite 205, Wilmington, DE 19805.
3. EFFECTIVE DATE. This Amended and Restated Certificate of Trust
shall be effective upon the date and time of filing.
4. COUNTERPARTS. This Certificate of Trust may be executed in one or
more counterparts.
[Signature page follows]
IN WITNESS WHEREOF, the undersigned, being a trustee of the Trust, has
duly executed this Amended and Restated Certificate of Trust in accordance with
Section 3811(a) of the Act.
MALYN K. MALQUIST, as Regular Trustee
/S/ MALYN K. MALQUIST
-------------------------------------
Exhibit 4(a)(3)
REMOVAL AND APPOINTMENT OF TRUSTEES
AND
AMENDMENT OF DECLARATION OF TRUST
OF
WASHINGTON WATER POWER CAPITAL III
This Removal and Appointment of Trustees and Amendment of
Declaration of Trust of Washington Water Power Capital III (the "Trust") is made
as of March 9, 2004 (this "Appointment and Amendment"), among Avista
Corporation, a Washington corporation, as successor in interest to The
Washington Water Power Company, as sponsor (the "Sponsor"), Malyn K. Malquist
and Diane C. Thoren, as Regular Trustees (the "Regular Trustees"), Union Bank of
California, N.A., a national banking association ("Union Bank"), in its capacity
as Institutional Trustee (the "Institutional Trustee"), and SunTrust Delaware
Trust Company, a Delaware limited purpose trust company ("SunTrust"), in its
capacity as Delaware Trustee (the "Delaware Trustee").
WHEREAS, the Trust was created pursuant to the filing of a
Certificate of Trust of the Trust in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on November 4, 1996, and by the
entering into of a Declaration of Trust, dated as of November 4, 1996 (the
"Declaration");
WHEREAS, the Sponsor desires to remove Wilmington Trust
Company as a trustee of the Trust and to appoint Union Bank, as Institutional
Trustee and SunTrust, as Delaware Trustee;
WHEREAS, Dorothy K. Mercer is not, and never has been, a
trustee of the Trust;
WHEREAS, Union Bank desires to become the Institutional
Trustee and SunTrust desires to become the Delaware Trustee; and, immediately
following such appointments, Wilmington Trust Company shall be removed as a
trustee of the Trust;
WHEREAS, the Sponsor desires to remove Lawrence J. Pierce, as
Regular Trustee, and to appoint Malyn K. Malquist and Diane C. Thoren, as
Regular Trustees;
WHEREAS, Malyn K. Malquist and Diane C. Thoren desire to
become Regular Trustees and, immediately following such appointments, Lawrence
J. Pierce shall be removed as a trustee of the Trust; and
WHEREAS, the parties hereto desire to change the name of the
Trust to "AVA Capital Trust III."
NOW, THEREFORE, in consideration of the mutual promises and
obligations contained herein, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. Pursuant to Section 6 of the Declaration, the Sponsor
hereby appoints Union Bank as the Institutional Trustee and SunTrust as the
Delaware Trustee of the Trust.
Union Bank and SunTrust hereby accept such appointments and agree to be trustees
of the Trust pursuant to the Declaration.
2. Immediately following the appointment by the Sponsor of
Union Bank and SunTrust as trustees of the Trust pursuant to Section 1 hereof,
the Sponsor hereby removes Wilmington Trust Company from the Trust as a trustee
of the Trust. Wilmington Trust Company's removal shall be deemed effective
immediately following the appointment by the Sponsor of Union Bank as
Institutional Trustee and SunTrust as Delaware Trustee of the Trust, and their
acceptance of such appointments pursuant to Section 1 hereof.
3. Pursuant to Section 6 of the Declaration, the Sponsor
hereby appoints Malyn K. Malquist and Diane C. Thoren as Regular Trustees of the
Trust. Malyn K. Malquist and Diane C. Thoren hereby accept such appointments and
agree to be trustees of the Trust pursuant to the Declaration.
4. Immediately following the appointment by the Sponsor of
Malyn K. Malquist and Diane C. Thoren as trustees of the Trust pursuant to
Section 3 hereof, the Sponsor hereby removes Lawrence J. Pierce from the Trust
as a trustee of the Trust. Lawrence J. Pierce's removal shall be deemed
effective immediately following the appointment by the Sponsor of Malyn K.
Malquist and Diane C. Thoren as Regular Trustees of the Trust, and their
acceptance of such appointments pursuant to Section 3 hereof.
5. All references in the Declaration to the term "Trustees"
are deemed to include a reference to Union Bank, SunTrust, Malyn K. Malquist and
Diane C. Thoren as trustees of the Trust.
6. Each reference in the Declaration to "Wilmington Trust
Company" shall be deemed a reference to Union Bank and SunTrust except with
respect to such reference in Section 7 of the Declaration. The reference in
Section 7 of the Declaration to "Wilmington Trust Company" shall be deemed a
reference to SunTrust.
7. Each reference in the Declaration to "Lawrence J. Pierce"
or "Lawrence J. Pierce and Dorothy K. Mercer" shall be deemed a reference to
Malyn K. Malquist and Diane C. Thoren.
8. Section 1 of the Declaration is hereby amended and restated
in its entirety as follows:
1. The trust created hereby shall be known as "AVA
Capital Trust III" (the "Trust"), in which name the Trustees,
or the Sponsor to the extent provided herein, may conduct the
business of the Trust, make and execute contracts, and sue and
be sued.
9. Each reference in the Declaration to the "Business Trust
Act" shall be deemed to be a reference to the "Statutory Trust Act." Each
reference in the Declaration to "business trust" shall be deemed to be a
reference to "statutory trust."
2
10. Each reference in the Declaration to "Merrill Lynch,
Pierce, Fenner &Smith Incorporated" shall be deemed a reference to Lehman
Brothers, Inc.
11. Each Regular Trustee, acting singly or jointly, is hereby
authorized and directed to execute and file an Amended and Restated Certificate
of Trust of the Trust in the office of the Secretary of State of the State of
Delaware changing the name of the Trust to "AVA Capital Trust III" and changing
the name and address of the Delaware Trustee.
12. This Appointment and Amendment may be executed in one or
more counterparts.
13. Except to the extent that it is expressly modified by this
Appointment and Amendment, the Declaration shall continue in full force and
effect.
14. This Appointment and Amendment shall be governed by, and
construed in accordance with, the laws of the State of Delaware (without regard
to conflict of laws principles).
[SIGNATURE PAGE FOLLOWS]
3
IN WITNESS WHEREOF, the parties hereto have caused this
Appointment and Amendment to be duly executed as of the date and year first
above written.
AVISTA CORPORATION, as Sponsor
By: /s/ MALYN K. MALQUIST
----------------------------------------
Name:
Title
UNION BANK OF CALIFORNIA, N.A., as
Institutional Trustee
By: /s/ SONIA N. FLORES
----------------------------------------
Name: Sonia N. Flores
Title Vice President
SUNTRUST DELAWARE TRUST COMPANY,
as Delaware Trustee
By: /s/ SUSAN D. TINSLEY
----------------------------------------
Name: Susan D. Tinsley
Title Assistant Vice President
Malyn K. Malquist, as Regular Trustee
/s/ MALYN K. MALQUIST
-------------------------------------------
Diane C. Thoren, as Regular Trustee
/s/ DIANE C. THOREN
-------------------------------------------
4
Exhibit 4(a)(4)
AVA CAPITAL TRUST III
AMENDED AND RESTATED
DECLARATION OF TRUST
AMONG
AVISTA CORPORATION, AS SPONSOR,
UNION BANK OF CALIFORNIA, N.A., AS INSTITUTIONAL TRUSTEE,
SUNTRUST DELAWARE TRUST COMPANY, AS DELAWARE TRUSTEE,
AND
MALYN K. MALQUIST AND DIANE C. THOREN,
AS REGULAR TRUSTEES
DATED AS OF ________, 2004
Table of Contents
PAGE
ARTICLE I DEFINED TERMS ..................................................... 2
SECTION 1.01. Definitions .................................... 2
ARTICLE II ESTABLISHMENT OF THE TRUST ....................................... 11
SECTION 2.01. Name ........................................... 11
SECTION 2.02. Offices of the Trustees; Principal Place
of Business ................................ 11
SECTION 2.03. Initial Contribution of Trust Property;
Organizational Expenses .................... 11
SECTION 2.04. Issuance of the Preferred Securities ........... 12
SECTION 2.05. Subscription and Purchase of Subordinated
Debt Securities; Issuance of the
Common Securities .......................... 12
SECTION 2.06. Declaration of Trust ........................... 12
SECTION 2.07. Authorization to Enter into Certain
Transactions ............................... 12
SECTION 2.08. Assets of Trust ................................ 18
SECTION 2.09. Title to Trust Property ........................ 18
SECTION 2.10. Mergers and Consolidations of the Trust ........ 18
ARTICLE III PAYMENT ACCOUNT ................................................. 19
SECTION 3.01. Payment Account ................................ 19
ARTICLE IV DISTRIBUTIONS; REDEMPTION ........................................ 19
SECTION 4.01. Distributions .................................. 19
SECTION 4.02. Distribution Rate .............................. 21
SECTION 4.03. Distribution Periods ........................... 25
SECTION 4.04. Redemption ..................................... 25
SECTION 4.05. Subordination of Common Securities and
Distributions .............................. 27
SECTION 4.06. Payment Procedures ............................. 27
SECTION 4.07. Tax Returns and Reports ........................ 28
SECTION 4.08. Exchange ....................................... 28
ARTICLE V TRUST SECURITIES CERTIFICATES ..................................... 29
SECTION 5.01. Initial Ownership .............................. 29
SECTION 5.02. The Trust Securities Certificates .............. 29
SECTION 5.03. Authentication of Trust Securities
Certificates ............................... 29
SECTION 5.04. Registration of Transfer and Exchange of
Preferred Securities Certificates .......... 29
SECTION 5.05. Mutilated, Destroyed, Lost or Stolen Trust
Securities Certificates .................... 30
SECTION 5.06. Persons Deemed Securityholders ................. 31
SECTION 5.07. Access to List of Securityholders' Names
and Addresses .............................. 31
SECTION 5.08. Maintenance of Office or Agency ................ 31
SECTION 5.09. Appointment of Paying Agent .................... 31
SECTION 5.10. Ownership of Common Securities by Sponsor ...... 32
SECTION 5.11. Book-Entry Preferred Securities
Certificates; Common Securities
Certificate ................................ 32
SECTION 5.12. Notices to Clearing Agency ..................... 33
SECTION 5.13. Definitive Preferred Securities
Certificates ............................... 34
SECTION 5.14. Rights of Securityholders ...................... 34
ARTICLE VI ACTS OF SECURITYHOLDERS; MEETINGS; VOTING ........................ 34
SECTION 6.01. Limitations on Voting Rights ................... 34
SECTION 6.02. Notice of Meetings ............................. 38
SECTION 6.03. Meetings of Holders of Preferred Securities .... 38
SECTION 6.04. Voting Rights .................................. 38
SECTION 6.05. Proxies, etc ................................... 38
SECTION 6.06. Securityholder Action by Written Consent ....... 39
SECTION 6.07. Record Date for Voting and Other Purposes ...... 39
SECTION 6.08. Acts of Securityholders ........................ 39
SECTION 6.09. Inspection of Records .......................... 40
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF THE TRUSTEES .................. 40
SECTION 7.01. Representations and Warranties of the
Trustees ................................... 40
ARTICLE VIII THE TRUSTEES ................................................... 41
SECTION 8.01. Certain Duties and Responsibilities ............ 41
SECTION 8.02. Notice of Defaults ............................. 42
SECTION 8.03. Certain Rights of Institutional Trustee ........ 42
SECTION 8.04. Not Responsible for Recitals or Issuance
of Securities .............................. 44
SECTION 8.05. May Hold Securities ............................ 44
SECTION 8.06. Compensation; Fees; Indemnity .................. 44
SECTION 8.07. Trustees Required; Eligibility ................. 45
SECTION 8.08. Conflicting Interests .......................... 45
SECTION 8.09. Co-Trustees and Separate Trustee ............... 45
SECTION 8.10. Resignation and Removal; Appointment of
Successor .................................. 47
SECTION 8.11. Acceptance of Appointment by Successor ......... 48
SECTION 8.12. Merger, Conversion, Consolidation or
Succession to Business ..................... 48
SECTION 8.13. Preferential Collection of Claims Against
Sponsor or Trust ........................... 49
SECTION 8.14. Reports by Institutional Trustee ............... 49
SECTION 8.15. Reports to the Institutional Trustee ........... 49
SECTION 8.16. Evidence of Compliance with Conditions
Precedent .................................. 50
SECTION 8.17. Number of Trustees ............................. 50
SECTION 8.18. Delegation of Power ............................ 50
SECTION 8.19. Enforcement of Rights of Institutional
Trustee by Securityholders ................. 50
SECTION 8.20. Delaware Trustee ............................... 51
ARTICLE IX DISSOLUTION AND LIQUIDATION ...................................... 52
SECTION 9.01. Dissolution Upon Expiration Date ............... 52
SECTION 9.02. Early Termination .............................. 52
SECTION 9.03. Termination .................................... 52
SECTION 9.04. Liquidation .................................... 52
SECTION 9.05. Bankruptcy ..................................... 53
SECTION 9.06. Certificate of Cancellation .................... 54
ARTICLE X REMARKETING PROCEDURES ............................................ 54
SECTION 10.01. Election to Remarket ........................... 54
SECTION 10.02. Notice of Election ............................. 54
SECTION 10.03. Determination of Distribution Rate ............. 55
ARTICLE XI MISCELLANEOUS PROVISIONS ......................................... 57
SECTION 11.01. Guarantee by the Sponsor ....................... 57
SECTION 11.02. Limitation of Rights of Securityholders ........ 57
SECTION 11.03. Amendment ...................................... 57
SECTION 11.04. Separability ................................... 59
SECTION 11.05. Governing Law .................................. 59
SECTION 11.06. Successors ..................................... 59
SECTION 11.07. Headings ....................................... 59
SECTION 11.08. Notice and Demand .............................. 59
SECTION 11.09. Agreement Not to Petition ...................... 60
SECTION 11.10. Conflict with Trust Indenture Act .............. 60
AVA CAPITAL TRUST III
Certain Sections of this Declaration of Trust relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
TRUST INDENTURE ACT SECTION DECLARATION OF TRUST SECTION
- --------------------------- ----------------------------
Section 310(a)(1) ..................................................8.07
(a)(2) ......................................................8.07
(a)(3) ......................................................8.09
(a)(4) ............................................Not Applicable
(b) .........................................................8.08
Section 311(a) .....................................................8.13
(b) .........................................................8.13
Section 312(a) .....................................................5.07
(b) .........................................................5.07
(c) .........................................................5.07
Section 313(a) ..................................................8.14(a)
(a)(4) ...................................................8.14(b)
(b) ......................................................8.14(b)
(c) ......................................................8.14(a)
(d) .............................................8.14(a), 8.14(b)
Section 314(a) .....................................................8.15
(b) ...............................................Not Applicable
(c)(1) ................................................8.15, 8.16
(c)(2) ......................................................8.16
(c)(3) ......................................................8.16
(d) ...............................................Not Applicable
(e) .........................................................8.16
Section 315(a) .....................................................8.01
(b) ................................................8.02, 8.14(b)
(c) ......................................................8.01(a)
(d) ...................................................8.01, 8.03
(e) ...............................................Not Applicable
Section 316(a) ...........................................Not Applicable
(a)(1)(A) ...................................................8.19
(a)(1)(B) ...................................................8.19
(a)(2) ............................................Not Applicable
(b) ...............................................Not Applicable
(c) ...............................................Not Applicable
Section 317(a)(1) ........................................Not Applicable
(a)(2) ............................................Not Applicable
(b) .........................................................5.09
Section 318(a) ....................................................11.10
- --------------
Note: This Cross Reference Table does not constitute part of the Declaration and
shall not affect the interpretation of any of its terms and provisions.
AMENDED AND RESTATED DECLARATION OF TRUST
THIS AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") is made as
of _____, 2004, by and among (i) Avista Corporation, a Washington corporation
(the "Sponsor" or the "Company"); (ii) Union Bank of California, N.A., banking
corporation duly organized and existing under the laws of the United States of
America, as trustee (the "Institutional Trustee" and, in its separate corporate
capacity and not in its capacity as Trustee, the "Bank"); (iii) SunTrust
Delaware Trust Company, a banking corporation duly organized and existing under
the laws of the State of Delaware, as Delaware trustee (the "Delaware Trustee"
and, in its separate corporate capacity and not in its capacity as Delaware
Trustee, the "Delaware Bank"); (iv) Malyn K. Malquist, an individual, and Diane
C. Thoren, an individual, as regular trustees (each a "Regular Trustee" and
together the "Regular Trustees") (the Institutional Trustee, the Delaware
Trustee and the Regular Trustees referred to collectively as the "Trustees");
and (v) the several Holders, as hereinafter defined.
W I T N E S S E T H :
WHEREAS, a statutory trust has been declared and established pursuant to
the Delaware Statutory Trust Act by entering into that certain Declaration of
Trust, dated as of November 4, 1996 (the "1996 Declaration"), and by the
execution and filing by the Trustees with the Secretary of State of the State of
Delaware of the Certificate of Trust, dated November 4, 1996;
WHEREAS, pursuant to the Removal and Appointment of Trustee and Amendment
of the Declaration of Trust of the Trust, entered into by the Sponsor, the Bank,
the Delaware Bank and a Regular Trustee, dated as of _____, 2004, (i) the
Sponsor removed Wilmington Trust Company as a trustee of the Trust and appointed
the Bank and the Delaware Bank as trustees of the Trust; (ii) the Sponsor
removed Lawrence J. Pierce as a trustee of the Trust and appointed Malyn K.
Malquist and Diane C. Thoren as trustees of the Trust; and (iii) the 1996
Declaration was amended by changing the name of the Trust from Washington Water
Power Capital III to AVA Capital Trust III. The 1996 Declaration, as amended by
the Removal and Appointment of Trustee and Amendment of the Declaration of Trust
is referred to as the "Original Declaration."
WHEREAS, _____ executed and filed the Amended and Restated Certificate of
Trust of the Trust with the Secretary of State of the State of Delaware on
_____, 2004;
WHEREAS, the parties hereto desire to amend and restate the Original
Declaration in its entirety as set forth herein to provide for, among other
things, (i) the acquisition by the Trust from the Sponsor of all of the right,
title and interest in the Subordinated Debt Securities; (ii) the issuance of the
Common Securities by the Trust to the Sponsor; and (iii) the issuance and sale
of the Preferred Securities by the Trust pursuant to the Underwriting Agreement.
NOW THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, each party, for the benefit of the other parties
and for the benefit of the Securityholders, hereby amends and restates the
Original Declaration in its entirety and agrees as follows:
ARTICLE I
DEFINED TERMS
SECTION 1.01. DEFINITIONS
For all purposes of this Declaration, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the singular;
(b) all other terms used herein that are defined in the Trust
Indenture Act, either directly or by reference therein, have the meanings
assigned to them therein;
(c) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may be,
of this Declaration; and
(d) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Declaration as a whole and not to any
particular Article, Section or other subdivision.
"Act" has the meaning specified in Section 6.08.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Bank" has the meaning specified in the preamble to this Declaration.
"Bankruptcy Event" means, with respect to any Person:
(i) the entry of a decree or order by a court having
jurisdiction in the premises judging such Person a bankrupt or
insolvent, or approving as properly filed a petition seeking
reorganization, arrangement, adjudication or composition of or in
respect of such Person under federal bankruptcy law or any other
applicable federal or state law, or appointing a receiver,
liquidator, assignee, trustee, sequestrator or other similar
official of such Person or of any substantial part of its
property, or ordering the winding up or liquidation of its
affairs, and the continuance of such decree or order unstayed and
in effect for a period of 60 consecutive days; or
(ii) the institution by such Person of proceedings to be
adjudicated a bankrupt or insolvent, or the consent by it to the
institution of bankruptcy or insolvency proceedings against it, or
the filing by it of a petition or answer or
2
consent seeking reorganization or relief under federal bankruptcy
law or any other applicable federal or state law, or the consent
by it to the filing of such petition or to the appointment of a
receiver, liquidator, assignee, trustee, sequestrator or similar
official of such Person or of any substantial part of its
property, or the making by it of an assignment for the benefit of
creditors, or the admission by it in writing of its inability to
pay its debts generally as they become due, or the taking of
action by such Person in furtherance of any such action.
"Bankruptcy Laws" has the meaning specified in Section 11.09.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Sponsor to have been duly adopted by
the Sponsor's Board of Directors or a duly authorized committee thereof and to
be in full force and effect on the date of such certification, and delivered to
the Trustees.
"Book-Entry Preferred Securities Certificates" means certificates
representing Preferred Securities issued in global, fully registered form to the
Clearing Agency as described in Section 5.11.
"Business Day" means a day other than (i) a Saturday or a Sunday; (ii) a
day on which banks in New York, New York are authorized or obligated by law or
executive order to remain closed; or (iii) a day on which the Indenture
Trustee's corporate trust office is closed for business.
"Calculation Agent" means Union Bank of California, N.A., acting as
calculation agent, or its successor appointed by the Company and the Trust.
"Calculation Agent Agreement" means the agreement among the Company, the
Trust and Union Bank of California, N.A., as calculation agent, dated as of
_____, 2004.
"Certificate Depository Agreement" means the agreement among the Trust,
the Institutional Trustee and The Depository Trust Company, as the initial
Clearing Agency, dated _____, 2004, relating to the Preferred Securities
Certificates.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act. The Depository Trust Company will
be the initial Clearing Agency.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" means the Securities and Exchange Commission, as from time
to time constituted, created under the Exchange Act, or, if at any time after
the execution of this instrument such Commission is not existing and performing
the duties now assigned to it under the Trust Indenture Act, then the body
performing such duties at such time.
3
"Common Security" means an undivided beneficial interest in the assets of
the Trust having a Liquidation Amount of $1,000 and having the rights provided
therefor in this Declaration, including the right to receive Distributions and a
Liquidation Distribution as provided herein.
"Common Securities Certificate" means a certificate evidencing ownership
of a Common Security or Securities, substantially in the form attached as
Exhibit C.
"Company" means Avista Corporation.
"Declaration" means this Amended and Restated Declaration of Trust, as
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for all
purposes of this Amended and Restated Declaration of Trust and any modification,
amendment or supplement, the provisions of the Trust Indenture Act that are
deemed to be a part of and govern this Amended and Restated Declaration of Trust
and any such modification, amendment or supplement, respectively.
"Definitive Preferred Securities Certificates" means either or both (as
the context requires) of (i) Preferred Securities Certificates issued in
certificated, fully registered form as provided in Section 5.11(a) and (ii)
Preferred Securities Certificates issued in certificated, fully registered form
as provided in Section 5.13.
"Delaware Bank" has the meaning specified in the preamble to this
Declaration.
"Delaware Statutory Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code Section 3801 et seq., as it may be amended from time
to time.
"Delaware Trustee" means the commercial bank or trust company or any
other Person identified as the "Delaware Trustee" and has the meaning specified
in the preamble to this Declaration solely in its capacity as Delaware Trustee
of the Trust and not in its individual capacity, or its successor in interest in
such capacity, or any successor Delaware Trustee appointed as herein provided.
"Designated CMT Maturity Index" means the original period to maturity of
the U.S. Treasury securities (10 years) with respect to which the 10-year
Treasury CMT will be calculated.
"Distribution Payment Date" means each day on which Distributions are
payable determined based on the prevailing Distribution Rate.
"Distribution Period" means each semiannual period in a Fixed Rate Period
and each quarterly period in a Floating Rate Period for which Distributions are
payable.
"Distribution Rate" means the rate at which Distributions will accrue in
respect of any Distribution Period, as determined pursuant to the terms of this
Declaration, whether by Remarketing or otherwise.
4
"Distributions" means amounts payable in respect of the Trust Securities
as provided in Section 4.01.
"Election Date" means a date that is no later than the fifth Business Day
prior to the proposed Remarketing Date.
"Event of Default" means any one of the following events (whatever the
reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the occurrence of an Indenture Event of Default;
(b) default by the Trust in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a period
of 60 days;
(c) default by the Trust in the payment of any Redemption Price
of any Trust Security when it becomes due and payable;
(d) default in the performance, or breach, in any material
respect, of any covenant or warranty of the Institutional Trustee and the
Delaware Trustee in this Declaration (other than a covenant or warranty a
default in the performance of which or the breach of which is dealt with in
clause (b) or (c) above) and continuation of such default or breach for a period
of 60 days after there has been give, by registered or certified mail, to the
appropriate trustees and the Sponsor by the Holders of at least 33% in aggregate
Liquidation Amount of the Outstanding Preferred Securities, a written notice
specifying such default or breach and requiring it to be remedied and stating
that such notice is a "Notice of Default" hereunder;
(e) the occurrence of any Bankruptcy Event with respect to the
Institutional Trustee or all or substantially all of its property if a successor
Institutional Trustee has not been appointed within a period of 90 days thereof;
or
(f) the occurrence of any Bankruptcy Event with respect to the
Trust.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expense Agreement" means the Agreement as to Expenses and Liabilities
between the Company and the Trust, substantially in the form attached as Exhibit
B, as amended from time to time.
"Extension Period" has the meaning specified in Section 4.01(d).
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Fixed Rate" means the Distribution Rate during a Fixed Rate Period as
determined by a Remarketing.
5
"Fixed Rate Period" means the Initial Fixed Rate Period and each period
set by the Company and the Regular Trustees during a Remarketing for which the
Fixed Rate determined in such Remarketing will apply; provided, however, that a
Fixed Rate Period must be for a duration of at least six months, may not extend
beyond the stated maturity of the Subordinated Debt Securities and may not end
on a day other than a day immediately preceding a Distribution Payment Date.
"Floating Rate" means the Distribution Rate during a Floating Rate Period
calculated pursuant to Section 4.02(e).
"Floating Rate Determination Date" means the second London Business Day
immediately preceding the first day of the relevant Distribution Period in the
Floating Rate Period.
"Floating Rate Period" means any period during which a Floating Rate is
in effect.
"Guarantee" means the Guarantee Agreement executed and delivered by the
Company and Union Bank of California, N.A., as Guarantee Trustee,
contemporaneously with the execution and delivery of this Declaration, for the
benefit of the Holders of the Trust Securities, as amended from time to time.
"Indenture Event of Default" means an "Event of Default" as defined in
the Subordinated Indenture.
"Indenture Redemption Date" means "Redemption Date," as defined in the
Subordinated Indenture.
"Indenture Trustee" means the trustee under the Subordinated Indenture.
"Initial Distribution Rate" means _____% per annum.
"Initial Fixed Rate Period" means the Issue Date through _____, 2009.
"Institutional Trustee" means the commercial bank or trust company
identified as the "Institutional Trustee" in the preamble to this Declaration
solely in its capacity as Institutional Trustee of the Trust and not in its
individual capacity, or its successor in interest in such capacity, or any
successor "Institutional Trustee" as herein provided.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Issue Date" means the date of the delivery of the Trust Securities.
"Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of
trust, adverse ownership interest, hypothecation, assignment, security interest
or preference, priority or other security agreement or preferential arrangement
of any kind or nature whatsoever.
"Like Amount" means (i) Trust Securities having a Liquidation Amount
equal to the principal amount of Subordinated Debt Securities to be
contemporaneously redeemed or repaid
6
in accordance with the Subordinated Indenture and the proceeds of which will be
used to pay the Redemption Price of such Trust Securities and (ii) Subordinated
Debt Securities having a principal amount equal to the Liquidation Amount of the
Trust Securities of the Holder to whom such Subordinated Debt Securities are
distributed.
"Liquidation Amount" means the stated amount of $1,000 per Trust
Security.
"Liquidation Date" means the date on which Subordinated Debt Securities
are to be distributed to Holders of Trust Securities in connection with a
dissolution and liquidation of the Trust pursuant to Section 9.04.
"Liquidation Distribution" has the meaning specified in Section 9.05.
"London Business Day" means a day that is a Business Day and a day on
which dealings in deposits in U.S. dollars are transacted, or with respect to
any future date are expected to be transacted, in the London interbank market.
"Maturity Date of the Subordinated Debt Securities" means "Stated
Maturity" as defined in the Subordinated Indenture.
"Majority in Liquidation Amount of the Preferred Securities" or "Majority
in Liquidation Amount of the Common Securities" means, except as provided by the
Trust Indenture Act, Preferred Securities or Common Securities, as the case may
be, representing more than 50% of the aggregate Liquidation Amount of all then
Outstanding Preferred Securities or Common Securities, as the case may be.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Sponsor, and
delivered to the appropriate Trustee. One of the officers signing an Officers'
Certificate given pursuant to Section 8.16 shall be the principal executive,
financial or accounting officer of the Sponsor. An Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Declaration shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering the
Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as is necessary, in such officer's opinion, to
express an informed opinion as to whether or not such covenant or condition has
been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Trust, the Trustees or the Sponsor, but not an employee of the
Trust or the Trustees, and who
7
shall be reasonably acceptable to the Institutional Trustee. Any Opinion of
Counsel pertaining to federal income tax matters may rely on published rulings
of the Internal Revenue Service.
"Original Declaration of Trust" has the meaning specified in the recitals
to this Declaration.
"Outstanding", when used with respect to Preferred Securities, means, as
of the date of determination, all Preferred Securities theretofore authenticated
and delivered under this Declaration, except:
(i) Preferred Securities theretofore canceled by the
Regular Trustees or delivered to the Regular Trustees for
cancellation;
(ii) Preferred Securities for whose payment or redemption
money in the necessary amount has been theretofore deposited with
the Institutional Trustee or any Paying Agent for the Holders of
such Preferred Securities; provided that if such Preferred
Securities are to be redeemed, notice of such redemption has been
duly given pursuant to this Declaration; and
(iii) Preferred Securities in exchange for or in lieu of
which other Preferred Securities have been authenticated and
delivered pursuant to this Declaration;
provided, however, that in determining whether the Holders of the requisite
Liquidation Amount of the Outstanding Preferred Securities have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Preferred Securities owned by the Sponsor, the Holder of the Common Securities,
any Trustee or any Affiliate of the Sponsor or any Trustee shall be disregarded
and deemed not to be Outstanding, except that (a) in determining whether any
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Preferred Securities
which such Trustee knows to be so owned shall be so disregarded and (b) the
foregoing shall not apply at any time when all of the outstanding Preferred
Securities are owned by the Sponsor, the Holder of the Common Securities, one or
more Trustees and/or any such Affiliate. Preferred Securities so owned which
have been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Regular Trustees the pledgee's right so
to act with respect to such Preferred Securities and that the pledgee is not the
Sponsor or any Affiliate of the Sponsor.
"Owner" means each Person who is the beneficial owner of a Book-Entry
Preferred Securities Certificate as reflected in the records of the Clearing
Agency or, if a Clearing Agency Participant is not the Owner, then as reflected
in the records of a Person maintaining an account with such Clearing Agency
(directly or indirectly, in accordance with the rules of such Clearing Agency).
"Paying Agent" means any paying agent or co-paying agent appointed
pursuant to Section 5.09 and shall initially be the Institutional Trustee.
8
"Payment Account" means a segregated non-interest-bearing corporate trust
account maintained by the Institutional Trustee for the benefit of the
Securityholders in which all amounts paid in respect of the Subordinated Debt
Securities will be held and from which the Institutional Trustee shall make
payments to the Securityholders in accordance with Section 4.01.
"Person" means an individual, corporation, partnership, joint venture,
trust, limited liability company or corporation, unincorporated organization or
government or any agency or political subdivision thereof.
"Preferred Securities Certificate" means a certificate evidencing
ownership of a Preferred Security or Securities, substantially in the form
attached as Exhibit A.
"Preferred Security" means an undivided beneficial interest in the assets
of the Trust having a Liquidation Amount of $1,000 and having rights provided
therefor in this Declaration, including the right to receive Distributions and a
Liquidation Distribution as provided herein.
"Record Date" means the opening of business on the Business Day
immediately preceding the relevant Distribution Payment Date.
"Redemption Date" means, with respect to any Trust Security to be
redeemed, the date fixed for such redemption by or pursuant to this Declaration;
provided that each Indenture Redemption Date and the Maturity Date of the
Subordinated Debt Securities shall be a Redemption Date for a Like Amount of
Trust Securities.
"Redemption Price" means, with respect to any date fixed for redemption
of any Trust Security, the Liquidation Amount of such Trust Security, plus
accrued and unpaid Distributions to such date.
"Relevant Trustee" shall have the meaning specified in Section 8.10.
"Remarketing" means the conduct by which a Fixed Rate shall be determined
in accordance with the Remarketing Procedures.
"Remarketing Agent" means Lehman Brothers Inc., its successors or
assigns, or such other remarketing agent appointed to such capacity by the
Company and the Regular Trustees.
"Remarketing Agreement" means the agreement among the Company, the Trust
and Lehman Brothers Inc., as remarketing agent, dated as of _____, 2004.
"Remarketing Date" means any Business Day no later than the third
Business Day prior to any Remarketing Settlement Date.
"Remarketing Procedures" means those procedures set forth in Article X.
"Remarketing Settlement Date" means, to the extent applicable, (i) the
first Business Day of the next Distribution Period following the expiration of
the Initial Fixed Rate Period and any subsequent Fixed Rate Period; (ii) any
Distribution Payment Date during a Floating Rate Period;
9
or (iii) any Distribution Payment Date during a time in which Preferred
Securities are redeemable in a Fixed Rate Period subsequent to the Initial Fixed
Rate Period.
"Regular Trustee" means each of the individuals identified as a "Regular
Trustee" in the preamble to this Declaration solely in their capacities as
Regular Trustees of the Trust formed and continued hereunder and not in their
individual capacities, or such trustee's successor(s) in interest in such
capacity, or any successor "Regular Trustee" appointed as herein provided.
"Securities Register" and "Securities Registrar" are described in Section
5.04.
"Securityholder" or "Holder" means a Person in whose name a Trust
Security or Securities is registered in the Securities Register; and any such
Person who is a beneficial owner within the meaning of the Delaware Statutory
Trust Act.
"Sponsor" means Avista Corporation, in its capacity as "Sponsor" under
this Declaration.
"Subordinated Debt Securities" means the $______ aggregate principal
amount of the Sponsor's Subordinated Debt Securities due _____, issued pursuant
to the Subordinated Indenture.
"Subordinated Indenture" means the Indenture, dated as of _____, 2004,
between the Sponsor and the Indenture Trustee, as the same may be modified,
amended or supplemented in accordance with the applicable provisions thereof.
"Telerate Page 3750" means the display designated on page 3750 on
MoneyLine Telerate (or such other page as may replace the 3750 page on the
service or such other service as may be nominated by the British Bankers'
Association for the purpose of displaying London interbank offered rates for
U.S. dollar deposits).
"Telerate Page 7051" means the display on MoneyLine Telerate (or any
successor service), on such page (or any other page as may replace such page on
that service), for the purpose of displaying Treasury Constant Maturities as
reported in H.15(519).
"10-year Treasury CMT" has the meaning set forth in Section 4.02(e).
"30-year Treasury CMT" has the meaning set forth in Section 4.02(e).
"3-month LIBOR Rate" has the meaning set forth in Section 4.02(e).
"Trust" means the Delaware statutory trust continued hereby and
identified on the cover page to this Declaration.
"Trustees" means the Persons identified as "Trustees" in the preamble to
this Declaration solely in their capacities as Trustees of the Trust and not in
their individual capacities, or their successor in interest in such capacity, or
any successor trustee appointed as herein provided.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in force
at the date as of which this instrument was executed; provided, however, that in
the event the Trust Indenture Act
10
of 1939 is amended after such date, "Trust Indenture Act" means, to the extent
required by any such amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Property" means (i) the Subordinated Debt Securities; (ii) any
cash on deposit in, or owing to, the Payment Account; and (iii) all proceeds and
rights in respect of the foregoing and any other property and assets for the
time being held or deemed to be held by the Institutional Trustee pursuant to
this Declaration.
"Trust Securities Certificate" means any one of the Common Securities
Certificates or the Preferred Securities Certificates.
"Trust Security" means any one of the Common Securities or the Preferred
Securities.
"Underwriting Agreement" means the Underwriting Agreement, dated _____,
2004, among the Trust, the Sponsor and the underwriters named therein.
ARTICLE II
ESTABLISHMENT OF THE TRUST
SECTION 2.01. NAME
The Trust continued hereby shall be known as "AVA Capital Trust III", in
which name the Trustees may conduct the business of the Trust, make and execute
contracts and other instruments on behalf of the Trust and sue and be sued. The
Regular Trustees may change the name of the Trust from time to time following
written notice to the Holders.
SECTION 2.02. OFFICES OF THE TRUSTEES; PRINCIPAL PLACE OF BUSINESS
The address of the Institutional Trustee is 475 Sansome Street, 12th
Floor, San Francisco, California 94111, or at such other address as the
Institutional Trustee may designate by written notice to the Securityholders and
the Sponsor. The principal place of business of the Delaware Trustee is c/o
_____, _____, or at such other address in Delaware as the Delaware Trustee may
designate by notice to the Sponsor. The address of the Regular Trustees is c/o
Avista Corporation, 1411 East Mission Avenue, Spokane, Washington 99202,
Attention: Treasurer. The principal place of business of the Trust is c/o Avista
Corporation, 1411 East Mission Avenue, Spokane, Washington 99202. The Sponsor
may change the principal place of business of the Trust at any time by giving
notice thereof to the Trustees.
SECTION 2.03. INITIAL CONTRIBUTION OF TRUST PROPERTY;
ORGANIZATIONAL EXPENSES
The Trust received from the Sponsor in connection with the Original
Declaration of the sum of $10, which constituted the initial Trust Property. The
Sponsor, as obligor of the Subordinated Debt Securities, shall pay all costs and
expenses of the Trust as they arise (including, but not limited to, costs and
expenses relating to the organization of the Trust, issuance and sale of the
Preferred Securities, the fees and expenses (including reasonable counsel fees
and expenses) of the Trustees) or shall, upon request of the Trustees, promptly
reimburse the
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Trustees for any such expenses paid by the Trustees. The Sponsor shall make no
claim upon the Trust Property for the payment of such expenses.
SECTION 2.04. ISSUANCE OF THE PREFERRED SECURITIES
The Regular Trustees, on behalf of the Trust, shall execute and deliver
to the underwriters named in the Underwriting Agreement Preferred Securities
Certificates, registered in the name of the nominee of the initial Clearing
Agency, in an aggregate amount of _____ Preferred Securities having an aggregate
Liquidation Amount of $_____, against receipt of the aggregate purchase price of
such Preferred Securities of $_____, which amount the Regular Trustees shall
promptly deliver to the Institutional Trustee.
SECTION 2.05. SUBSCRIPTION AND PURCHASE OF SUBORDINATED DEBT
SECURITIES; ISSUANCE OF THE COMMON SECURITIES
The Regular Trustees, on behalf of the Trust, shall execute and deliver
to the Sponsor Common Securities Certificates, registered in the name of the
Sponsor, in an aggregate amount of ____ Common Securities having an aggregate
Liquidation Amount of $____ against payment by the Sponsor of such amount, which
amount shall be promptly delivered to the Institutional Trustee.
Contemporaneously therewith, the Regular Trustees, on behalf of the Trust, shall
subscribe to and purchase from the Sponsor Subordinated Debt Securities,
registered in the name of the Institutional Trustee, on behalf of the Trust and
the Holders, and having an aggregate principal amount equal to $_____, and, in
satisfaction of the purchase price for such Subordinated Debt Securities, the
Institutional Trustee, on behalf of the Trust, shall deliver to the Sponsor the
sum of $_____.
SECTION 2.06. DECLARATION OF TRUST
The exclusive purposes and functions of the Trust are (i) to issue and
sell the Trust Securities and use the proceeds from such sale to acquire the
Subordinated Debt Securities, (ii) to maintain its status as a grantor trust for
federal income tax purposes; (iii) to make Distributions, and (iv) to engage in
those activities necessary, incidental, appropriate or convenient thereto. The
Sponsor hereby confirms each of the Bank, the Delaware Bank, Malyn K. Malquist
and Diane C. Thoren as trustees of the Trust, to have all the rights, powers and
duties to the extent set forth herein. The Institutional Trustee hereby declares
that it will hold the Trust Property in trust upon and subject to the conditions
set forth herein for the benefit of the Trust and the Securityholders. The
Trustees shall have all rights, powers and duties set forth herein and in
accordance with applicable law with respect to accomplishing the purposes of the
Trust. The Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities, of the
Institutional Trustee or the Regular Trustees set forth herein. The Delaware
Trustee shall be one of the Trustees for the sole and limited purpose of
fulfilling the requirements of the Delaware Statutory Trust Act.
SECTION 2.07. AUTHORIZATION TO ENTER INTO CERTAIN TRANSACTIONS
The Trustees shall conduct the affairs of the Trust in accordance with
the terms of this Declaration. Subject to the limitations set forth in paragraph
(c) of this Section, and in
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accordance with the following paragraphs (a) and (b), the Trustees shall have
the authority to enter into all transactions and agreements determined by the
Trustees to be appropriate in exercising the authority, express or implied,
otherwise granted to the Trustees under this Declaration, and to perform all
acts in furtherance thereof, including without limitation, the following:
(a) As among the Trustees, the Regular Trustees, acting singly
or jointly, shall have the exclusive power, duty and authority to act on behalf
of the Trust with respect to the following matters:
(i) to acquire the Subordinated Debt Securities with the
proceeds of the sale of the Trust Securities; provided, however,
the Regular Trustees shall cause legal title to all of the
Subordinated Debt Securities to be vested in, and the Subordinated
Debt Securities to be held of record in the name of, the
Institutional Trustee for the benefit of the Trust and Holders of
the Trust Securities;
(ii) to give the Sponsor and the Institutional Trustee
prompt written notice of the occurrence of any Special Event (as
defined in the Subordinated Indenture) and to take any ministerial
actions in connection therewith; provided, that the Regular
Trustees shall consult with the Sponsor and the Institutional
Trustee before taking or refraining to take any ministerial action
in relation to a Special Event;
(iii) to establish a record date with respect to all
actions to be taken hereunder that require a record date be
established, including for the purposes of ss. 316(c) of the Trust
Indenture Act and with respect to Distributions, voting rights,
redemptions, and exchanges, and to issue relevant notices to
Holders of the Trust Securities as to such actions and applicable
record dates;
(iv) to bring or defend, pay, collect, compromise,
arbitrate, resort to legal action, or otherwise adjust claims or
demands of or against the Trust ("Legal Action"), unless pursuant
to Section 2.07(b)(v), the Institional Trustee has the power to
bring such Legal Action;
(v) to employ or otherwise engage employees and agents
(who may be designated as officers with titles) and managers,
contractors, advisors, and consultants and pay reasonable
compensation for such services;
(vi) to cause the Trust to comply with the Trust's
obligations under the Trust Indenture Act;
(vii) to give the certificate to the Institutional Trustee
required by ss. 314(a)(4) of the Trust Indenture Act, which
certificate may be executed by any Regular Trustee;
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(viii) to take all actions and perform such duties as may
be required of the Regular Trustees pursuant to the terms of this
Declaration, the Remarketing Agreement and the Calculation Agent
Agreement;
(ix) to take all action that may be necessary or
appropriate for the preservation and the continuation of the
Trust's valid existence, rights, franchises and privileges as a
statutory trust under the laws of the State of Delaware and of
each other jurisdiction in which such existence is necessary to
protect the limited liability of the Holders of the Trust
Securities or to enable the Trust to effect the purposes for which
the Trust has been created;
(x) to take all action necessary to cause all applicable
tax returns and tax information reports that are required to be
filed with respect to the Trust to be duly prepared and filed by
the Regular Trustees, on behalf of the Trust;
(xi) to execute and deliver the Trust Securities on
behalf of the Trust;
(xii) to cause the Trust to enter into, and to execute,
deliver and perform on behalf of the Trust, the Remarketing
Agreement, the Calculation Agent Agreement, the Expense Agreement
and the Certificate Depository Agreement and such other agreements
as may be necessary or desirable in connection with the
consummation hereof;
(xiii) to assist in the registration of the Preferred
Securities under the Securities Act of 1933, as amended, and under
state securities or blue sky laws, and the qualification of this
Declaration as a trust indenture under the Trust Indenture Act;
(xiv) to assist in the listing of the Preferred Securities
upon such securities exchange or exchanges, if necessary and as
shall be determined by the Sponsor, and the registration of the
Preferred Securities under the Exchange Act, and the preparation
and filing of all periodic and other reports and other documents
pursuant to the foregoing;
(xv) to send notices (other than notices of default) and
other information regarding the Trust Securities and the
Subordinated Debt Securities to the Securityholders in accordance
with this Declaration, the Remarketing Agreement and the
Calculation Agent Agreement;
(xvi) to appoint a Paying Agent (subject to Section 5.09),
authenticating agent, Remarketing Agent, Calculation Agent and
Securities Registrar in accordance with this Declaration;
(xvii) to elect to remarket the Preferred Securities and
determine the length of any Fixed Rate Period in accordance with
this Declaration, including redemption dates applicable to any
Fixed Rate Period;
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(xviii) to register transfers of the Trust Securities in
accordance with this Declaration;
(xix) to assist in, to the extent provided in this
Declaration, the winding up of the affairs of and termination of
the Trust and the preparation, execution and filing of the
certificate of cancellation with the Secretary of State of the
State of Delaware; and (xx) to take any action incidental to the
foregoing as the Regular Trustees may from time to time determine
is necessary, appropriate, convenient or advisable to protect and
conserve the Trust Property for the benefit of the Securityholders
(without consideration of the effect of any such action on any
particular Securityholder).
(b) As among the Trustees, the Institutional Trustee shall have
the exclusive power, duty and authority to act on behalf of the Trust with
respect to the following matters:
(i) engage in such ministerial activities as shall be
necessary or appropriate to effect promptly the redemption of the
Trust Securities to the extent the Subordinated Debt Securities
are redeemed, mature or otherwise repaid;
(ii) upon a distribution of Subordinated Debt Securities
in accordance with the terms of this Declaration, engage in such
ministerial activities as shall be necessary or appropriate to
effect promptly the distribution of Subordinated Debt Securities
to Holders of Trust Securities pursuant to the terms of this
Declaration;
(iii) subject to the terms hereof, exercise all of the
rights, powers and privileges of a holder of the Subordinated Debt
Securities under the Subordinated Indenture and, if an Event of
Default occurs and is continuing, shall enforce for the benefit
of, and subject to the rights of, the Holders of the Trust
Securities, its rights as holder of the Subordinated Debt
Securities under the Subordinated Indenture;
(iv) take all actions and perform such duties as may be
specifically required of the Institutional Trustee pursuant to the
terms of this Declaration;
(v) take any Legal Action specifically required of the
Institutional Trustee pursuant to the terms of this Declaration
which arises out of or in connection with an Event of Default or
the Institutional Trustee's duties and obligations under this
Declaration, the Delaware Statutory Trust Act or the Trust
Indenture Act;
(vi) the establishment and maintenance of the Payment
Account;
(vii) the receipt of and holding of legal title to the
Subordinated Debt Securities as described herein;
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(viii) the collection of interest, principal and any other
payments made in respect of the Subordinated Debt Securities in
the Payment Account;
(ix) the distribution of amounts owed to the
Securityholders in respect of the Trust Securities;
(x) the sending of notices of default and other
information regarding the Trust Securities and the Subordinated
Debt Securities to the Securityholders in accordance with this
Declaration;
(xi) the distribution of the Trust Property in accordance
with the terms of this Declaration;
(xii) as provided in this Declaration, the winding up of
the affairs of and termination of the Trust; and
(xiii) the taking of any action incidental to the foregoing
as the Institutional Trustee may from time to time determine is
necessary, appropriate, convenient or advisable to protect and
conserve the Trust Property for the benefit of the Securityholders
(without consideration of the effect of any such action on any
particular Securityholder).
(c) So long as this Declaration remains in effect, the Trust
(or the Trustees acting on behalf of the Trust) shall not undertake any
business, activities or transaction except as expressly provided herein or
contemplated hereby. In particular, the Trustees shall not (i) acquire any
investments or engage in any activities not authorized by this Declaration; (ii)
sell, assign, transfer, exchange, pledge, set-off or otherwise dispose of any of
the Trust Property or interests therein, including to Securityholders, except as
expressly provided herein; (iii) take any action that would cause the Trust to
fail or cease to qualify as a grantor trust for United States federal income tax
purposes; (iv) incur any indebtedness for borrowed money; (v) take or consent to
any action that would result in the placement of a Lien on any of the Trust
Property; (vi) issue any securities other than the Trust Securities; or (vii)
have any power to, or agree to any action by the Sponsor that would, vary the
investment (within the meaning of Treasury Regulation Section 301.7701-4(c)) of
the Trust or of the Securityholders. The Trustees shall defend all claims and
demands of all Persons at any time claiming any Lien on any of the Trust
Property adverse to the interest of the Trust or the Securityholders in their
capacity as Securityholders.
(d) In connection with the issue and sale of the Preferred
Securities, the Sponsor, as obligor of the Subordinated Debt Securities, shall
have the right and responsibility to assist the Trust with respect to, or effect
on behalf of the Trust, the following (and any actions taken by the Sponsor in
furtherance of the following prior to the date of this Declaration are hereby
ratified and confirmed in all respects):
(i) to prepare for filing by the Trust with the
Commission, and execute on behalf of the Trust, a registration
statement on Form S-3 under the Securities
16
Act of 1933, as amended, in relation to the Preferred Securities,
including any amendments thereto;
(ii) to determine the states in which to take appropriate
action to qualify or register for sale all or part of the
Preferred Securities and to do any and all such acts, other than
actions which must be taken by or on behalf of the Trust, and
advise the Trustees of actions they must take on behalf of the
Trust, and prepare for execution and filing any documents to be
executed and filed by the Trust or on behalf of the Trust, as the
Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(iii) to prepare for filing by the Trust, and execute on
behalf of the Trust, an application to the New York Stock Exchange
or any other national stock exchange or the Nasdaq National Market
for listing upon notice of issuance of any Preferred Securities,
if applicable;
(iv) to prepare for filing by the Trust, and execute on
behalf of the Trust, with the Commission a registration statement
on Form 8-A relating to the registration of the Preferred
Securities under Section 12(b) of the Exchange Act, including any
amendments thereto;
(v) to negotiate the terms of, and execute on behalf of
the Trust, the Underwriting Agreement providing for the sale of
the Preferred Securities and to execute, deliver and perform the
Underwriting Agreement on behalf of the Trust;
(vi) to negotiate the terms of, and execute on behalf of
the Trust, the Remarketing Agreement providing for the retention
of the Remarketing Agent and the establishment of certain
procedures relating to Remarketings;
(vii) to negotiate the terms of, and execute on behalf of
the Trust, the Calculation Agent Agreement providing for the
retention of the Calculation Agent;
(viii) to elect to remarket the Preferred Securities and
determine the length of any Fixed Rate Period in accordance with
this Declaration, including redemption dates applicable to any
Fixed Rate Period; and
(ix) to take any other actions necessary, incidental,
appropriate or convenient to carry out any of the foregoing
activities.
(e) Notwithstanding anything herein to the contrary, the
Regular Trustees are authorized and directed to conduct the affairs of the Trust
and to operate the Trust so that the Trust will not be deemed to be an
"investment company" required to be registered under the Investment Company Act
of 1940, as amended, or taxed as other than a grantor trust for United States
federal income tax purposes and so that the Subordinated Debt Securities will be
treated as indebtedness of the Sponsor for United States federal income tax
purposes. In this connection, the Sponsor and the Regular Trustees are
authorized to take any action, not inconsistent with
17
applicable law, the Certificate of Trust or this Declaration, that each of the
Sponsor and the Regular Trustees determines in its discretion to be necessary or
desirable for such purposes, as long as such action does not materially and
adversely affect the interests of the Holders of the Preferred Securities.
SECTION 2.08. ASSETS OF TRUST
The assets of the Trust shall consist of the Trust Property.
SECTION 2.09. TITLE TO TRUST PROPERTY
Legal title to all Trust Property shall be vested at all times in the
Institutional Trustee (in its capacity as such) and shall be held and
administered by the Institutional Trustee for the benefit of the Securityholders
and the Trust in accordance with this Declaration. The right, title and interest
of the Institutional Trustee to the Subordinated Debt Securities shall vest
automatically in each Person who may thereafter be appointed as Institutional
Trustee in accordance with the terms hereof. Such vesting and cessation of title
shall be effective whether or not conveyancing documents have been executed and
delivered.
SECTION 2.10. MERGERS AND CONSOLIDATIONS OF THE TRUST
The Trust may not merge with or into, consolidate, amalgamate, or be
replaced by, or convey, transfer or lease its properties and assets
substantially as an entirety to, any entity, except pursuant to this Section
2.10 or Section 9.04. Upon the approval of the Holders of the Common Securities,
and without the consent of the Holders of the Preferred Securities or the
Trustees, the Trust may merge with or into, consolidate, amalgamate, or be
replaced by or convey, transfer or lease its properties and assets substantially
as an entirety to a trust organized as such under the laws of any state;
provided, however, that (i) such successor entity either (a) expressly assumes
all of the obligations of the Trust with respect to the Preferred Securities or
(b) substitutes for the Preferred Securities other securities having
substantially the same terms as the Preferred Securities (the "Successor
Preferred Securities") so long as the Successor Preferred Securities have the
same priority as the Preferred Securities with respect to distributions and
payments upon liquidation, redemption and otherwise; (ii) a trustee of such
successor entity possessing the same powers and duties as the Institutional
Trustee is appointed to hold the Subordinated Debt Securities; (iii) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not cause the Preferred Securities (including any Successor Preferred
Securities) to be downgraded by any nationally recognized statistical rating
organization; (iv) the Preferred Securities or any Successor Preferred
Securities are listed or quoted, or any Successor Preferred Securities will be
listed or quoted upon notification of issuance, on any national securities
exchange or with another organization on which Preferred Securities are then
listed or quoted; (v) such merger, consolidation, amalgamation, replacement,
18
conveyance, transfer or lease does not adversely affect the rights, preferences
and privileges of the holders of the Preferred Securities (including any
Successor Preferred Securities) in any material respect; (vi) such successor
entity has a purpose substantially identical to that of the Trust; (vii) prior
to such merger, consolidation, amalgamation, replacement, conveyance, transfer
or lease, the Institutional Trustee has received an Opinion of Counsel from
independent counsel experienced in such matters to the effect that (a) such
merger, consolidation, amalgamation, replacement, conveyance, transfer or lease
does not adversely affect the rights, preferences and privileges of the holders
of the Preferred Securities (including any Successor Preferred Securities) in
any material respect, and (b) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, neither the Trust nor
such successor entity will be required to register as an "investment company"
under the Investment Company Act; and (viii) the Sponsor or any permitted
transferee to whom it has transferred the Common Securities hereunder owns all
of the common securities of such successor entity and guarantees the obligations
of such successor entity under the Successor Preferred Securities at least to
the extent provided by the Guarantee. Notwithstanding the foregoing, the Trust
shall not, except with the consent of Holders of 100% in aggregate Liquidation
Amount of the Preferred Securities, consolidate, amalgamate, merge with or into,
or be replaced by or convey, transfer or lease its properties and assets
substantially as an entirety to, any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Trust or the successor entity to be taxable other than as a
grantor trust for United States federal income tax purposes. Any merger or
similar agreement shall be executed by the Regular Trustees on behalf of the
Trust.
ARTICLE III
PAYMENT ACCOUNT
SECTION 3.01. PAYMENT ACCOUNT
(a) On or prior to the Issue Date, the Institutional Trustee
shall establish the Payment Account. The Institutional Trustee and an agent of
the Institutional Trustee shall have exclusive control and sole right of
withdrawal with respect to the Payment Account for the purpose of making
deposits in and withdrawals from the Payment Account in accordance with this
Declaration. All monies and other property deposited or held from time to time
in the Payment Account shall be held by the Institutional Trustee in the Payment
Account for the exclusive benefit of the Securityholders and for distribution as
herein provided, including (and subject to) any priority of payments provided
for herein.
(b) The Institutional Trustee shall deposit in the Payment
Account, promptly upon receipt, all payments of principal or interest on, and
any other payments or proceeds with respect to, the Subordinated Debt Securities
and any amounts paid to the Institutional Trustee pursuant to the Guarantee.
Amounts held in the Payment Account shall not be invested by the Institutional
Trustee pending distribution thereof.
ARTICLE IV
DISTRIBUTIONS; REDEMPTION
SECTION 4.01. DISTRIBUTIONS
(a) Distributions shall accrue from the Issue Date until the
Redemption Date. During the Initial Fixed Rate Period, Distributions will be
payable semiannually in arrears on _____ and _____ of each year, commencing on
_____, 2004. During any Fixed Rate Period,
19
other than the Initial Fixed Rate Period, Distributions will be payable
semiannually in arrears on the first day of the first month that begins at least
six months after the first day of the Fixed Rate Period and on the first day of
each six month period thereafter during such Fixed Rate Period. Any Fixed Rate
Period may not end on a day other than a day immediately preceding a
Distribution Payment Date. During any Floating Rate Period, Distributions will
be payable quarterly in arrears on _____, _____, _____ and _____ of each year.
(b) If any Distribution Payment Date with respect to a Fixed
Rate Period is not a Business Day, Distributions will be payable, without
interest, on the immediately succeeding Business Day, with the same force and
effect as if payment was made on the date such payment was originally payable
(and without the accrual of any additional amount of Distributions). If any
Distribution Payment Date with respect to a Floating Rate Period is not a
Business Day, then Distributions will be payable on the immediately succeeding
Business Day and Distributions shall accrue to the actual payment date (except
for a Distribution Payment Date that coincides with the Redemption Date).
(c) The amount of Distributions payable on each Distribution
Payment Date relating to a Fixed Rate Period will be computed on the basis of a
360-day year of twelve 30-day months. The amount of Distributions payable on
each Distribution Payment Date relating to a Floating Rate Period will be
computed by multiplying the per annum Distribution Rate in effect for such
Distribution Period by a fraction, the numerator of which will be the actual
number of days in such Distribution Period (or portion thereof) (determined by
including the first day thereof and excluding the last thereof) and the
denominator of which will be 360, and multiplying the rate so obtained by
$1,000.
(d) The Company has the right under the Subordinated Indenture
to defer payments of interest on the Subordinated Debt Securities by extending
the interest period from time to time on the Subordinated Debt Securities (an
"Extension Period") which, if exercised, would defer Distributions on the
Preferred Securities during any Extension Period. The payment of such
Distributions, together with any interest thereon, will be distributed to the
Holders of Trust Securities as received at the end of any Extension Period.
(e) Distributions on the Trust Securities shall be made and
shall be deemed payable on each Distribution Payment Date only to the extent
that the Trust has available funds on hand in the Payment Account for the
payment of such Distributions.
(f) Distributions on the Trust Securities on each Distribution
Date shall be payable to the Holders thereof as they appear on the Securities
Register for the Trust Securities on the relevant Record Date.
Each Trust Security upon registration of transfer of or in exchange for
or in lieu of any other Trust Security shall carry the rights of Distributions
accrued and unpaid, and to accrue, which were carried by such other Trust
Security.
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SECTION 4.02. DISTRIBUTION RATE
(a) During the Initial Fixed Rate Period, the Distribution Rate
shall be the Initial Distribution Rate.
(b) Prior to the expiration of the Initial Fixed Rate Period
and any subsequent Fixed Rate Period, prior to any Distribution Payment Date
with respect to a Floating Rate Period or prior to any Distribution Payment Date
in a Fixed Rate Period during a time in which the Preferred Securities are
redeemable in such Fixed Rate Period, the Company and the Regular Trustees will
have the option to remarket the Preferred Securities to establish a new Fixed
Rate for a new Fixed Rate Period (to be in effect after the expiration of the
then current Distribution Period). If the Company and the Regular Trustees elect
to conduct a Remarketing of the Preferred Securities for the purpose of
establishing a new Fixed Rate for a new Fixed Rate Period, the Trust shall, not
less than 20 nor more than 35 Business Days prior to the related Election Date,
notify in writing the Clearing Agency, the Institutional Trustee, the Indenture
Trustee, the Calculation Agent and the Remarketing Agent. If the Preferred
Securities are not issued in global, fully registered form to the Clearing
Agency or its nominee, such notice shall be delivered to the Owners instead of
the Clearing Agency. Such notice shall describe the Remarketing and shall
indicate the length of the proposed new Fixed Rate Period, the proposed
Remarketing Date and any redemption provisions that will apply during such new
Fixed Rate Period. The Company and the Regular Trustees shall have the right to
terminate a Remarketing at any time prior to the Election Date by written notice
of such termination to the Clearing Agency (or the Owners, as applicable), the
Remarketing Agent, the Institutional Trustee, the Indenture Trustee and the
Calculation Agent.
(c) If the Remarketing Agent has determined that it will be
able to remarket all Preferred Securities tendered or deemed tendered for
purchase in the Remarketing at a Fixed Rate and at a price of $1,000 per
Preferred Security, on any Remarketing Date, the Distribution Rate for the new
Fixed Rate Period will be the Fixed Rate determined by the Remarketing Agent,
which will be the rate per annum (rounded to the nearest one-thousandth (0.001)
of one percent per annum) which the Remarketing Agent determines, in its sole
judgment, to be the lowest Fixed Rate per annum that will enable it to remarket
all Preferred Securities tendered or deemed tendered for Remarketing at a price
of $1,000 per Preferred Security.
(d) If the Company and the Regular Trustees do not elect to
remarket the Preferred Securities pursuant to Section 4.02(b) or have terminated
a Remarketing or if the Remarketing Agent is unable to remarket all of the
Preferred Securities tendered or deemed tendered for a purchase price of $1,000
per Preferred Security pursuant to the Remarketing Procedures, the Distribution
Rate for the next Distribution Period shall be the Floating Rate and the new
Distribution Period shall be a Floating Rate Period.
(e) The Calculation Agent shall calculate the Floating Rate on
the Floating Rate Determination Date as follows:
Except as provided below, the Floating Rate for any Floating Rate Period
for the Preferred Securities will be equal to the Adjustable Rate (as defined
below) plus ____%. The "Adjustable Rate" for any Distribution Period will be
equal to the highest of the 3-month LIBOR
21
Rate, the 10-year Treasury CMT and the 30-year Treasury CMT (each as defined
below and collectively referred to as the "Benchmark Rates") for such
Distribution Period during the Floating Rate Period. In the event that the
Calculation Agent determines in good faith that for any reason:
(1) any one of the Benchmark Rates cannot be determined
for any Distribution Period, the Adjustable Rate for
such Distribution Period will be equal to the higher
of whichever two of such rates can be so determined;
(2) only one of the Benchmark Rates can be determined
for any Distribution Period, the Adjustable Rate for
such Distribution Period will be equal to whichever
such rate can be so determined; or
(3) none of the Benchmark Rates can be determined for
any Distribution Period, the Adjustable Rate for the
preceding Distribution Period will be continued for
such Distribution Period.
The "3-month LIBOR Rate" means, for each Distribution Period, the
arithmetic average of the two most recent weekly quotes for deposits for U.S.
Dollars having a term of three months, as published on the first Business Day of
each week immediately preceding the Distribution Period for which the Floating
Rate is being determined. Such quotes will be taken from Telerate Page 3750 at
approximately 11:00 a.m. London time on the relevant date. If such rate does not
appear on Telerate Page 3750 on the Floating Rate Determination Date, the
3-month LIBOR Rate will be the arithmetic mean of the rates quoted by three
major banks in New York City selected by the Calculation Agent, at approximately
11:00 a.m., New York City time, on the Floating Rate Determination Date for
loans in U.S. Dollars to leading European banks for a period of three months.
"The 10-year Treasury CMT" means the rate determined in accordance with
the following provisions:
(1) With respect to any Floating Rate Determination Date
and the Distribution Period that begins immediately
thereafter, the 10-year Treasury CMT means the rate
displayed on Telerate Page 7051 under the caption "
...Treasury Constant Maturities... Federal Reserve
Board Release H.15 ...Mondays Approximately 3:45
P.M.", under the column for the Designated CMT
Maturity Index (as defined below).
(2) If such rate is no longer displayed on the relevant
page, or is not so displayed by 3:00 P.M., New York
City time, on the applicable Floating Rate
Determination Date, then the 10-year Treasury CMT
for such Floating Rate Determination Date will be
such treasury constant maturity rate for the
Designated CMT Maturity Index as is published in
H.15(519).
22
(3) If such rate is no longer displayed on the relevant
page, or if not published by 3:00 P.M., New York
City time, on the applicable Floating Rate
Determination Date, then the 10-year Treasury CMT
for such Floating Rate Determination Date will be
such constant maturity treasury rate for the
Designated CMT Maturity Index (or other United
States Treasury rate for the Designated CMT Maturity
Index) for the applicable Floating Rate
Determination Date with respect to such Distribution
reset date as may then be published by either the
Board of Governors of the Federal Reserve System or
the United States Department of the Treasury that
the Calculation Agent determines to be comparable to
the rate formerly displayed on the Telerate Page
7051 and published in H.15(519).
(4) If such information is not provided by 3:00 P.M.,
New York City time, on the applicable Floating Rate
Determination Date, then the 10-year Treasury CMT
for such Floating Rate Determination Date will be
calculated by the Calculation Agent and will be a
yield to maturity, based on the arithmetic mean of
the secondary market offered rates as of
approximately 3:30 P.M., New York City time, on such
Floating Rate Determination Date reported, according
to their written records, by three leading primary
United States government securities dealers in The
City of New York (each, a "Reference Dealer")
selected by the Calculation Agent (from five such
Reference Dealers selected by the Calculation Agent
and eliminating the highest quotation (or, in the
event of equality, one of the highest) and the
lowest quotation (or, in the event of equality, one
of the lowest)), for the most recently issued direct
noncallable fixed rate obligations of the United
States ("Treasury Debentures") with an original
maturity of approximately the Designated CMT
Maturity Index and a remaining term to maturity of
not less than such Designated CMT Maturity Index
minus one year.
(5) If the Calculation Agent is unable to obtain three
such Treasury Debentures quotations, the 10-year
Treasury CMT for the applicable Floating Rate
Determination Date will be calculated by the
Calculation Agent and will be a yield to maturity
based on the arithmetic mean of the secondary market
offered rates as of approximately 3:30 P.M., New
York City time, on the applicable Floating Rate
Determination Date of three Reference Dealers in The
City of New York (from five such Reference Dealers
selected
23
by the Calculation Agent and eliminating the highest
quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event
of equality, one of the lowest)), for Treasury
Debentures with an original maturity of the number
of years that is the next highest to the Designated
CMT Maturity Index and a remaining term to maturity
closest to the Designated CMT Maturity Index and in
an amount of at least $100 million.
(6) If three or four (and not five) of such Reference
Dealers are quoting as set forth above, then the
10-year Treasury CMT will be based on the arithmetic
mean of the offered rates obtained and neither the
highest nor lowest of such quotes will be
eliminated; provided, however, that if fewer than
three Reference Dealers selected by the Calculation
Agent are quoting as set forth above, the 10-year
Treasury CMT with respect to the applicable Floating
Rate Determination Date will remain the 10-year
Treasury CMT for the immediately preceding interest
period. If two Treasury Debentures with an original
maturity as described in the second preceding
sentence have remaining terms to maturity equally
close to the Designated CMT Maturity Index, then the
quotes for the Treasury Debentures with the shorter
remaining term to maturity will be used.
The "30-year Treasury CMT" has the meaning specified under the definition
of 10-year Treasury CMT, except that the Designated CMT Maturity Index for the
30-year Treasury CMT shall be 30 years.
The 3-month LIBOR Rate, the 10-year Treasury CMT and the 30-year Treasury
CMT shall each be rounded to the nearest hundredth of a percent.
The Floating Rate with respect to each Floating Rate Period will be
calculated as promptly as practicable by the Calculation Agent according to the
appropriate method described above.
(f) If the Company elects to defer interest during a Fixed Rate
Period, Distributions will continue to accrue and be compounded semiannually at
the Fixed Rate until the expiration of the Fixed Rate Period. Prior to the
expiration of such Fixed Rate Period and any subsequent Fixed Rate Period during
the Extension Period, the Company and the Regular Trustees will have the option
to remarket the Preferred Securities for a new Fixed Rate Period (to take effect
upon expiration of such Fixed Rate Period). If the Company and the Trust do not
remarket the Preferred Securities, the Floating Rate during the Extension Period
shall be determined as provided herein, but shall not be less than the Fixed
Rate for the Fixed Rate Period just ended. If the Company elects to defer
interest during a Floating Rate Period, Distributions will continue to accrue
and be compounded quarterly at the applicable Floating Rate, reset quarterly,
subject to the right of the Company and the Regular Trustees to remarket the
Preferred
24
Securities prior to any Distribution Payment Date in order to establish a new
Fixed Rate for a new Fixed Rate Period in accordance with this Section 4.02 and
the Remarketing Procedures.
SECTION 4.03. DISTRIBUTION PERIODS
In accordance with Section 4.02 and the Remarketing Procedures, the
Company and the Regular Trustees, on behalf of the Trust may, prior to the
expiration of the Initial Fixed Rate Period and any subsequent Fixed Rate
Period, prior to any Distribution Payment Date in a Fixed Rate Period during a
time in which the Preferred Securities are redeemable in such Fixed Rate Period
or prior to any Distribution Payment Date with respect to a Floating Rate
Period, elect to remarket the Preferred Securities to establish a new Fixed Rate
for a new Fixed Rate Period (to be in effect after the then current Distribution
Period). A Fixed Rate Period must be for a duration of at least six months, may
not extend beyond the stated maturity of the Subordinated Debt Securities and
may not end on a day other than a day immediately preceding a Distribution
Payment Date. If a new Fixed Rate for a new Fixed Rate Period is set in a
Remarketing, a new Fixed Rate Period shall commence following the expiration of
the then current Distribution Period. If a new Fixed Rate for a new Fixed Rate
Period is not set, for any reason, including after the expiration of the Initial
Fixed Rate Period, in accordance with the terms of this Declaration, a Floating
Rate Period and the Floating Rate reset quarterly shall be in effect if and
until the Company and the Regular Trustees remarket the Preferred Securities and
set a new Fixed Rate for a new Fixed Rate Period in accordance with Section 4.02
and the Remarketing Procedures.
SECTION 4.04. REDEMPTION
(a) On each Indenture Redemption Date and the Maturity Date of
the Subordinated Debt Securities, the Trust will be required to redeem a Like
Amount of Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Institutional
Trustee by first class mail, postage prepaid, mailed not less than 30 nor more
than 60 days prior to the Redemption Date to each Holder of Trust Securities to
be redeemed, at such Holder's address appearing in the Securities Register. All
notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price;
(iii) the CUSIP number or CUSIP numbers of the Preferred
Securities affected;
(iv) that on the Redemption Date the Redemption Price
will become due and payable upon each such Trust Security to be
redeemed and that Distributions thereon will cease to accumulate
on and after said date, except as provided in Section 4.04(e)
below; and
25
(v) the place or places where Trust Securities are to be
surrendered for the payment of the Redemption Price.
(c) The Trust in issuing the Trust Securities may use "CUSIP"
or "private placement" numbers (if then generally in use), and, if so, the
Institutional Trustee shall indicate the "CUSIP" or "private placement" numbers
of the Trust Securities in notices of redemption and related materials as a
convenience to Holders; provided, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Trust Securities or as contained in any notice of redemption and related
material.
(d) The Trust Securities redeemed on each Redemption Date shall
be redeemed at the Redemption Price with the applicable proceeds from the
contemporaneous redemption or repayment of Subordinated Debt Securities.
Redemptions of the Trust Securities shall be made and the Redemption Price shall
be payable on each Redemption Date only to the extent that the Trust has funds
then on hand and available in the Payment Account for the payment of such
Redemption Price.
(e) If the Trust gives a notice of redemption in respect of any
Preferred Securities, then by 12:00 noon, New York City time, on the Redemption
Date, subject to this Section 4.04(e), the Institutional Trustee will, with
respect to Preferred Securities held in global form, irrevocably deposit with
the Clearing Agency for such Preferred Securities, to the extent available
therefor, funds sufficient to pay the applicable Redemption Price and will give
such Clearing Agency irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities. With respect to
Preferred Securities that are not held in global form, the Institutional
Trustee, subject to Section this 4.04(e), will irrevocably deposit with the
Paying Agent, to the extent available therefor, funds sufficient to pay the
applicable Redemption Price and will give the Paying Agent irrevocable
instructions and authority to pay the Redemption Price to the Holders of the
Preferred Securities upon surrender of their Preferred Securities Certificates.
Notwithstanding the foregoing, Distributions payable on or prior to the
Redemption Date for any Trust Securities called for redemption shall be payable
to the Holders of such Trust Securities as they appear on the Securities
Register for the Trust Securities on the relevant Record Dates for the related
Distribution Dates. If notice of redemption shall have been given (or if the
Sponsor has given irrevocable instructions to the Institutional Trustee to give
notice of redemption) and funds deposited as required, then, upon the date of
such deposit, all rights of Holders holding Trust Securities so called for
redemption will cease, except the right of such Holders to receive the
Redemption Price and any Distribution payable in respect of the Trust Securities
on or prior to the Redemption Date, but without interest, and such Trust
Securities will cease to be Outstanding. In the event that any date on which any
applicable Redemption Price is payable is not a Business Day, then payment of
the applicable Redemption Price payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), except that, if such Business Day falls in the
next calendar year, such payment will be made on the immediately preceding
Business Day, in each case, with the same force and effect as if made on such
date. In the event that payment of the Redemption Price in respect of any Trust
Securities called for redemption is improperly withheld or refused and not paid
either by the Trust or by the Sponsor pursuant to the Guarantee, Distributions
on such Trust Securities will continue to accumulate, as set forth in
26
Section 4.01 and in accordance with the continued accrual of interest on the
Subordinated Debt Securities, from the Redemption Date originally established by
the Trust for such Trust Securities to the date such applicable Redemption Price
is actually paid, in which case the actual payment date will be the date fixed
for redemption for purposes of calculating the applicable Redemption Price.
SECTION 4.05. SUBORDINATION OF COMMON SECURITIES AND DISTRIBUTIONS
(a) Payment of Distributions on, and the Redemption Price of,
the Trust Securities, as applicable, shall be made pro rata based on the
Liquidation Amount of the Trust Securities; provided, however, that if on any
Distribution Payment Date or Redemption Date an Indenture Event of Default shall
have occurred and be continuing, no payment of any Distribution on, or
Redemption Price of, any Common Security, and no other payment on account of the
redemption, liquidation or other acquisition of Common Securities, shall be made
unless payment in full in cash of all accumulated and unpaid Distributions on
all Outstanding Preferred Securities for all Distribution Periods terminating on
or prior thereto, or in the case of payment of the Redemption Price the full
amount of such Redemption Price on all Outstanding Preferred Securities, shall
have been made or provided for, and all funds immediately available to the
Institutional Trustee shall first be applied to the payment in full in cash of
all Distributions on, or Redemption Price of, Preferred Securities then due and
payable.
(b) In the case of the occurrence of any Indenture Event of
Default, the Holder of Common Securities will be deemed to have waived any right
to act with respect to such Event of Default under this Declaration until the
effect of all such Events of Default with respect to the Preferred Securities
have been cured, waived or otherwise eliminated. Until any such Events of
Default under this Declaration with respect to the Preferred Securities have
been so cured, waived or otherwise eliminated, the Institutional Trustee shall
act solely on behalf of the Holders of the Preferred Securities and not the
Holder of the Common Securities, and only the Holders of the Preferred
Securities will have the right to direct the Institutional Trustee to act on
their behalf.
(c) Distributions on the Common Securities shall be payable at
the same Distribution Rates, on the same Distribution Payment Dates and for the
same Distribution Periods and to holders as of the same Record Date as for the
Preferred Securities.
SECTION 4.06. PAYMENT PROCEDURES
Payments of Distributions in respect of the Preferred Securities shall be
made by check mailed to the address of the Person entitled thereto as such
address shall appear on the Securities Register or, if the Preferred Securities
are held by a Clearing Agency, such Distributions shall be made to the Clearing
Agency, which shall credit the relevant Persons' accounts at such Clearing
Agency on the applicable Distribution Payment Dates. Payment of the Redemption
Price of or Liquidation Distribution on the Preferred Securities shall be made
in immediately available funds upon surrender of the Preferred Securities
Certificates representing such Preferred Securities at the corporate trust
office of the Institutional Trustee or, if the Preferred Securities are held by
the Clearing Agency or its nominee, such Redemption Price or Liquidation
Distribution shall be made to the Clearing Agency by wire transfer in
immediately available funds. Payments in
27
respect of the Common Securities shall be made in such manner as shall be
mutually agreed between the Institutional Trustee and the Holder of the Common
Securities.
SECTION 4.07. TAX RETURNS AND REPORTS
The Regular Trustee(s) shall prepare (or cause to be prepared), at the
Sponsor's expense, and file all United States federal, state and local tax and
information returns and reports required to be filed by or in respect of the
Trust. The Regular Trustee(s) shall provide or cause to be provided on a timely
basis to each Holder any Internal Revenue Service form required to be so
provided in respect of the Trust Securities.
SECTION 4.08. EXCHANGE
(a) If at any time the Sponsor or any of its Affiliates (in
either case, a "Sponsor Affiliated Owner/Holder") is the Owner or Holder of any
Preferred Securities, such Sponsor Affiliated Owner/Holder shall have the right
to deliver to the Institutional Trustee all or such portion of its Preferred
Securities as it elects and receive, in exchange therefore, a like amount of
Subordinated Debt Securities. Such election (i) shall be exercisable effective
on any Distribution Payment Date by such Sponsor Affiliated Owner/Holder
delivering to the Institutional Trustee a written notice of such election
specifying the liquidation amount of Preferred Securities with respect to which
such election is being made and the Distribution Payment Date on which such
exchange shall occur, which Distribution Payment Date shall be not less than ten
Business Days after the date of receipt by the Institutional Trustee or its
designee the Preferred Securities which are the subject of such election by
10:00 A.M. New York time, on the Distribution Payment Date on which such
exchange is to occur. After the exchange, such Preferred Securities will be
canceled and will no longer be deemed to be outstanding and all rights of the
Sponsor or its Affiliate(s) with respect to such Preferred Securities will
cease.
(b) In the case of an exchange described in Section 4.08(a),
the Trust will, on the date of such exchange, exchange Subordinated Debt
Securities having a principal amount equal to the aggregate liquidation amount
of the outstanding Common Securities, multiplied by the ratio of the aggregate
liquidation amount of the Preferred Securities exchanged pursuant to Section
4.08(a) divided by the aggregate liquidation amount of the Preferred Securities
outstanding immediately prior to such exchange, for such proportional amount of
Common Securities held by the Sponsor (which contemporaneously shall be canceled
and no longer be deemed to be outstanding); provided, that the Sponsor delivers
or caused to be delivered to the Institutional Trustee or its designee the
required amount of Common Securities to be exchanged by 10:00 A.M. New York
time, on the Distribution Payment Date on which such exchange is to occur.
28
ARTICLE V
TRUST SECURITIES CERTIFICATES
SECTION 5.01. INITIAL OWNERSHIP
Upon the creation of the Trust by the contribution by the Sponsor
pursuant to Section 2.03 and until the issuance of the Trust Securities, and at
any time during which no Trust Securities are outstanding, the Sponsor shall be
the sole beneficial owner of the Trust.
SECTION 5.02. THE TRUST SECURITIES CERTIFICATES
Each of the Preferred and Common Securities Certificates shall be issued
in minimum denominations of $1,000 and integral multiples in excess thereof. The
Trust Securities Certificates shall be executed on behalf of the Trust by manual
or facsimile signature of at least one Regular Trustee. Trust Securities
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be validly issued and entitled to the benefits of
this Declaration, notwithstanding that such individuals or any of them shall
have ceased to be so authorized prior to the authentication and delivery of such
Trust Securities Certificates or did not hold such offices at the date of
authentication and delivery of such Trust Securities Certificates. A transferee
of a Trust Securities Certificate shall become a Securityholder, and shall be
entitled to the rights and subject to the obligations of a Securityholder
hereunder, upon due registration of such Trust Securities Certificate in such
transferee's name pursuant to Section 5.04.
SECTION 5.03. AUTHENTICATION OF TRUST SECURITIES CERTIFICATES
On the Issue Date, the Regular Trustees shall cause Trust Securities
Certificates, in an aggregate Liquidation Amount as provided in Sections 2.04
and 2.05, to be executed on behalf of the Trust, authenticated and delivered to
or upon the written order of the Sponsor signed by its Chairman of the Board,
its President or any Vice President, without further corporate action by the
Sponsor, in authorized denominations. No Trust Securities Certificate shall
entitle its holder to any benefit under this Declaration, or shall be valid for
any purpose, unless there shall appear on such Trust Securities Certificate a
certificate of authentication substantially in the form set forth in Exhibit A
or Exhibit C, as applicable, executed by the Institutional Trustee by manual
signature; such authentication shall constitute conclusive evidence that such
Trust Securities Certificate shall have been duly authenticated and delivered
hereunder. All Trust Securities Certificates shall be dated the date of their
authentication.
SECTION 5.04. REGISTRATION OF TRANSFER AND EXCHANGE OF PREFERRED
SECURITIES CERTIFICATES
The Securities Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 5.08, a Securities Register in which,
subject to such reasonable regulations as it may prescribe, the Securities
Registrar shall provide for the registration of Preferred Securities
Certificates and the Common Securities Certificates (subject to Section 5.10 in
the case of the Common Securities Certificates) and registration of transfers
and exchanges of Preferred
29
Securities Certificates as herein provided. The Institutional Trustee shall be
the initial Securities Registrar.
Upon surrender for registration of transfer of any Preferred Securities
Certificate at the office or agency maintained pursuant to Section 5.08, one or
more of the Regular Trustees shall execute, and the Institutional Trustee shall
authenticate and deliver in the name of the designated transferee or transferees
one or more new Preferred Securities Certificates in authorized denominations of
a like aggregate Liquidation Amount dated the date of authentication by the
Institutional Trustee. The Securities Registrar shall not be required to
register the transfer of any Preferred Securities that have been called for
redemption. At the option of a Holder, Preferred Securities Certificates may be
exchanged for other Preferred Securities Certificates in authorized
denominations of the same class and of a like aggregate Liquidation Amount upon
surrender of the Preferred Securities Certificates to be exchanged at the office
or agency maintained pursuant to Section 5.08.
Every Preferred Securities Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied by a written
instrument of transfer in form satisfactory to the Trustees and the Securities
Registrar duly executed by the Holder or his attorney duly authorized in
writing. Each Preferred Securities Certificate surrendered for registration of
transfer or exchange shall be canceled and subsequently disposed of by the
Securities Registrar in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Preferred Securities Certificates, but the Securities Registrar or
the Regular Trustees may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer or
exchange of Preferred Securities Certificates.
SECTION 5.05. MUTILATED, DESTROYED, LOST OR STOLEN TRUST
SECURITIES CERTIFICATES
If (a) any mutilated Trust Securities Certificate shall be surrendered to
the Securities Registrar, or if the Securities Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate and (b) there shall be delivered to the Securities Registrar and the
Regular Trustees such security or indemnity as may be required by them to save
each of them harmless, then in the absence of notice that such Trust Securities
Certificate shall have been acquired by a bona fide purchaser, the Regular
Trustees or any one of them on behalf of the Trust shall execute, and the
Institutional Trustee shall authenticate and make available for delivery, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Securities Certificate, a new Trust Securities Certificate of like class, tenor
and denomination. In connection with the issuance of any new Trust Securities
Certificate under this Section, the Regular Trustees or the Securities Registrar
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection therewith. Any duplicate
Trust Securities Certificate issued pursuant to this Section shall constitute
conclusive evidence of an ownership interest in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Trust Securities
Certificate shall be found at any time.
30
SECTION 5.06. PERSONS DEEMED SECURITYHOLDERS
Prior to due presentation of a Trust Securities Certificate for
registration of transfer, the Trustees or the Securities Registrar shall treat
the Person in whose name any Trust Securities Certificate shall be registered in
the Securities Register as the owner of such Trust Securities Certificate for
the purpose of receiving Distributions (subject to Section 4.01(d)) and for all
other purposes whatsoever, and neither the Trustees nor the Securities Registrar
shall be bound by any notice to the contrary.
SECTION 5.07. ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES
In the event that the Institutional Trustee is no longer the Securities
Registrar, the Regular Trustees shall furnish or cause to be furnished to (i)
the Sponsor and the Institutional Trustee semi-annually, not later than _____
and _____ in each year, and (ii) the Sponsor or the Institutional Trustee, as
the case may be, within 15 days after receipt by any Regular Trustee of a
request therefor from the Sponsor or the Institutional Trustee, as the case may
be, in writing, a list, in such form as the Sponsor or the Institutional
Trustee, as the case may be, may reasonably require, of the names and addresses
of the Securityholders as of a date not more than 15 days prior to the time such
list is furnished. If three or more Securityholders or one or more Holders of
Trust Securities Certificates evidencing not less than 25% of the outstanding
Liquidation Amount apply in writing to the Regular Trustees, and such
application states that the applicants desire to communicate with other
Securityholders with respect to their rights under this Declaration or under the
Trust Securities Certificates and such application is accompanied by a copy of
the communication that such applicants propose to transmit, then the Regular
Trustees shall, within five Business Days after the receipt of such application,
afford such applicants access during normal business hours to the current list
of Securityholders. Each Holder, by receiving and holding a Trust Securities
Certificate, shall be deemed to have agreed not to hold the Sponsor, the
Institutional Trustee or the Regular Trustees accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 5.08. MAINTENANCE OF OFFICE OR AGENCY
The Regular Trustees shall maintain in the Borough of Manhattan, New
York, an office or offices or agency or agencies where Preferred Securities
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Trustees in respect of the Trust
Securities Certificates may be served. The Regular Trustees initially designate
Union Bank of California, N.A., 475 Sansome Street, 12th Floor, San Francisco,
California 94111, as its principal agency for such purposes. The Regular
Trustees shall give prompt written notice to the Sponsor and to the
Securityholders of any change in the location of the Securities Register or any
such office or agency.
SECTION 5.09. APPOINTMENT OF PAYING AGENT
The Paying Agent shall make Distributions and other payments provided
hereby to Securityholders from the Payment Account and shall report the amounts
of such Distributions and payments to the Institutional Trustee and the Regular
Trustees. Any Paying Agent shall
31
have the revocable power to withdraw funds from the Payment Account for the
purpose of making the Distributions and payments provided hereby. The Regular
Trustees may revoke such power and remove the Paying Agent if such Trustees
determine in their sole discretion that the Paying Agent shall have failed to
perform its obligations under this Agreement in any material respect, provided
that such revocation and removal shall not become effective until the
appointment of a successor. The Paying Agent shall initially be the
Institutional Trustee, and it may choose any co-paying agent that is acceptable
to the Regular Trustees and the Sponsor. Any Person acting as Paying Agent shall
be permitted to resign as Paying Agent upon 30 days' written notice to the
Regular Trustees and the Institutional Trustee, provided that such resignation
shall not become effective until the appointment of a successor. In the event
that a Paying Agent shall resign or be removed, the Institutional Trustee shall
appoint a successor that is acceptable to the Regular Trustees to act as Paying
Agent (which shall be a bank or trust company). The Institutional Trustee shall
cause such successor Paying Agent or any additional Paying Agent appointed by
the Institutional Trustee to execute and deliver to the Trustees an instrument
in which such successor Paying Agent or additional Paying Agent shall agree with
the Trustees that as Paying Agent, such successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the
Securityholders in trust for the benefit of the Securityholders entitled thereto
until such sums shall be paid to such Securityholders. The Paying Agent shall
return all unclaimed funds to the Institutional Trustee and upon removal of a
Paying Agent such Paying Agent shall also return all funds in its possession to
the Institutional Trustee. The provisions of Sections 8.01, 8.03 and 8.06 shall
apply to the Institutional Trustee also in its role as Paying Agent, for so long
as the Institutional Trustee shall act as Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Agreement to the Paying Agent shall include any co-paying agent unless the
context requires otherwise.
SECTION 5.10. OWNERSHIP OF COMMON SECURITIES BY SPONSOR
On the Issue Date, the Sponsor shall acquire, and thereafter retain,
beneficial and record ownership of the Common Securities. To the fullest extent
permitted by law, any attempted transfer of the Common Securities, except for
transfers by operation of law or to an Affiliate of the Sponsor or a permitted
successor under Article Ten of the Subordinated Indenture, shall be void. The
Regular Trustees shall cause each Common Securities Certificate issued to the
Sponsor to contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT
AS PROVIDED IN THE DECLARATION OF TRUST REFERRED TO HEREIN".
SECTION 5.11. BOOK-ENTRY PREFERRED SECURITIES CERTIFICATES; COMMON
SECURITIES CERTIFICATE
(a) The Preferred Securities Certificates, upon original
issuance, will be issued in the form of a typewritten global Preferred
Securities Certificate or Certificates representing Book-Entry Preferred
Securities Certificates, to be delivered to The Depository Trust Company, the
initial Clearing Agency, or its custodian, by or on behalf of, the Trust. Such
Preferred Securities Certificate or Certificates shall initially be registered
on the Securities Register in the name of Cede & Co., the nominee of the initial
Clearing Agency, and no Owner will receive a definitive Preferred Securities
Certificate representing such beneficial owner's
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interest in such Preferred Securities, except as provided in Section 5.13.
Unless and until Definitive Preferred Securities Certificates have been issued
to Owners pursuant to Section 5.13:
(i) the provisions of this Section 5.11(a) shall be in
full force and effect;
(ii) the Securities Registrar and the Trustees shall be
entitled to deal with the Clearing Agency for all purposes of this
Declaration relating to the Book-Entry Preferred Securities
Certificates (including the payment of principal of and
Distributions on the Book-Entry Preferred Securities and the
giving of instructions or directions to Owners of Book-Entry
Preferred Securities) as the sole Holder of Book-Entry Preferred
Securities and shall have no obligations to the Owners thereof;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Declaration, the
provisions of this Section shall control; and
(iv) the rights of the Owners of the Book-Entry Preferred
Securities Certificates shall be exercised only through the
Clearing Agency and shall be limited to those established by law
and agreements between such Owners and the Clearing Agency and/or
the Clearing Agency Participants. Pursuant to the Certificate
Depository Agreement, unless and until Definitive Preferred
Securities Certificates are issued pursuant to Section 5.13, the
Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments on the
Preferred Securities to such Clearing Agency Participants.
(v) The Clearing Agency will make book-entry transfers
among the Clearing Agency Participants; provided, that solely for
the purposes of determining whether the Holders of the requisite
amount of Preferred Securities have voted on any matter provided
for in this Declaration, so long as Definitive Preferred
Securities Certificates have not been issued, the Trustees may
conclusively rely on, and shall be fully protected in relying on,
any written instrument (including a proxy) delivered to the
Trustees by the Clearing Agency setting forth the Owners' votes or
assigning the right to vote on any matter to any other Person
either in whole or in part.
(b) A single Common Securities Certificate representing the
Common Securities shall be issued to the Sponsor in the form of a definitive
Common Securities Certificate.
SECTION 5.12. NOTICES TO CLEARING AGENCY
To the extent a notice or other communication to the Owners is required
under this Declaration, unless and until Definitive Preferred Securities
Certificates shall have been issued to Owners pursuant to Section 5.13, the
Trustees shall give all such notices and communications
33
specified herein to be given to Owners to the Clearing Agency, and shall have no
obligations to the Owners.
SECTION 5.13. DEFINITIVE PREFERRED SECURITIES CERTIFICATES
If (i) the Sponsor advises the Trustees in writing that the Clearing
Agency is no longer willing or able to properly discharge its responsibilities
with respect to the Preferred Securities Certificates, and the Sponsor is unable
to locate a qualified successor within 90 days, or (ii) the Sponsor at its
option advises the Trustees in writing that it elects to terminate the
book-entry system through the Clearing Agency, then the Regular Trustees shall
notify the Clearing Agency and Holders of the Preferred Securities. Upon
surrender to the Regular Trustees of the typewritten Preferred Securities
Certificate or Certificates representing the Book-Entry Preferred Securities
Certificates by the Clearing Agency, accompanied by registration instructions,
the Regular Trustees or any one of them shall execute, and the Institutional
Trustee shall authenticate, the Definitive Preferred Securities Certificates in
accordance with the instructions of the Clearing Agency. Neither the Securities
Registrar nor the Trustees shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Preferred Securities
Certificates, the Trustees shall recognize the Holders of the Definitive
Preferred Securities Certificates as Securityholders. The Definitive Preferred
Securities Certificates shall be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the Regular
Trustees, as evidenced by the execution thereof by the Regular Trustees or any
one of them.
SECTION 5.14. RIGHTS OF SECURITYHOLDERS
The legal title to the Trust Property is vested exclusively in the
Institutional Trustee (in its capacity as such) in accordance with Section 2.09,
and the Securityholders shall not have any right or title therein other than an
undivided beneficial interest in the assets of the Trust conferred by their
Trust Securities, and they shall have no right to call for any partition or
division of property, profits or rights of the Trust except as described below.
The Trust Securities shall be personal property giving only the rights
specifically set forth therein and in this Declaration. The Trust Securities
shall have no preemptive or other similar rights and when issued and delivered
to Securityholders against payment of the purchase price therefor, except as
otherwise provided in the Expense Agreement and Section 11.01 hereof, will be
fully paid and nonassessable by the Trust. Except as otherwise provided in the
Expense Agreement and Section 11.01 hereof, the Holders of the Trust Securities
shall be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware.
ARTICLE VI
ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 6.01. LIMITATIONS ON VOTING RIGHTS
(a) Except as provided in this Section, in Section 2.10, in
Section 8.10 or in Section 11.03 of this Declaration, in the Subordinated
Indenture, and as otherwise required by
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law, no Holder of Preferred Securities shall have any right to vote or in any
manner otherwise control the administration, operation and management of the
Trust or the obligations of the parties hereto, nor shall anything herein set
forth, or contained in the terms of the Trust Securities Certificates, be
construed so as to constitute the Securityholders from time to time as partners
or members of an association.
(b) So long as any Subordinated Debt Securities are held by the
Institutional Trustee on behalf of the Trust, the Institutional Trustee shall
not (i) direct the time, method and place of conducting any proceeding for any
remedy available to the Indenture Trustee, or execute any trust or power
conferred on the Institutional Trustee with respect to such Subordinated Debt
Securities; (ii) waive any past default that may be waived under Section 713 of
the Subordinated Indenture; (iii) exercise any right to rescind or annul a
declaration that the principal of all the Subordinated Debt Securities shall be
due and payable; or (iv) consent to any amendment, modification or termination
of the Subordinated Indenture or the Subordinated Debt Securities, where such
consent shall be required, without, in each case, obtaining the prior approval
of the Holders of at least a Majority in Liquidation Amount of the Preferred
Securities; provided, however, that where a consent under the Subordinated
Indenture would require the consent of each holder of Subordinated Debt
Securities affected thereby, no such consent shall be given by the Institutional
Trustee without the prior written consent of each Holder of Preferred
Securities. The Institutional Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of Preferred Securities, except
by a subsequent vote of the Holders of Preferred Securities. Subject to Section
8.02, the Institutional Trustee shall notify all Holders of the Preferred
Securities of any notice of default received with respect to the Subordinated
Debt Securities. In addition to obtaining the foregoing approvals of the Holders
of the Preferred Securities, prior to taking any of the foregoing actions, the
Institutional Trustee shall, at the expense of the Sponsor, obtain an Opinion of
Counsel experienced in such matters to the effect that such action will not
cause the Trust to be taxable other than as a grantor trust for United States
federal income tax purposes.
(c) If any proposed amendment to the Declaration provides for,
or the Trust otherwise proposes to effect, (i) any action that would adversely
affect in any material respect the interests, powers, preferences or special
rights of the Preferred Securities, whether by way of amendment to the
Declaration or otherwise, or (ii) the dissolution, winding-up or termination of
the Trust, other than pursuant to the terms of this Declaration, then the
Holders of Outstanding Trust Securities as a class will be entitled to vote on
such amendment or proposal and such amendment or proposal shall not be effective
except with the approval of the Holders of at least a Majority in Liquidation
Amount of the Preferred Securities; except as otherwise provided in Section
11.03(c). Notwithstanding any other provision of this Declaration, no amendment
to this Declaration may be made if, as a result of such amendment, it would
cause the Trust to be taxable other than as a grantor trust for United States
federal income tax purposes.
(d) Holders of a Majority in Liquidation Amount of the
Preferred Securities may, on behalf of the Holders of all the Preferred
Securities, waive any past Event of Default and its consequences, except a
default described in clause (b) or (c) of the definition of "Event of Default"
contained in Section 1.01, a default in respect of a covenant or provision which
under this Declaration cannot be modified or amended without the consent of the
Holder of each
35
Outstanding Preferred Security or an Indenture Event of Default that the Holders
of a Majority in Liquidation Amount of the Preferred Securities would not be
entitled to waive pursuant to Section 6.01(e).
Upon any such waiver, any such Event of Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Declaration; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon. Any waiver by the Holders of the Preferred Securities of an Event of
Default with respect to Preferred Securities shall also be deemed to constitute
a waiver by the Holders of Common Securities for all purposes of the Declaration
without any further act, vote or consent of the Holders of Common Securities.
(e) For so long as any Preferred Securities remain Outstanding,
if, upon an Indenture Event of Default, the Indenture Trustee and the holders of
the outstanding Subordinated Debt Securities have failed to declare the
principal of all of the Subordinated Debt Securities to be immediately due and
payable, the Holders of at least 33% in aggregate Liquidation Amount of the
Preferred Securities then Outstanding shall have such right to make such
declaration by a notice in writing to the Institutional Trustee, the Sponsor and
the Indenture Trustee.
At any time after such a declaration of acceleration with respect to the
Subordinated Debt Securities has been made and before a judgment or decree for
payment of the money due has been obtained by the Indenture Trustee as provided
in the Subordinated Indenture, the Holders of a Majority in Liquidation Amount
of the Preferred Securities, by written notice to the Institutional Trustee, the
Sponsor and the Indenture Trustee, may rescind and annul such declaration and
its consequences if:
(i) the Sponsor has paid or deposited with the Indenture
Trustee a sum sufficient to pay
(1) all overdue installments of interest on all
of the Subordinated Debt Securities,
(2) the principal of any Subordinated Debt
Securities which have become due otherwise than by such
declaration of acceleration and interest thereon at the
rate borne by the Subordinated Debt Securities, and
(3) all sums paid or advanced by the Indenture
Trustee under the Subordinated Indenture and the reasonable
compensation, expenses, disbursements and advances of the
Indenture Trustee and the Institutional Trustee, their
agents and counsel; and
(ii) all Indenture Events of Default, other than the
non-payment of the principal of the Subordinated Debt Securities
which has become due solely by such acceleration, have been cured
or waived as provided in Section 713 of the Subordinated
Indenture.
36
The Holders of at least a Majority in Liquidation Amount of the Preferred
Securities may, on behalf of the Holders of all the Preferred Securities, waive
any past default under the Subordinated Indenture, except a default in the
payment of principal or interest (unless such default has been cured and a sum
sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Indenture Trustee) or
a default in respect of a covenant or provision which under the Subordinated
Indenture cannot be modified or amended without the consent of the holder of
each outstanding Subordinated Debt Securities. No such rescission shall affect
any subsequent default or impair any right consequent thereon.
Upon receipt by the Institutional Trustee of written notice declaring
such an acceleration, or rescission and annulment thereof, by Holders of the
Preferred Securities all or part of which is represented by Book-Entry Preferred
Securities Certificates, a record date shall be established for determining
Holders of Outstanding Preferred Securities entitled to join in such notice,
which record date shall be at the close of business on the day the Institutional
Trustee receives such notice. The Holders on such record date, or their duly
designated proxies, and only such Persons, shall be entitled to join in such
notice, whether or not such Holders remain Holders after such record date;
provided, that, unless such declaration of acceleration, or rescission and
annulment, as the case may be, shall have become effective by virtue of the
requisite percentage having joined in such notice prior to the day which is 90
days after such record date, such notice of declaration of acceleration, or
rescission and annulment, as the case may be, shall automatically and without
further action by any Holder be canceled and of no further effect. Nothing in
this paragraph shall prevent a Holder, or a proxy of a Holder, from giving,
after expiration of such 90-day period, a new written notice of declaration of
acceleration, or rescission and annulment thereof, as the case may be, that is
identical to a written notice which has been canceled pursuant to the proviso to
the preceding sentence, in which event a new record date shall be established
pursuant to the provisions of this Section 6.01(e).
(f) Except as set forth in Section 6.01(e) and Section 8.19,
the Holders of Preferred Securities shall have no right to exercise directly any
right or remedy available to the holders of, or in respect of, the Subordinated
Debt Securities.
The Holders of a Majority in Liquidation Amount of the Preferred
Securities at the time Outstanding shall have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power conferred on the
Institutional Trustee with respect to the Preferred Securities; provided,
however, that, the Institutional Trustee shall have the right to decline to
follow any such direction if the Institutional Trustee being advised by counsel
determines that the action so directed may not lawfully be taken, or if the
Institutional Trustee in good faith shall determine that the proceedings so
directed would be illegal or involve it in personal liability or be unduly
prejudicial to the rights of Holders of Preferred Securities not parties to such
direction, and provided further that nothing in this Declaration shall impair
the right of the Institutional Trustee to take any action deemed proper by the
Institutional Trustee and which is not inconsistent with such direction by such
Holders.
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SECTION 6.02. NOTICE OF MEETINGS
Notice of all meetings of the Holders of Preferred Securities, stating
the time, place and purpose of the meeting, shall be given by the Regular
Trustees pursuant to Section 11.08 to each Holder of Preferred Securities of
record, at his registered address, at least 15 days and not more than 90 days
before the meeting. At any such meeting, any business properly before the
meeting may be so considered whether or not stated in the notice of the meeting.
Any adjourned meeting may be held as adjourned without further notice.
SECTION 6.03. MEETINGS OF HOLDERS OF PREFERRED SECURITIES
No annual meeting of Securityholders is required to be held. The Regular
Trustees, however, shall call a meeting of Securityholders to vote on any matter
upon the written request of the Holders of Preferred Securities of record of at
least 33% of the Preferred Securities (based upon their Liquidation Amount) and
the Regular Trustees or the Institutional Trustee may, at any time in their
discretion, call a meeting of Holders of Preferred Securities to vote on any
matters as to which Holders of Preferred Securities are entitled to vote.
Holders of Preferred Securities of record of at least 50% of the
Preferred Securities (based upon their Liquidation Amount), present in person or
by proxy, shall constitute a quorum at any meeting of Holders of Preferred
Securities.
If a quorum is present at a meeting, an affirmative vote by the Holders
of Preferred Securities of record present, in person or by proxy, holding more
than 66-2/3% of the Preferred Securities (based upon their Liquidation Amount)
held by the Holders of Preferred Securities of record present, either in person
or by proxy, at such meeting shall constitute the action of the Securityholders,
unless this Declaration requires a greater number of affirmative votes.
SECTION 6.04. VOTING RIGHTS
Securityholders shall be entitled to one vote for each $1,000 of
Liquidation Amount represented by their Trust Securities in respect of any
matter as to which such Securityholders are entitled to vote; provided, however,
any Preferred Securities that are owned by the Company, the Institutional
Trustee or the Delaware Trustee will, for purposes of any vote or consent, be
treated as if they were not outstanding.
SECTION 6.05. PROXIES, ETC.
At any meeting of Securityholders, any Securityholder entitled to vote
may vote by proxy, provided that no proxy shall be voted at any meeting unless
it shall have been placed on file with the Regular Trustees, or with such other
officer or agent of the Trust as the Regular Trustees may direct, for
verification prior to the time at which such vote shall be taken. Pursuant to a
resolution of the Institutional Trustee, proxies may be solicited in the name of
the Institutional Trustee or one or more officers of the Institutional Trustee.
Only Securityholders of record shall be entitled to vote. When Trust Securities
are held jointly by several Persons, any one of them may vote at any meeting in
person or by proxy in respect of such Trust Securities, but if more than one of
them shall be present at such meeting in person or by proxy, and such
38
joint owners or their proxies so present disagree as to any vote to be cast,
such vote shall not be received in respect of such Trust Securities. A proxy
purporting to be executed by or on behalf of a Securityholder shall be deemed
valid unless challenged at or prior to its exercise, and the burden of proving
invalidity shall rest on the challenger. No proxy shall be valid more than three
years after its date of execution.
SECTION 6.06. SECURITYHOLDER ACTION BY WRITTEN CONSENT
Any action which may be taken by Securityholders at a meeting may be
taken without a meeting and without prior notice if Securityholders holding at
least 66-2/3% of all outstanding Trust Securities entitled to vote in respect of
such action (or such other proportion thereof as shall be required by any
express provision of this Declaration) shall consent to the action in writing
(based upon their Liquidation Amount).
SECTION 6.07. RECORD DATE FOR VOTING AND OTHER PURPOSES
For the purposes of determining the Securityholders who are entitled to
notice of and to vote at any meeting or by written consent, or to participate in
any Distribution on the Trust Securities in respect of which a record date is
not otherwise provided for in this Declaration, or for the purpose of any other
action, the Regular Trustees may from time to time fix a date, not more than 90
days prior to the date of any meeting of Securityholders or the payment of
Distribution or other action, as the case may be, as a record date for the
determination of the identity of the Securityholders of record for such
purposes.
SECTION 6.08. ACTS OF SECURITYHOLDERS
Any request, demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Declaration to be given, made or
taken by Securityholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Securityholders in
person or by an agent appointed in writing; and, except as otherwise expressly
provided herein, such action shall become effective when such instrument or
instruments are delivered to the Regular Trustees. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Securityholders signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Declaration and (subject to Section 8.01) conclusive in favor of the Trustees,
if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or writing,
or the authority of the Person executing the same, may also be proved in any
other manner which the Trustees deem sufficient.
39
The ownership of Preferred Securities shall be proved by the Securities
Register. Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder of every Trust
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
Without limiting the foregoing, a Securityholder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Amount of such Trust Security
or by one or more duly appointed agents each of which may do so pursuant to such
appointment with regard to all or any part of such Liquidation Amount.
If any dispute shall arise between the Securityholders and the Trustees
with respect to the authenticity, validity or binding nature of any request,
demand, authorization, direction, consent, waiver or other Act of such
Securityholder or Trustee under this Article VI, then the determination of such
matter by the Institutional Trustee shall be conclusive with respect to such
matter.
SECTION 6.09. INSPECTION OF RECORDS
Upon reasonable notice to the Trustees, the records of the Trust shall be
open to inspection by Securityholders during normal business hours for any
purpose reasonably related to such Securityholder's interest as a
Securityholder.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE TRUSTEES
SECTION 7.01. REPRESENTATIONS AND WARRANTIES OF THE TRUSTEES
The Bank, the Delaware Bank, the Institutional Trustee and the Delaware
Trustee, each on behalf of and as to itself, hereby represents and warrants for
the benefit of the Sponsor and the Securityholders that:
(a) the Bank is a banking corporation or trust company duly
organized, validly existing and in good standing under the laws of the United
States of America, and the Delaware Bank is a banking corporation or trust
company, duly organized, validly existing and in good standing under the laws of
the State of Delaware;
(b) each of the Bank and the Delaware Bank has full corporate
power, authority and legal right to execute, deliver and perform their
obligations under this Declaration and has taken all necessary action to
authorize the execution, delivery and performance by it of this Declaration;
40
(c) this Declaration has been duly authorized, executed and
delivered by each of the Bank and the Delaware Bank and constitutes the valid
and legally binding agreement of each of the Bank and the Delaware Bank,
enforceable against it in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles;
(d) the execution, delivery and performance by each of the Bank
and the Delaware Bank of this Declaration have been duly authorized by all
necessary corporate action on the part of the Bank, the Institutional Trustee,
the Delaware Bank and the Delaware Trustee and do not require any approval of
stockholders of the Bank or the Delaware Bank and such execution, delivery and
performance will not (i) violate the Bank's or the Delaware Bank's Charter or
By-laws, or (ii) violate any law, governmental rule or regulation of the United
States or the State of New York or Delaware, as the case may be, governing the
banking or trust powers of the Bank and the Institutional Trustee or the
Delaware Bank and the Delaware Trustee, or any order, judgment or decree
applicable to the Bank, the Institutional Trustee, the Delaware Bank or the
Delaware Trustee; and
(e) neither the authorization, execution or delivery by the
Bank or the Delaware Bank of this Declaration, nor the consummation of any of
the transactions by the Bank, the Institutional Trustee, the Delaware Bank or
the Delaware Trustee (as appropriate in context) contemplated herein or therein,
require the consent or approval of, the giving of notice to, the registration
with or the taking of any other action with respect to any governmental
authority or agency under any existing federal, New York or Delaware law
governing the banking or trust powers of the Bank or the Delaware Bank.
ARTICLE VIII
THE TRUSTEES
SECTION 8.01. CERTAIN DUTIES AND RESPONSIBILITIES
(a) The rights, duties and responsibilities of the Trustees
shall be as provided by this Declaration and, in the case of the Institutional
Trustee, the Trust Indenture Act. The Institutional Trustee, other than during
the occurrence and continuation of an Event of Default, undertakes to perform
only such duties as are specifically set forth in this Declaration and, upon an
Event of Default, must exercise the same degree of care and skill as a prudent
person would exercise or use in the conduct of his/her own affairs. The Trustees
shall have all the privileges, rights and immunities provided by the Delaware
Statutory Trust Act. Notwithstanding the foregoing, no provision of this
Declaration shall require the Trustees to expend or risk their own funds or
otherwise incur any financial liability in the performance of any of their
duties hereunder, or in the exercise of any of their rights or powers, if they
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured to
them. Whether or not therein expressly so provided, every provision of this
Declaration relating to the conduct or affecting the liability of or affording
protection to the Trustees shall be subject to the provisions of this Section.
To the extent that, at law or in equity, each Trustee has duties (including
fiduciary duties) and liabilities relating
41
thereto to the Trust or to the Securityholders, each Trustee shall not be liable
to the Trust or to any Securityholder for such Trustee's good faith reliance on
the provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of each Trustee otherwise
existing at law or in equity, are agreed by the Sponsor and the Securityholders
to replace such other duties and liabilities of such Trustee.
(b) All payments made by the Institutional Trustee in respect
of the Trust Securities shall be made only from the income and proceeds from the
Trust Property and only to the extent that there shall be sufficient income or
proceeds from the Trust Property to enable the Institutional Trustee to make
payments in accordance with the terms hereof. Each Securityholder, by its
acceptance of a Trust Security, agrees that it will look solely to the income
and proceeds from the Trust Property to the extent available for distribution to
it as herein provided and that the Trustees are not personally liable to it for
any amount distributable in respect of any Trust Security or for any other
liability in respect of any Trust Security. This Section 8.01(b) does not limit
the liability of the Trustees expressly set forth elsewhere in this Declaration
or, in the case of the Institutional Trustee, in the Trust Indenture Act.
SECTION 8.02. NOTICE OF DEFAULTS
Within 90 days after the occurrence of any default, the Institutional
Trustee shall transmit, in the manner and to the extent provided in Section
11.08, notice of any default actually known to the Institutional Trustee to the
Securityholders, the Regular Trustees and the Sponsor, unless such default shall
have been cured or waived before the giving of such notice, provided that the
Institutional Trustee shall be protected in withholding such notice if and so
long as the board of directors, the executive committee, or a trust committee of
directors and/or responsible officers of the Institutional Trustee in good faith
determines that the withholding of such notice is in the interests of the
Securityholders. For the purpose of this Section, the term "default" means any
event which is, or after notice or lapse of time or both would become, an Event
of Default.
SECTION 8.03. CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE
Subject to the provisions of Section 8.01 and except as provided by law:
(a) the Institutional Trustee may rely and shall be protected
in acting or refraining from acting in good faith upon any resolution, Opinion
of Counsel, certificate, written representation of a Holder or transferee,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond or other paper
or document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(b) if (i) in performing its duties under this Declaration the
Institutional Trustee is required to decide between alternative courses of
action, or (ii) in construing any of the provisions in this Declaration the
Institutional Trustee finds the same ambiguous or inconsistent with any other
provisions contained herein, or (iii) the Institutional Trustee is unsure of the
application of any provision of this Declaration, then, except as to any matter
as to which the Holders of Preferred Securities are entitled to vote under the
terms of this Declaration, the
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Institutional Trustee shall deliver a notice to the Sponsor requesting written
instructions of the Sponsor as to the course of action to be taken. The
Institutional Trustee shall take such action, or refrain from taking such
action, as the Institutional Trustee shall be instructed in writing to take, or
to refrain from taking, by the Sponsor; provided, however, that if the
Institutional Trustee does not receive such instructions of the Sponsor within
ten Business Days after it has delivered such notice, or such reasonably shorter
period of time set forth in such notice (which to the extent practicable shall
not be less than two Business Days), it may, but shall be under no duty to, take
or refrain from taking such action not inconsistent with this Declaration as it
shall deem advisable and in the best interests of the Securityholders, in which
event the Institutional Trustee shall have no liability except for its own bad
faith, negligence or willful misconduct;
(c) the Institutional Trustee may consult with counsel or other
experts of its selection and the written advice of such counsel or other experts
or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(d) the Institutional Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration at the
request or direction of any of the Securityholders pursuant to this Declaration,
unless such Securityholders shall have offered to the Institutional Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with such request or direction;
(e) the Institutional Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other document, but the Institutional Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit;
(f) the Institutional Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys; provided that the Institutional Trustee shall
be responsible for its own negligence or recklessness with respect to selection
of any agent or attorney appointed by it hereunder;
(g) the Institutional Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith and
reasonably believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Declaration;
(h) the Institutional Trustee shall not be deemed to have
notice of any default or Event of Default unless an officer of the Institutional
Trustee assigned to its Corporate Trust Division has actual knowledge thereof or
unless written notice of any event which is in fact such a default is received
by the Institutional Trustee at its corporate trust office, and such notice
references the Trust Securities and this Declaration; and
(i) the rights, privileges, protections, immunities and
benefits given to the Institutional Trustee, including, without limitation, its
right to be indemnified, are extended to, and shall be enforceable by, the
Institutional Trustee in each of its respective capacities hereunder, and to
each agent, custodian and other Person employed to act hereunder.
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SECTION 8.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Trust, and the Trustees do not assume
any responsibility for their correctness. The Trustees shall not be accountable
for the use or application by the Trust of the proceeds of the Trust Securities
in accordance with Section 2.05.
The Institutional Trustee may conclusively assume that any funds held by
it hereunder are legally available unless an officer of the Institutional
Trustee assigned to its Institutional Trust Services Department shall have
received written notice from the Company, any Holder or any other Trustee that
such funds are not legally available.
The Institutional Trustee makes no representations as to the value or
condition of the property of the Trust or any part thereof. The Institutional
Trustee makes no representations as to the validity or sufficiency of this
Declaration or the Trust Securities.
SECTION 8.05. MAY HOLD SECURITIES
Any Trustee or any other agent of the Trustees or the Trust, in its
individual or any other capacity, and except as provided in the definition of
the term "Outstanding" in Article I, may become the owner or pledgee of Trust
Securities and may otherwise deal with the Trust with the same rights it would
have if it were not a Trustee or such other agent.
SECTION 8.06. COMPENSATION; FEES; INDEMNITY
The Sponsor, as obligor of the Subordinated Debt Securities, agrees:
(a) to pay to the Trustees from time to time reasonable
compensation for all services rendered by the Trustees hereunder (which
compensation shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse
the Trustees upon request for all reasonable expenses, disbursements and
advances incurred or made by the Trustees in accordance with any provision of
this Declaration (including the reasonable compensation and the expenses and
disbursements of their agents and counsel), except any such expense,
disbursement or advance as may be attributable to their willful misconduct,
negligence or bad faith (or, in the case of the Delaware Trustee, any such
expense, disbursement or advance as shall have been caused by his/her own gross
negligence); and
(c) to indemnify each of the Trustees for, and to hold each of
the Trustees harmless against, any and all loss, damage, claims, liability or
expense incurred without willful misconduct, negligence (gross negligence, in
the case of the Delaware Trustee) or bad faith on their part, arising out of or
in connection with the acceptance or administration of this Declaration,
including the costs and expenses of defending themselves against any claim
(whether by the Sponsor, any Securityholder or any other person) or liability in
connection with the exercise or performance of any of their powers or duties
hereunder.
The provisions of this Section 8.06 shall survive the termination of this
Declaration.
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SECTION 8.07. TRUSTEES REQUIRED; ELIGIBILITY
(a) There shall at all times be an Institutional Trustee
hereunder with respect to the Trust Securities. The Institutional Trustee shall
be a Person that has a combined capital and surplus of at least $50,000,000. If
any such Person publishes reports of condition at least annually, pursuant to
law or to the requirements of its supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Institutional
Trustee with respect to the Trust Securities shall cease to be eligible in
accordance with the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this Article.
(b) There shall at all times be one or more Regular Trustees
hereunder with respect to the Trust Securities. Each Regular Trustee shall be
either a natural person who is at least 21 years of age or a legal entity that
shall act through one or more persons authorized to bind such entity.
(c) There shall at all times be a Delaware Trustee with respect
to the Trust Securities. The Delaware Trustee shall either be (i) a natural
person who is at least 21 years of age and a resident of the State of Delaware
or (ii) a legal entity authorized to conduct a trust business and with its
principal place of business in the State of Delaware that shall act through one
or more persons authorized to bind such entity.
SECTION 8.08. CONFLICTING INTERESTS
If the Institutional Trustee has or shall acquire a conflicting interest
within the meaning of the Trust Indenture Act, the Institutional Trustee shall
either eliminate such interest or resign, to the extent and in the manner
provided by, and subject to the provisions of, the Trust Indenture Act and this
Declaration. To the extent permitted by the Trust Indenture Act, the
Institutional Trustee shall not be deemed to have a conflicting interest by
virtue of being trustee under the Guarantee.
SECTION 8.09. CO-TRUSTEES AND SEPARATE TRUSTEE
At any time or times, for the purpose of meeting the legal requirements
of the Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Holder of the Common Securities and the
Institutional Trustee shall have power to appoint, and upon the written request
of the Institutional Trustee, the Sponsor shall for such purpose join with the
Institutional Trustee in the execution, delivery and performance of all
instruments and agreements necessary or proper to appoint, one or more Persons
approved by the Institutional Trustee either to act as co-trustee, jointly with
the Institutional Trustee, of all or any part of such Trust Property, or to act
as separate trustee of any such Trust Property, in either case with such powers
as may be provided in the instrument of appointment, and to vest in such Person
or Persons in the capacity aforesaid, any property, title, right or power deemed
necessary or desirable, subject to the other provisions of this Section. If the
Sponsor does not join in such appointment within 15 days after the receipt by it
of a request so to do, or in case an Indenture Event of Default has occurred and
is continuing, the Institutional Trustee alone shall have power
45
to make such appointment. Any co-trustee or separate trustee appointed pursuant
to this Section shall satisfy the requirements of Section 8.07.
Should any written instrument from the Sponsor be required by any
co-trustee or separate trustee so appointed for more fully confirming to such
co-trustee or separate trustee such property, title, right, or power, any and
all such instruments shall, on request, be executed, acknowledged, and delivered
by the Sponsor.
Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to the following terms,
namely:
(i) The Trust Securities shall be executed,
authenticated and delivered and all rights, powers, duties, and
obligations hereunder in respect of the custody of securities,
cash and other personal property held by, or required to be
deposited or pledged with, the Trustees hereunder, shall be
exercised, solely by the Trustees.
(ii) The rights, powers, duties, and obligations hereby
conferred or imposed upon the Institutional Trustee in respect of
any property covered by such appointment shall be conferred or
imposed upon and exercised or performed by the Institutional
Trustee or by the Institutional Trustee and such co-trustee or
separate trustee jointly, as shall be provided in the instrument
appointing such co-trustee or separate trustee, except to the
extent that under any law of any jurisdiction in which any
particular act is to be performed, the Institutional Trustee shall
be incompetent or unqualified to perform such act, in which event
such rights, powers, duties, and obligations shall be exercised
and performed by such co-trustee or separate trustee.
(iii) The Institutional Trustee, at any time, by an
instrument in writing executed by it, with the written concurrence
of the Sponsor, may accept the resignation of or remove any
co-trustee or separate trustee appointed under this Section, and,
in case an Indenture Event of Default has occurred and is
continuing, the Institutional Trustee shall have power to accept
the resignation of, or remove, any such co-trustee or separate
trustee without the concurrence of the Sponsor. Upon the written
request of the Institutional Trustee, the Sponsor shall join with
the Institutional Trustee in the execution, delivery, and
performance of all instruments and agreements necessary or proper
to effectuate such resignation or removal. A successor to any
co-trustee or separate trustee so resigned or removed may be
appointed in the manner provided in this Section.
(iv) No co-trustee or separate trustee hereunder shall be
personally liable by reason of any act or omission of the
Institutional Trustee, or any other such trustee hereunder.
(v) The Trustees shall not be liable by reason of any
act of a co-trustee or separate trustee.
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(vi) Any Act of Holders delivered to the Institutional
Trustee shall be deemed to have been delivered to each such
co-trustee and separate trustee.
SECTION 8.10. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR
No resignation or removal of any Trustee (the "Relevant Trustee") and no
appointment of a successor Relevant Trustee pursuant to this Article shall
become effective until the acceptance of appointment by the successor Relevant
Trustee in accordance with the applicable requirements of Section 8.11.
The Relevant Trustee may resign at any time by giving written notice
thereof to the Securityholders, the Sponsor and the other Trustees, except that
notice is only required to be delivered to the Securityholders in the event that
the Institutional Trustee or the Delaware Trustee is the resigning Relevant
Trustee. If the instrument of acceptance by a successor Relevant Trustee
required by Section 8.11 shall not have been delivered to the resigning Relevant
Trustee within 30 days after the giving of such notice of resignation, the
resigning Relevant Trustee may petition any court of competent jurisdiction for
the appointment of a successor Relevant Trustee.
Unless an Indenture Event of Default shall have occurred and be
continuing, the Relevant Trustee may be removed at any time by Act of the Holder
of the Common Securities. If an Indenture Event of Default shall have occurred
and be continuing, the Relevant Trustee may be removed at such time by Act of
the Securityholders of a Majority in Liquidation Amount of the Preferred
Securities, delivered to the Relevant Trustee (in its individual capacity and on
behalf of the Trust).
If the Relevant Trustee shall resign, be removed or become incapable of
continuing to act as Trustee at a time when no Indenture Event of Default shall
have occurred and be continuing, the Holder of the Common Securities, by Act of
the Holder of the Common Securities delivered to the retiring and successor
Relevant Trustees, shall promptly appoint a successor Relevant Trustee or
Trustees, and the retiring Relevant Trustee shall comply with the applicable
requirements of Section 8.11. If the Relevant Trustee shall resign, be removed
or become incapable of continuing to act as the Relevant Trustee at a time when
an Indenture Event of Default shall have occurred and be continuing, the Holders
of Preferred Securities, by Act of the Securityholders of a Majority in
Liquidation Amount of the Preferred Securities then outstanding delivered to the
retiring and successor Relevant Trustee, shall promptly appoint a successor
Relevant Trustee or Trustees, and the Relevant Trustee shall comply with the
applicable requirements of Section 8.11. If no successor Relevant Trustee shall
have been so appointed in accordance with this Section 8.10 and accepted
appointment in the manner required by Section 8.11, any Securityholder who has
been a Securityholder of Trust Securities for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Relevant Trustee.
The retiring Relevant Trustee shall give notice of each resignation and
each removal of the Relevant Trustee, and each appointment of a successor
Trustee to all Securityholders in the manner provided in Section 11.08 and shall
give notice to the Sponsor, except that notice is only required to be delivered
to the Securityholders in the event that the Institutional Trustee or the
47
Delaware Trustee is the resigning or removed Relevant Trustee. Each notice shall
include the name of the successor Relevant Trustee and the address of its
corporate trust office if it is the Institutional Trustee.
Notwithstanding the foregoing or any other provision of this Declaration,
in the event any Regular Trustee or a Delaware Trustee who is a natural person
dies or becomes incompetent or incapacitated, the vacancy created by such death,
incompetence or incapacity may be filled by (i) the act of the remaining Regular
Trustee or (ii) otherwise by the Sponsor (with the successor in each case being
an individual who satisfies the eligibility requirement for Regular Trustees set
forth in Section 8.07). Additionally, notwithstanding the foregoing or any other
provision of this Declaration, in the event the Sponsor believes that any
Regular Trustee has become incompetent or incapacitated, the Sponsor, by notice
to the remaining Trustees, may terminate the status of such Person as an Regular
Trustee (in which case the vacancy so created will be filled in accordance with
the preceding sentence).
SECTION 8.11. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR
In case of the appointment hereunder of a successor Relevant Trustee,
every such successor Relevant Trustee so appointed shall execute, acknowledge
and deliver to the Trust and to the retiring Relevant Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Relevant Trustee shall become effective and such successor Relevant
Trustee, without any further act, deed or conveyance, shall become vested with
all the rights, powers, trusts and duties of the retiring Relevant Trustee; but,
on the request of the Sponsor or the successor Relevant Trustee, such retiring
Relevant Trustee shall, upon payment of its charges, execute and deliver an
instrument transferring to such successor Relevant Trustee all the rights,
powers and trusts of the retiring Relevant Trustee and shall duly assign,
transfer and deliver to such successor Relevant Trustee all property and money
held by such retiring Relevant Trustee hereunder.
Upon request of any such successor Relevant Trustee, the retiring
Relevant Trustee shall execute any and all instruments for more fully and
certainly vesting in and confirming to such successor Relevant Trustee all such
rights, powers and trusts referred to in the preceding paragraph.
No successor Relevant Trustee shall accept its appointment unless at the
time of such acceptance such successor Relevant Trustee shall be qualified and
eligible under this Article.
SECTION 8.12. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS
Any Person into which the Institutional Trustee, Delaware Trustee or any
Regular Trustee which is not a natural person may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which such Relevant Trustee shall be a party, or
any Person succeeding to all or substantially all the corporate trust business
of such Relevant Trustee, shall be the successor of such Relevant Trustee
hereunder; provided such Person shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto.
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SECTION 8.13. PREFERENTIAL COLLECTION OF CLAIMS AGAINST SPONSOR OR
TRUST
If and when the Institutional Trustee shall be or become a creditor of
the Sponsor or the Trust (or any other obligor upon the Subordinated Debt
Securities or the Trust Securities), the Institutional Trustee shall be subject
to the provisions of the Trust Indenture Act regarding the collection of claims
against the Sponsor or Trust (or any such other obligor). For purposes of
Section 311(b)(4) and (6) of the Trust Indenture Act:
(a) "cash transaction" means any transaction in which full
payment for goods or securities sold is made within seven days after delivery of
the goods or securities in currency or in checks or other orders drawn upon
banks or bankers and payable upon demand; and
(b) "self-liquidating paper" means any draft, bill of exchange,
acceptance or obligation which is made, drawn, negotiated or incurred by the
Sponsor or the Trust (or any such obligor) for the purpose of financing the
purchase, processing, manufacturing, shipment, storage or sale of goods, wares
or merchandise and which is secured by documents evidencing title to, possession
of, or a lien upon, the goods, wares or merchandise or the receivables or
proceeds arising from the sale of the goods, wares or merchandise previously
constituting the security; provided the security is received by the
Institutional Trustee simultaneously with the creation of the creditor
relationship with the Sponsor or the Trust (or any such obligor) arising from
the making, drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation.
SECTION 8.14. REPORTS BY INSTITUTIONAL TRUSTEE
(a) Within 60 days after _____ of each year commencing with
_____, 2004, if required by Section 313(a) of the Trust Indenture Act, the
Institutional Trustee shall transmit a brief report dated as of such _____ with
respect to any of the events specified in such Section 313(a) that may have
occurred since the later of the date of this Declaration or the preceding ____.
(b) The Institutional Trustee shall transmit to Securityholders
the reports required by Section 313(b) of the Trust Indenture Act at the times
specified therein.
(c) Reports pursuant to this Section shall be transmitted in
the manner and to the Persons required by Sections 313(c) and (d) of the Trust
Indenture Act.
SECTION 8.15. REPORTS TO THE INSTITUTIONAL TRUSTEE
The Sponsor and the Regular Trustees on behalf of the Trust shall provide
to the Institutional Trustee such documents, reports and information as required
by Section 314 of the Trust Indenture Act (if any) and, within 120 days after
the end of each fiscal year of the Sponsor, the compliance certificate required
by Section 314(a)(4) of the Trust Indenture Act in the form and in the manner
required by Section 314 of the Trust Indenture Act.
Delivery of such reports, information and documents to the Institutional
Trustee is for informational purposes only and the Institutional Trustee's
receipt of such shall not constitute
49
constructive notice of any information contained therein or determinable from
information contained therein.
SECTION 8.16. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT
Each of the Sponsor and the Regular Trustees on behalf of the Trust shall
provide to the Institutional Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Declaration, including an
Officers' Certificate and an Opinion of Counsel that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate
or opinion required to be given pursuant to Section 314(c) of the Trust
Indenture Act shall comply with Section 314(e) of the Trust Indenture Act.
SECTION 8.17. NUMBER OF TRUSTEES
(a) The number of Trustees shall initially be four; provided
that the Sponsor by written instrument may increase or decrease the number of
Regular Trustees.
(b) If a Trustee ceases to hold office for any reason and the
number of Regular Trustees is not reduced pursuant to Section 8.17(a), or if the
number of Trustees is increased pursuant to Section 8.17(a), a vacancy shall
occur. The vacancy shall be filled with a Trustee appointed in accordance with
Section 8.10.
(c) Except as provided in Section 9.02, the death, resignation,
retirement, removal, bankruptcy, incompetence or incapacity to perform the
duties of a Trustee shall not operate to annul, dissolve or terminate the Trust.
Whenever a vacancy in the number of Regular Trustees shall occur, until such
vacancy is filled by the appointment of an Regular Trustee in accordance with
Section 8.10, the Regular Trustees in office, regardless of their number (and
notwithstanding any other provision of this Declaration), shall have all powers
granted to the Regular Trustees and shall discharge the duties imposed upon the
Regular Trustees by this Declaration.
SECTION 8.18. DELEGATION OF POWER
(a) Any Regular Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purpose of executing any documents contemplated in Section
2.07(a), including any registration statement or amendment thereto filed with
the Commission, or making any other governmental filing; and
(b) The Regular Trustees shall have power to delegate from time
to time to such of their number the doing of such things and the execution of
such instruments either in the name of the Trust or the names of the Regular
Trustees or otherwise as the Regular Trustees may deem expedient, to the extent
such delegation is not prohibited by applicable law or contrary to the
provisions of the Trust, as set forth herein.
SECTION 8.19. ENFORCEMENT OF RIGHTS OF INSTITUTIONAL TRUSTEE BY
SECURITYHOLDERS
If (i) the Trust fails to pay Distributions in full on the Preferred
Securities for more than five consecutive years at any one time, or (ii) an
Event of Default occurs and is continuing, then
50
the Holders of Preferred Securities will rely on the enforcement by the
Institutional Trustee of its rights against the Company as the holder of the
Subordinated Debt Securities. In addition, the Holders of a majority in
aggregate Liquidation Amount of the Preferred Securities will have the right to
direct the time, method, and place of conducting any proceeding for any remedy
available to the Institutional Trustee or to direct the exercise of any trust or
power conferred upon the Institutional Trustee under this Declaration, including
the right to direct the Institutional Trustee to exercise the remedies available
to it as a holder of the Subordinated Debt Securities; provided that such
direction shall not be in conflict with any rule of law or with this
Declaration, and could not involve the Institutional Trustee in personal
liability in circumstances where reasonable indemnity would not be adequate. If
the Institutional Trustee fails to enforce its rights under the Subordinated
Debt Securities, a Holder of Preferred Securities may, to the fullest extent
permitted by applicable law, institute a legal proceeding against the Company to
enforce its rights under this Declaration without first instituting any legal
proceeding against the Institutional Trustee or any other Person, including the
Trust; it being understood and intended that no one or more of such Holders
shall have any right in any manner whatsoever by virtue of, or by availing of,
any provision of this Declaration to affect, disturb or prejudice the rights of
any other of such Holders or to obtain or to seek to obtain priority or
preference over any other of such Holders or to enforce any right under this
Declaration, except in the manner herein provided and for the equal and ratable
benefit of all such Holders. Notwithstanding the foregoing, a Holder of
Preferred Securities may institute a legal proceeding directly against the
Company, without first instituting a legal proceeding against or requesting or
directing that action be taken by the Institutional Trustee or any other Person,
for enforcement of payment to such Holder of principal of or interest on the
Subordinated Debt Securities having a principal amount equal to the aggregate
stated liquidation amount of the Preferred Securities of such Holder on or after
the due dates therefor specified or provided for in the Subordinated Debt
Securities. The Company shall be subrogated to all rights of the Holders of
Preferred Securities in respect of any amounts paid to such Holders by the
Company pursuant to this Section.
SECTION 8.20. DELAWARE TRUSTEE
(a) Notwithstanding any other provision of this Declaration,
the Delaware Trustee shall not be entitled to exercise any powers, nor shall the
Delaware Trustee have any of the duties and responsibilities of the Regular
Trustees or the Institutional Trustee described in this Declaration. The
Delaware Trustee shall be a trustee for the sole and limited purpose of
fulfilling the requirements of ss.3807 of the Delaware Statutory Trust Act.
(b) It is expressly understood and agreed by the parties hereto
that in fulfilling its obligations as Delaware Trustee hereunder on behalf of
the Trust (i) each of the representations, undertakings and agreements herein
made on the part of the Trust is made and intended not as representations,
warranties, covenants, undertakings and agreements by SunTrust Delaware Trust
Company in its individual capacity but is made and intended for the purpose of
binding only the Trust, and (ii) under no circumstances shall SunTrust Delaware
Trust Company in its individual capacity be personally liable for the payment of
any indebtedness or expenses of the Trust or be liable for the breach or failure
of any obligation, representation, warranty or covenant made or undertaken by
the Trust under this Declaration, except if such breach or failure is due to any
gross negligence or willful misconduct of the Delaware Trustee.
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ARTICLE IX
DISSOLUTION AND LIQUIDATION
SECTION 9.01. DISSOLUTION UPON EXPIRATION DATE
The Trust shall automatically dissolve on December 1, 2044 (the
"Expiration Date") or earlier pursuant to Section 9.02.
SECTION 9.02. EARLY TERMINATION
Upon the first to occur of any of the following events (such first
occurrence, an "Early Termination Event"), the Trust shall be dissolved in
accordance with the terms hereof:
(i) the occurrence of a Bankruptcy Event in respect of
the Sponsor, dissolution or liquidation of the Sponsor, or the
dissolution of the Trust pursuant to judicial decree;
(ii) the delivery of written direction to the
Institutional Trustee by the Sponsor at any time (which direction
is optional and wholly within the discretion of the Sponsor) to
dissolve the Trust and distribute the Subordinated Debt Securities
to Securityholders as provided in Section 9.04; and
(iii) the payment at maturity or redemption of all of the
Junior Subordinated Debt Securities, and the consequent redemption
of all of the Preferred Securities.
SECTION 9.03. TERMINATION
The respective obligations and responsibilities of the Trust and the
Trustees created hereby shall terminate upon the latest to occur of the
following: (a) the distribution by the Institutional Trustee to Securityholders
upon the liquidation of the Trust pursuant to Section 9.04 or 9.05, or upon the
redemption of all of the Trust Securities pursuant to Section 4.04, of all
amounts or instruments required to be distributed hereunder upon the final
payment of the Trust Securities; (b) the payment of any expenses owed by the
Trust; and (c) the discharge of all administrative duties of the Regular
Trustees, including the performance of any tax reporting obligations with
respect to the Trust or the Securityholders.
SECTION 9.04. LIQUIDATION
(a) If any Early Termination Event specified in clause (ii) of
Section 9.02 occurs, the Trust shall be liquidated and the Institutional Trustee
shall distribute the Subordinated Debt Securities to the Securityholders as
provided in this Section 9.04.
(b) In connection with a distribution of the Subordinated Debt
Securities, each Holder of Trust Securities shall be entitled to receive, after
the satisfaction of liabilities to creditors of the Trust (as evidenced by a
certificate of the Regular Trustees), a Like Amount of Subordinated Debt
Securities. Notice of liquidation shall be given by the Institutional Trustee by
52
first-class mail, postage prepaid, mailed not later than 30 nor more than 60
days prior to the Liquidation Date to each Holder of Trust Securities at such
Holder's address appearing in the Securities Register. All notices of
liquidation shall:
(i) state the Liquidation Date;
(ii) state that from and after the Liquidation Date, the
Trust Securities will no longer be deemed to be Outstanding and
any Trust Securities Certificates not surrendered for exchange
will be deemed to represent a Like Amount of Subordinated Debt
Securities; and
(iii) provide such information with respect to the
mechanics by which Holders may exchange Trust Securities
Certificates for Subordinated Debt Securities as the Regular
Trustees or the Institutional Trustee shall deem appropriate.
(c) In order to effect the liquidation of the Trust and
distribution of the Subordinated Debt Securities to Securityholders, the
Institutional Trustee shall establish a record date for such distribution (which
shall be not more than 45 days prior to the Liquidation Date) and, either itself
acting as exchange agent or through the appointment of a separate exchange
agent, shall establish such procedures as it shall deem appropriate to effect
the distribution of Subordinated Debt Securities in exchange for the Outstanding
Trust Securities Certificates.
(d) After the Liquidation Date, (i) the Trust Securities will
no longer be deemed to be Outstanding, (ii) certificates representing a Like
Amount of Subordinated Debt Securities will be issued to Holders of Trust
Securities Certificates, upon surrender of such certificates to the Regular
Trustees or their agent for exchange, (iii) any Trust Securities Certificates
not so surrendered for exchange will be deemed to represent a Like Amount of
Subordinated Debt Securities, accruing interest at the rate provided for in the
Subordinated Debt Securities from the last Distribution Payment Date on which a
Distribution was made on such Trust Certificates until such certificates are so
surrendered (and until such certificates are so surrendered, no payments of
interest or principal will be made to Holders of Trust Securities Certificates
with respect to such Subordinated Debt Securities) and (iv) all rights of
Securityholders holding Trust Securities will cease, except the right of such
Securityholders to receive Subordinated Debt Securities upon surrender of Trust
Securities Certificates.
(e) The Sponsor will use its best efforts to have the
Subordinated Debt Securities that are distributed in exchange for the Preferred
Securities to be listed on such securities exchange as the Preferred Securities
are then listed. The Sponsor may elect to have the Subordinated Debt Securities
issued in book-entry form to the Clearing Agency or its nominee pursuant to a
Certificate Depository Agreement.
SECTION 9.05. BANKRUPTCY
If an Early Termination Event specified in clause (i) of Section 9.02 has
occurred, the Trust shall be liquidated. The Institutional Trustee shall
distribute the Subordinated Debt Securities to the Securityholders as provided
in Section 9.04, unless such distribution is
53
determined by the Regular Trustees not to be practical, in which event the
Holders will be entitled to receive out of the assets of the Trust available for
distribution to Securityholders, after satisfaction of liabilities to creditors,
an amount equal to the Liquidation Amount per Trust Security plus accrued and
unpaid Distributions thereon to the date of payment (such amount being the
"Liquidation Distribution"). If such Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then, subject to the next succeeding
sentence, the amounts payable by the Trust on the Trust Securities shall be paid
on a pro rata basis (based upon Liquidation Amounts). The Holder of the Common
Securities will be entitled to receive Liquidation Distributions upon any such
dissolution, winding-up or termination pro rata (determined as aforesaid) with
Holders of Preferred Securities, except that, if an Indenture Event of Default
has occurred and is continuing, the Preferred Securities shall have a priority
over the Common Securities.
SECTION 9.06. CERTIFICATE OF CANCELLATION
A Certificate of Cancellation ("Certificate") to terminate the Trust (as
permitted hereby) may be signed by any Regular Trustee, individually, in such
capacity so long as such Certificate fully complies with all legal requirements.
ARTICLE X
REMARKETING PROCEDURES
SECTION 10.01. ELECTION TO REMARKET
If the Company, and the Regular Trustees acting at the direction of the
Company, elect to conduct a Remarketing, the Trust, not less than 20 nor more
than 35 Business Days prior to the related Election Date, is required pursuant
to Section 4.02(b) to give the written notice of proposed Remarketing of the
Preferred Securities to the Clearing Agency, the Institutional Trustee, the
Indenture Trustee, the Remarketing Agent and the Calculation Agent. If the
Preferred Securities are not issued in global, fully registered form to the
Clearing Agency, such notice shall be delivered to the Holders instead of the
Clearing Agency. As required by Section 4.02(b), such notice will describe the
Remarketing and will indicate the length of the proposed new Fixed Rate Period,
the proposed Remarketing Date and any redemption provisions that will apply
during such new Fixed Rate Period. At any time prior to the Election Date, the
Company and the Regular Trustees may elect to terminate a Remarketing by giving
the Clearing Agency (or the Holders, as applicable), the Remarketing Agent, the
Institutional Trustee, the Indenture Trustee and the Calculation Agent written
notice of such termination.
SECTION 10.02. NOTICE OF ELECTION
(a) Not later than 4:00 P.M., New York City time, on an
Election Date, each Holder of Preferred Securities may give, through the
facilities of the Clearing Agency in the case of Book-Entry Preferred Securities
Certificates, a written notice to the Institutional Trustee of its election
("Notice of Election") (i) to retain and not to have all or any portion of the
Preferred Securities owned by it remarketed in the Remarketing or (ii) to tender
all or any portion of such Preferred Securities for purchase in the Remarketing
(such portion, in either case, is to be in the
54
Liquidation Amount of $1,000 or any integral multiple thereof). Any Notice of
Election given to the Institutional Trustee will be irrevocable and may not be
conditioned upon the level at which the Fixed Rate is established in the
Remarketing. Promptly after 4:30 P.M., New York City time, on such Election
Date, the Institutional Trustee, based on the Notices of Election received by it
through the Clearing Agency (or from the Holders, if Definitive Preferred
Securities Certificates have been issued) prior to such time, will notify the
Regular Trustees, the Company and the Remarketing Agent of the number of
Preferred Securities to be retained by holders of Preferred Securities and the
number of Preferred Securities tendered for purchase in the Remarketing.
(b) If any Holder of Preferred Securities gives a Notice of
Election to tender Preferred Securities as described in 10.02(a), the Preferred
Securities so subject to such Notice of Election will be deemed tendered for
purchase in the Remarketing, notwithstanding any failure by such Holder to
deliver or properly deliver such Preferred Securities to the Remarketing Agent
for purchase. If any Holder of Preferred Securities fails timely to deliver a
Notice of Election, as described above, such Preferred Securities will be deemed
tendered for purchase in such Remarketing, notwithstanding such failure or the
failure by such Holder to deliver or properly deliver such Preferred Securities
to the Remarketing Agent for purchase.
(c) The right of each Holder of Preferred Securities to have
Preferred Securities tendered for purchase in the Remarketing shall be limited
to the extent that (i) the Remarketing Agent conducts a Remarketing pursuant to
the terms of the Remarketing Agreement, (ii) Preferred Securities tendered have
not been called for redemption, (iii) the Remarketing Agent is able to find a
purchaser or purchasers for tendered Preferred Securities at a Fixed Rate and
(iv) such purchaser or purchasers deliver the purchase price therefor to the
Remarketing Agent.
(d) Any Holder of Preferred Securities that desires to continue
to retain a number of Preferred Securities, but only if the Fixed Rate is not
less than a specified rate per annum, shall submit a Notice of Election to
tender such Preferred Securities pursuant to this Section 10.02 and separately
notify the Remarketing Agent of its interest at the telephone number set forth
in the notice of Remarketing delivered pursuant to Section 10.01. If such Holder
so notifies the Remarketing Agent, the Remarketing Agent will give priority to
such Holder's purchase of such number of Preferred Securities in the Remarketing
providing that the Fixed Rate is not less than such specified rate.
SECTION 10.03. DETERMINATION OF DISTRIBUTION RATE
(a) If Holders submit Notices of Election to retain all of the
Preferred Securities then outstanding, the Fixed Rate will be the rate
determined by the Remarketing Agent, in its sole discretion, as the rate that
would have been established had a Remarketing been held on the related
Remarketing Date.
(b) On any Remarketing Date on which the Remarketing is to be
conducted, the Remarketing Agent will use commercially reasonable efforts to
remarket, at a price equal to 100% of the Liquidation Amount thereof, Preferred
Securities tendered or deemed tendered for purchase. Except as provided in
Section 10.03(a), if, as a result of such efforts, on any
55
Remarketing Date, the Remarketing Agent has determined that it will be able to
remarket all Preferred Securities tendered or deemed tendered for purchase in
the Remarketing at a Fixed Rate and at a price of $1,000 per Preferred Security,
prior to 4:00 P.M., New York City time, on such Remarketing Date, the
Remarketing Agent will determine the Fixed Rate, which will be the rate per
annum (rounded to the nearest one-thousandth (0.001) of one percent per annum)
which the Remarketing Agent determines, in its sole judgment, to be the lowest
Fixed Rate per annum that will enable it to remarket all Preferred Securities
tendered or deemed tendered for Remarketing at a price of $1,000 per Preferred
Security.
(c) If the Remarketing Agent is unable to remarket by 4:00
P.M., New York City time on the third Business Day prior to the Remarketing
Settlement Date, all Preferred Securities tendered or deemed tendered for a
purchase at a price of $1,000 per Preferred Security, the Distribution Rate for
the next Distribution Period shall be the Floating Rate and the new Distribution
Period shall be a Floating Rate Period. In such case, no Preferred Securities
will be sold in the Remarketing and each Holder will continue to hold its
Preferred Securities at such Floating Rate during such Floating Rate Period.
(d) All Preferred Securities tendered or deemed tendered in the
Remarketing will be automatically delivered to the account of the Remarketing
Agent through the facilities of the Clearing Agency against payment of the
purchase price therefor on the Remarketing Settlement Date. The Remarketing
Agent will make payment to the Clearing Agency Participant of each tendering
holder of Preferred Securities in the Remarketing through the facilities of the
Clearing Agency by the close of business on the Remarketing Settlement Date.
In accordance with the Clearing Agency's normal procedures, on the
Remarketing Settlement Date, the transaction described above with respect to
each Preferred Security tendered for purchase and sold in the Remarketing will
be executed through the Clearing Agency Participants, will be debited and
credited and such Preferred Securities delivered by book entry as necessary to
effect purchases and sales of such Preferred Securities. The Clearing Agency is
expected to make payment in accordance with its normal procedures.
This Section 10.03(d) shall not apply if Definitive Preferred Securities
Certificates have been issued.
(e) If any Holder selling Preferred Securities in the
Remarketing fails to deliver such Preferred Securities, the Clearing Agency
Participant of such selling Holder and of any other person that was to have
purchased Preferred Securities in the Remarketing may deliver to any such other
person a number of Preferred Securities that is less than the number of
Preferred Securities that otherwise was to be purchased by such person. In such
event, the number of Preferred Securities to be so delivered will be determined
by such Clearing Agency Participant and delivery of such lesser number of
Preferred Securities will constitute good delivery. This paragraph shall not
apply if Definitive Preferred Securities Certificates have been issued.
(f) The Remarketing Agent is not obligated to purchase any
Preferred Securities that would otherwise remain unsold in a Remarketing.
Neither the Trust, any Trustee,
56
the Company nor the Remarketing Agent shall be obligated in any case to provide
funds to make payment upon tender of Preferred Securities for Remarketing.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.01. GUARANTEE BY THE SPONSOR
Subject to the terms and conditions hereof, the Sponsor, as obligor of
the Subordinated Debt Securities, irrevocably and unconditionally guarantees to
each Person to whom the Trust is now or hereafter becomes indebted or liable
(the "Beneficiaries") the full payment, when and as due, of any and all
Obligations (as hereinafter defined) to such Beneficiaries. As used herein,
"Obligations" means any indebtedness, expenses or liabilities of the Trust,
other than obligations of the Trust to pay to Holders of any Preferred
Securities, Common Securities or other similar interests in the Trust the
amounts due such Holders pursuant to the terms of the Preferred Securities,
Common Securities or such other similar interests, as the case may be. This
guarantee is intended to be for the benefit of, and to be enforceable by, all
such Beneficiaries, whether or not such Beneficiaries have received notice
hereof.
SECTION 11.02. LIMITATION OF RIGHTS OF SECURITYHOLDERS
The death or incapacity of any Person having an interest, beneficial or
otherwise, in a Trust Security shall not operate to terminate this Declaration,
nor entitle the legal representatives or heirs of such Person or any
Securityholder for such Person, to claim an accounting, take any action or bring
any proceeding in and for a partition or winding up of the arrangements
contemplated hereby, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
SECTION 11.03. AMENDMENT
(a) This Declaration may be amended from time to time by the
Institutional Trustee and the Holders of a Majority in Liquidation Amount of the
Common Securities, without the consent of any Holder of the Preferred Securities
(i) to cure any ambiguity, correct or supplement any provision herein that may
be defective or inconsistent with any other provision herein, or to make other
changes to the provisions with respect to matters or questions arising under
this Declaration; provided, however, that such amendment shall not adversely
affect in any material respect the interests of any Holder of Trust Securities;
(ii) to facilitate the tendering, remarketing and settlement of the Preferred
Securities, as herein contemplated; (iii) to modify, eliminate or add to any
provisions of this Declaration to such extent as shall be necessary to ensure
that the Trust will not be taxable other than as a grantor trust for United
States federal income tax purposes at any time that any Trust Securities are
Outstanding or to ensure that the Trust will not be required to register as an
investment company under the Investment Company Act; or (iv) in accordance with
the requirements of Section 8.11. Without limiting the generality of the
foregoing, if the Trust Indenture Act as in effect at the date of the execution
and delivery of this Declaration or at any time thereafter shall be amended and
(x) if any such amendment shall require one or more changes to any provisions
hereof or the inclusion herein of any
57
additional provisions, or shall by operation of law be deemed to effect such
changes or incorporate such provisions by reference or otherwise, this
Declaration shall be deemed to have been amended so as to conform to such
amendment to the Trust Indenture Act, and the Company and the Trustees may,
without the consent of any Holders, amend this Declaration to evidence such
amendment hereof; or (y) if any such amendment shall permit one or more changes
to, or the elimination of, any provisions hereof which, at the date of the
execution and delivery hereof or at any time thereafter, are required by the
Trust Indenture Act to be contained herein or are contained herein to reflect
any provisions of the Trust Indenture Act as in effect at such date, this
Declaration 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, amend this Declaration to evidence such amendment.
(b) Except as provided in Section 11.03(c) hereof, any
provision of this Declaration may be amended by the Institutional Trustee and
the Holders of a Majority in Liquidation Amount of the Common Securities with
(i) the consent of Holders of at least a Majority in Liquidation Amount of the
Preferred Securities, and (ii) receipt by the Trustees of an Opinion of Counsel
to the effect that such amendment or the exercise of any power granted to the
Trustees in accordance with such amendment will not affect the Trust's being
taxable as a grantor trust for United States federal income tax purposes or the
Trust's exemption from status of an "investment company" under the Investment
Company Act.
(c) In addition to and notwithstanding any other provision in
this Declaration, without the consent of each affected Securityholder, this
Declaration may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date; (ii) restrict the right of a Securityholder to institute suit
for the enforcement of any such payment on or after such date; or (iii) change
the consent required pursuant to this Section 11.03.
(d) Notwithstanding any other provisions of this Declaration,
the Trustees shall not enter into or consent to any amendment to this
Declaration which would cause the Trust to fail or cease to qualify for the
exemption from status of an "investment company" under the Investment Company
Act of 1940, as amended, afforded by Rule 3a-5 thereunder.
(e) Without the consent of the Sponsor, the Calculation Agent
or the Remarketing Agent, this Declaration may not be amended in a manner which
imposes any additional obligation on the Sponsor, the Calculation Agent or the
Remarketing Agent, as the case may be. Notwithstanding any other provisions of
this Declaration, the consent of the Delaware Trustee shall be required to amend
any provision of, or add any provision to, this Declaration which affects the
Delaware Trustee's rights, duties, immunities, liabilities or otherwise. In
executing any amendment permitted by this Declaration, the Trustees shall be
entitled to receive, and (subject to Section 8.01) shall be fully protected in
relying upon an Officer's Certificate and an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Declaration. Any
Trustee may, but shall not be obligated to, enter into any such amendment which
affects such Trustee's own rights, duties, immunities or liabilities under this
Declaration or otherwise.
58
(f) In the event that any amendment to this Declaration is
made, the Regular Trustees shall promptly provide to the Sponsor a copy of such
amendment.
SECTION 11.04. SEPARABILITY
In case any provision in this Declaration or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.05. GOVERNING LAW
THIS DECLARATION AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS DECLARATION AND
THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF DELAWARE.
SECTION 11.06. SUCCESSORS
This Declaration shall be binding upon and shall inure to the benefit of
any successor to both the Trust and the Trustees, including any successor by
operation of law.
SECTION 11.07. HEADINGS
The Article and Section headings are for convenience only and shall not
affect the construction of this Declaration.
SECTION 11.08. NOTICE AND DEMAND
Any notice, demand or other communication which by any provision of this
Declaration is required or permitted to be given or served to or upon any
Securityholder or the Sponsor may be given or served in writing by deposit
thereof, first-class postage prepaid, in the United States mail, hand delivery
or facsimile transmission, in each case, addressed, (i) in the case of a Holders
of Preferred Securities, to such Holders of Preferred Securities as such
Securityholder's name and address appear on the Securities Register and, (ii) in
the case of the Holders of Common Securities or the Sponsor, to Avista
Corporation, 1411 East Mission Avenue, Spokane, Washington 99202, Attention:
Treasurer, Facsimile No. (509) 495-4361, or to such other address as the Holders
of Common Securities or the Sponsor may give notice of to the Institutional
Trustee and the Delaware Trustee. Such notice, demand or other communication to
or upon a Securityholder shall be deemed to have been sufficiently given or
made, for all purposes, upon hand delivery, mailing or transmission.
Any notice, demand or other communication which by any provision of this
Declaration is required or permitted to be given or served to or upon the Trust
or the Trustees shall be given in writing addressed as follows: (i) with respect
to the Institutional Trustee and the Delaware Trustee, Union Bank of California,
N.A., 475 Sansome Street, 12th Floor, San Francisco, California 94111,
Attention: Corporate Trust Services, Facsimile No. (415) 296-6754; SunTrust
Delaware Trust Company, _____, Attention: Corporate Trust Services, Facsimile
No. (___) ___-
59
____, as the case may be, or to such other address as the Institutional Trustee
or the Delaware Trustee may give notice of to the Sponsor; and (ii) with respect
to the Regular Trustees, to them at the address above for notices to the
Sponsor, marked Attention: Regular Trustees of AVA Capital Trust III, c/o
Treasurer. Such notice, demand or other communication to or upon the Trust or
the Trustees shall be deemed to have been sufficiently given or made only upon
actual receipt of the writing by the applicable Trustee.
Any notice, demand or other communication which by any provision of this
Declaration is required or permitted to be served upon the Calculation Agent or
the Remarketing Agreement shall be given in accordance with the Calculation
Agent Agreement or the Remarketing Agreement, respectively.
SECTION 11.09. AGREEMENT NOT TO PETITION
Each of the Trustees and the Sponsor agrees for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been terminated in accordance with Article IX, it shall not file, or join in the
filing of, a petition against the Trust under any bankruptcy, reorganization,
arrangement, insolvency, liquidation or other similar law (including, without
limitation, the United States Bankruptcy Code) (collectively, "Bankruptcy Laws")
or otherwise join in the commencement of any proceeding against the Trust under
any Bankruptcy Law. In the event the Sponsor takes action in violation of this
Section 11.09, the Institutional Trustee agrees, for the benefit of
Securityholders, that it shall file an answer with the bankruptcy court or
otherwise properly contest the filing of such petition by the Sponsor against
the Trust or the commencement of such action and raise the defense that the
Sponsor has agreed in writing not to take such action and should be stopped and
precluded therefrom and such other defenses, if any, as counsel for the Trustees
or the Trust may assert. The provisions of this Section 11.09 shall survive the
termination of this Declaration.
SECTION 11.10. CONFLICT WITH TRUST INDENTURE ACT
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions.
(b) The Institutional Trustee shall be the only Trustee which
is a Trustee for the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with
another provision hereof which is required to be included in this Declaration by
any of the provisions of the Trust Indenture Act, such required provision shall
control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Trust Securities as equity
securities representing undivided beneficial interests in the assets of the
Trust.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL
60
OWNER, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL
CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS
HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND
PROVISIONS OF THIS DECLARATION AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND
OTHER TERMS OF THE GUARANTEE AND THE SUBORDINATED INDENTURE AND THE AGREEMENT OF
THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THOSE TERMS AND PROVISIONS
SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH
SECURITYHOLDER AND SUCH OTHERS.
61
IN WITNESS WHEREOF, the parties hereto have executed this Declaration or have
caused this Declaration to be executed on their behalf, all as of the day and
year first above written.
AVISTA CORPORATION,
as Sponsor
By:
---------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.,
as Institutional Trustee
By:
---------------------------------------
Name:
Title:
SUNTRUST DELAWARE TRUST COMPANY,
as Delaware Trustee
By:
---------------------------------------
Name:
Title:
--------------------------------------------
Malyn K. Malquist
as Regular Trustee
--------------------------------------------
Diane C. Thoren
as Regular Trustee
EXHIBIT A
This Security is a Global Certificate within the meaning of the
Declaration hereinafter referred to and is registered in the name of the
Depository Trust Company ("DTC") or a nominee of DTC. This Security is
exchangeable for Securities registered in the name of a person other than DTC or
its nominee only in the limited circumstances described in the Declaration and
no transfer of this Security (other than a transfer of this Security as a whole
by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of
DTC) may be registered except in limited circumstances.
Unless this certificate is presented by an authorized representative of
DTC, to AVA Capital Trust III or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), any transfer, pledge or other
use hereof for value or otherwise by or to any person is wrongful inasmuch as
the registered owner thereof, Cede & Co., has an interest herein.*
Certificate Number Number of Preferred Securities
-----------------
P-_ CUSIP NO. _____
Certificate Evidencing Preferred Securities
of
AVA Capital Trust III
Flexible Trust Preferred Securities
(Five Year Initial Fixed Rate Period)
(Liquidation Amount $1,000 per Preferred Security)
AVA Capital Trust III, a statutory trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Cede & Co.* (the
"Holder") is the registered owner of _____ (_______) preferred securities of the
Trust representing undivided beneficial interests in the assets of the Trust and
designated the AVA Capital Trust III Flexible Trust Preferred Securities (Five
Year Initial Fixed Rate Period) (Liquidation Amount $1,000 per Preferred
Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer as provided in Section 5.04 of the Declaration (as
defined below). The designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities are set forth in, and
this certificate and the Preferred Securities represented hereby are issued and
shall in all respects be subject to the terms and provisions of, the Amended and
Restated Declaration of Trust of the Trust, dated as of _____, 2004, as the same
may be amended from time to time (the "Declaration"), including the designation
of the terms of Preferred Securities as set forth therein. The holder of this
certificate
A-1
is entitled to the benefits of a guarantee by Avista Corporation, a Washington
corporation (the "Company"), pursuant to a Guarantee Agreement between the
Company and Union Bank of California, N.A., as guarantee trustee, dated as of
_____, 2004, as the same may be amended from time to time (the "Guarantee"), to
the extent provided therein. The Trust will furnish a copy of the Declaration
and the Guarantee to the holder of this certificate without charge upon written
request to the Trust at its principal place of business or registered office.
Upon receipt of this certificate, the holder of this certificate is bound
by the Declaration and is entitled to the benefits thereunder.
*Insert in Book-Entry Preferred Securities Certificates only
IN WITNESS WHEREOF, the Trust has executed this certificate this ____ day
of _______, 2004.
AVA CAPITAL TRUST III
By:
-----------------------------------
As Regular Trustee
CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Declaration.
-----------------------------------
as Institutional Trustee
A-2
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Preferred Securities Certificate on the books of the
Trust. The agent may substitute another to act for him or her.
Date:
-----------------------------------------------------
Signature:
-----------------------------------------------------
(Sign exactly as your name appears on the other side of this Preferred
Securities Certificate)
A-3
EXHIBIT B
AGREEMENT AS TO EXPENSES AND LIABILITIES
THIS AGREEMENT AS TO EXPENSES AND LIABILITIES (this "Agreement") is made
as of _____, 2004, between Avista Corporation, a Washington corporation (the
"Company"), and AVA Capital Trust III, a Delaware statutory trust (the "Trust").
WHEREAS, the Trust intends to issue its Common Securities (the "Common
Securities and its AVA Capital Trust III Flexible Trust Preferred Securities
(the "Preferred Securities"), with such powers, preferences and special rights
and restrictions as are set forth in the Amended and Restated Declaration of
Trust of the Trust dated as of _____, 2004 as the same may be amended from time
to time (the "Declaration"), and with the proceeds thereof to purchase from the
Company its Subordinated Debt Securities, Series ____ (the "Subordinated Debt
Securities"); and
NOW, THEREFORE, in consideration of the purchase by each holder of the
Preferred Securities, which purchase the Company hereby agrees shall benefit the
Company and which purchase the Company acknowledges will be made in reliance
upon the execution and delivery of this Agreement, the Company and the Trust
hereby agree as follows:
ARTICLE I
Section 1.01. AGREEMENT OF THE COMPANY. Subject to the terms and
conditions hereof, the Company hereby irrevocably and unconditionally agrees
with the Trust, and with each person or entity to whom the Trust is now or
hereafter becomes indebted or liable (the "Beneficiaries"), that the Company
shall make full payment, when and as due, of any and all Expenses (as
hereinafter defined) to such Beneficiaries and shall reimburse the Trust for any
Expenses paid by it. As used herein, "Expenses" means any expenses, indebtedness
or liabilities of the Trust, including, without limitation, any and all taxes,
duties, assessments or other governmental charges of whatever nature (other than
United States federal withholding taxes) imposed by the United States or any
other taxing authority; it being understood (a) that "Expenses" shall not be
deemed to include amounts to be distributed to the holders of the Common
Securities and the Preferred Securities pursuant to the terms thereof and (b)
that the intention of this covenant is that the net amounts received and
retained by the Trust after paying all Expenses will be equal to the amounts the
Trust would have received and retained had no such Expenses been incurred by or
imposed on the Trust. This Agreement is intended to be for the benefit of, and
to be enforceable by, the Trust and by all such Beneficiaries, whether or not
such Beneficiaries have received notice hereof.
Section 1.02. TERM OF AGREEMENT. This Agreement shall terminate and be
of no further force and effect upon the date on which there are no Beneficiaries
remaining; provided, however, that this Agreement shall continue to be effective
or shall be reinstated, as the case may be, if at any time any holder of
Preferred Securities or any Beneficiary must restore payment of any sums paid
B-1
under the Preferred Securities, any Expense, under the Guarantee Agreement dated
the date hereof by the Company and Union Bank of California, N.A., as guarantee
trustee, or under this Agreement for any reason whatsoever. This Agreement is
continuing, irrevocable, unconditional and absolute.
Section 1.03. WAIVER OF NOTICE. The Company hereby waives notice of
acceptance of this Agreement and of any payment of Expenses to which it applies
or may apply, and the Company hereby waives presentment, demand for payment,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
Section 1.04. NO IMPAIRMENT. The obligations, covenants, agreements
and duties of the Company under this Agreement shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the extension of time for the payment by the Trust of all
or any portion of the Expenses or for the performance of any other
obligation under, arising out of, or in connection with, the Expenses;
(b) any failure, omission, delay or lack of diligence on the
part of the Beneficiaries to enforce, assert or exercise any right,
privilege, power or remedy conferred on the Beneficiaries with respect to
the Expenses or any action on the part of the Trust granting indulgence
or extension of any kind; or
(c) the voluntary or involuntary liquidation, dissolution, sale
of any collateral, receivership, insolvency, bankruptcy, assignment for
the benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Trust or any of the assets of the Trust.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, the Company with respect to the happening of any of the
foregoing.
Section 1.05. ENFORCEMENT. A Beneficiary may enforce this Agreement
directly against the Company and the Company waives any right or remedy to
require that any action be brought against the Trust or any other person or
entity before proceeding against the Company.
ARTICLE II
Section 2.01. BINDING EFFECT. All guarantees and agreements contained
in this Agreement shall bind the successors, assigns, receivers, trustees and
representatives of the Company and shall inure to the benefit of the
Beneficiaries.
Section 2.02. AMENDMENT. So long as there remains any Beneficiary or
any Preferred Securities of any series are outstanding, this Agreement shall not
be modified or amended in any manner adverse to such Beneficiary or to the
holders of the Preferred Securities.
Section 2.03. NOTICES. Any notice, request or other communication
required or permitted to be given hereunder shall be given in writing by
delivering the same against receipt therefor by
B-2
facsimile transmission (confirmed by mail), telex or by registered or certified
mail, addressed as follows (and if so given, shall be deemed given when mailed
or upon receipt of an answer-back, if sent by telex), to-wit:
AVA Capital Trust III
c/o Union Bank of California, N.A.
475 Sansome Street, 12th Floor
San Francisco, California 94111
Facsimile No.: (415) 296-6757
Attention: Corporate Trust Services
Avista Corporation
1411 East Mission Avenue
Spokane, Washington 99202
Facsimile No.: [(509) 482-4879]
Attention: [Treasurer]
Section 2.04. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
THIS AGREEMENT is executed as of the date and year first above written.
AVISTA CORPORATION
By:
-----------------------------------
Name:
Title:
AVA CAPITAL TRUST III
By:
-----------------------------------
as Regular Trustee
B-3
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT AS PROVIDED IN THE
DECLARATION OF TRUST REFERRED TO HEREIN
Certificate Number C-1 Number of Common Securities
-----------------
Certificate Evidencing Common Securities
of
AVA Capital Trust III
Common Securities
(Liquidation Amount $1,000 per Common Security)
AVA Capital Trust III, a statutory trust created under the laws of the
State of Delaware (the "Trust"), hereby certifies that Avista Corporation (the
"Holder") is the registered owner of _____________ (_______) common securities
of the Trust representing undivided beneficial interests in the assets of the
Trust and designated the AVA Capital Trust III Common Securities (Liquidation
Amount $1,000 per Common Security) (the "Common Securities"). In accordance with
Section 5.10 of the Declaration (as defined below), the Common Securities are
not transferable, except as permitted by the Declaration referred to herein,
and, to the fullest extent permitted by law, any attempted transfer hereof shall
be void. The designations, rights, privileges, restrictions, preferences and
other terms and provisions of the Common Securities are set forth in, and this
certificate and the Common Securities represented hereby are issued and shall in
all respects be subject to the terms and provisions of, the Amended and Restated
Declaration of Trust of the Trust dated as of _____, 2004, as the same may be
amended from time to time (the "Declaration"), including the designation of the
terms of the Common Securities as set forth therein. The holder of this
certificate is entitled to the benefits of a guarantee by Avista Corporation, a
Delaware corporation (the "Company"), pursuant to a Guarantee Agreement between
the Company and Union Bank of California, N.A., as guarantee trustee, dated as
of _____, 2004, as the same may be amended from time to time (the "Guarantee"),
to the extent provided therein. The Trust will furnish a copy of the Declaration
and the Guarantee to the Holder without charge upon written request to the Trust
at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Trust has executed this certificate this ____ day
of __________, 2004.
AVA Capital Trust III
By:
---------------------------------------,
as Regular Trustee
CERTIFICATE OF AUTHENTICATION
This is one of the Common Securities referred to in the within-mentioned
Declaration.
---------------------------------------,
as Institutional Trustee
C-2
Exhibit 4(b)(1)
AVISTA CORPORATION
TO
UNION BANK OF CALIFORNIA, N.A.,
Trustee
---------------
INDENTURE
DATED AS OF _____ 1, 2004
---------------
AVISTA CORPORATION
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939 AND
INDENTURE, DATED AS OF ______________ 1, 2004
--------------------------------------------------------------
TRUST INDENTURE ACT SECTION INDENTURE SECTION(S)
ss.310(a)(1) ..............................................809
(a)(2) ..............................................809
(a)(3) ..............................................Not Applicable
(a)(4) ..............................................Not Applicable
(b) ..............................................808, 810
ss.311(a) ..............................................813
(b) ..............................................813
(c) ..............................................813
ss.312(a) ..............................................901
(b) ..............................................901
(c) ..............................................901
ss.313(a) ..............................................902
(b) ..............................................902
(c) ..............................................902
(d) ..............................................902
ss.314(a) ..............................................902, 507
(b) ..............................................Not Applicable
(c)(1) ..............................................102
(c)(2) ..............................................102
(c)(3) ..............................................Not Applicable
(d) ..............................................Not Applicable
(e) ..............................................102
ss.315(a) ..............................................801, 803
(b) ..............................................802
(c) ..............................................801
(d) ..............................................801
(e) ..............................................714
ss.316(a) ..............................................712, 713
(a)(1)(A) ..............................................702, 712
(a)(1)(B) ..............................................713
(a)(2) ..............................................Not Applicable
(b) ..............................................708
ss.317(a)(1) ..............................................703
(a)(2) ..............................................705
(b) ..............................................503
ss.318(a) ..............................................107
2
TABLE OF CONTENTS
PAGE
Recital of the Company........................................................ 1
ARTICLE ONE. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. GENERAL DEFINITIONS........................................9
ACT..................................................................10
AFFILIATE............................................................10
AUTHENTICATING AGENT.................................................10
AUTHORIZED OFFICER...................................................10
BOARD OF DIRECTORS...................................................10
BOARD RESOLUTION.....................................................10
BUSINESS DAY.........................................................10
COMMISSION...........................................................10
COMMON SECURITIES....................................................11
COMPANY..............................................................11
COMPANY ORDER" or "COMPANY REQUEST...................................11
CORPORATE TRUST OFFICE...............................................11
CORPORATION..........................................................11
DECLARATION..........................................................11
DISCOUNT SECURITY....................................................11
INTEREST.............................................................11
DOLLAR" or "$........................................................11
ELIGIBLE OBLIGATIONS.................................................11
EVENT OF DEFAULT.....................................................11
FAIR VALUE...........................................................12
GOVERNMENTAL AUTHORITY...............................................12
GOVERNMENT OBLIGATIONS...............................................12
HOLDER...............................................................12
INDENTURE............................................................12
INDEPENDENT EXPERT'S CERTIFICATE.....................................12
INSTITUTIONAL TRUSTEE................................................12
INTEREST PAYMENT DATE................................................12
MATURITY.............................................................12
NOTICE OF DEFAULT....................................................13
OFFICER'S CERTIFICATE................................................13
OPINION OF COUNSEL...................................................13
OUTSTANDING..........................................................13
PAYING AGENT.........................................................14
PERIODIC OFFERING....................................................14
3
PERSON...............................................................14
PLACE OF PAYMENT.....................................................14
PREDECESSOR SECURITY.................................................14
PREFERRED SECURITIES.................................................15
REDEMPTION DATE......................................................15
REDEMPTION PRICE.....................................................15
REGULAR RECORD DATE..................................................15
REQUIRED CURRENCY....................................................15
RESPONSIBLE OFFICER..................................................15
SECURITIES...........................................................15
SECURITY REGISTER....................................................15
SECURITY REGISTRAR...................................................15
SENIOR INDEBTEDNESS..................................................15
SPECIAL RECORD DATE..................................................16
STATED INTEREST RATE.................................................16
STATED MATURITY......................................................16
SUCCESSOR............................................................16
TRANCHE..............................................................16
TRUST................................................................16
TRUSTEE..............................................................16
TRUST INDENTURE ACT..................................................16
TRUST SECURITIES.....................................................16
TRUST SECURITIES GUARANTEE...........................................16
UNITED STATES........................................................17
UNPAID INTEREST......................................................17
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS......................17
SECTION 103. CONTENT AND FORM OF DOCUMENTS DELIVERED TO TRUSTEE........17
SECTION 104. ACTS OF HOLDERS...........................................19
SECTION 105. NOTICES, ETC. TO TRUSTEE OR COMPANY.......................20
SECTION 106. NOTICE TO HOLDERS OF SECURITIES; WAIVER...................21
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.........................22
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS..................22
SECTION 109. SUCCESSORS AND ASSIGNS....................................22
SECTION 110. SEPARABILITY CLAUSE.......................................22
SECTION 111. BENEFITS OF INDENTURE.....................................22
SECTION 112. GOVERNING LAW.............................................22
SECTION 113. LEGAL HOLIDAYS............................................22
ARTICLE TWO. SECURITY FORMS
SECTION 201. FORMS GENERALLY...........................................23
ARTICLE THREE. THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES......................24
SECTION 302. DENOMINATIONS.............................................28
4
SECTION 303. EXECUTION, DATING, CERTIFICATE OF AUTHENTICATION..........28
SECTION 304. TEMPORARY SECURITIES......................................31
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.......31
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES..........33
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED............34
SECTION 308. PERSONS DEEMED OWNERS.....................................35
SECTION 309. CANCELLATION BY SECURITY REGISTRAR........................35
SECTION 310. COMPUTATION OF INTEREST...................................36
SECTION 311. PAYMENT TO BE IN PROPER CURRENCY..........................36
ARTICLE FOUR. REDEMPTION OF SECURITIES
SECTION 401. APPLICABILITY OF ARTICLE..................................36
SECTION 402. ELECTION TO REDEEM; NOTICE TO TRUSTEE.....................36
SECTION 403. SELECTION OF SECURITIES TO BE REDEEMED....................37
SECTION 404. NOTICE OF REDEMPTION......................................37
SECTION 405. SECURITIES PAYABLE ON REDEMPTION DATE.....................38
SECTION 406. SECURITIES REDEEMED IN PART...............................39
ARTICLE FIVE. COVENANTS
SECTION 501. PAYMENT OF SECURITIES.....................................39
SECTION 502. MAINTENANCE OF OFFICE OR AGENCY...........................39
SECTION 503. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.........40
SECTION 504. CORPORATE EXISTENCE.......................................41
SECTION 505. MAINTENANCE OF PROPERTIES.................................42
SECTION 506. WAIVER OF CERTAIN COVENANTS...............................42
SECTION 507. ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.............43
SECTION 508. RESTRICTION ON PAYMENT OF DIVIDENDS, ETC..................43
SECTION 509. AVA CAPITAL TRUST III.....................................44
SECTION 510. HOLDERS OF PREFERRED SECURITIES...........................44
ARTICLE SIX. SATISFACTION AND DISCHARGE
SECTION 601. SATISFACTION AND DISCHARGE OF SECURITIES..................44
SECTION 602. SATISFACTION AND DISCHARGE OF INDENTURE...................47
SECTION 603. APPLICATION OF TRUST MONEY................................47
ARTICLE SEVEN. EVENTS OF DEFAULT; REMEDIES
SECTION 701. EVENTS OF DEFAULT.........................................48
SECTION 702. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT........50
SECTION 703. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY TRUSTEE..............................................51
SECTION 704. APPLICATION OF MONEY COLLECTED............................51
SECTION 705. TRUSTEE MAY FILE PROOFS OF CLAIM..........................52
SECTION 706. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION
OF SECURITIES...........................................53
SECTION 707. LIMITATION ON SUITS.......................................53
SECTION 708. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST......................................54
5
SECTION 709. RESTORATION OF RIGHTS AND REMEDIES........................54
SECTION 710. RIGHTS AND REMEDIES CUMULATIVE............................54
SECTION 711. DELAY OR OMISSION NOT WAIVER..............................55
SECTION 712. CONTROL BY HOLDERS OF SECURITIES..........................55
SECTION 713. WAIVER OF PAST DEFAULTS...................................55
SECTION 714. UNDERTAKING FOR COSTS.....................................56
SECTION 715. WAIVER OF STAY OR EXTENSION LAWS..........................56
SECTION 716. ACTION BY HOLDERS OF CERTAIN TRUST SECURITIES.............56
ARTICLE EIGHT. THE TRUSTEE
SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES.......................57
SECTION 802. NOTICE OF DEFAULTS........................................58
SECTION 803. CERTAIN RIGHTS OF TRUSTEE.................................59
SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES....60
SECTION 805. MAY HOLD SECURITIES.......................................60
SECTION 806. MONEY HELD IN TRUST.......................................60
SECTION 807. COMPENSATION AND REIMBURSEMENT............................60
SECTION 808. DISQUALIFICATION; CONFLICTING INTERESTS...................61
SECTION 809. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY...................61
SECTION 810. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.........62
SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR....................64
SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION
TO BUSINESS.............................................65
SECTION 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.........65
SECTION 814. APPOINTMENT OF AUTHENTICATING AGENT.......................66
ARTICLE NINE. LISTS OF HOLDERS; REPORTS BY TRUSTEE AND COMPANY
SECTION 901. LISTS OF HOLDERS..........................................68
SECTION 902. REPORTS BY TRUSTEE AND COMPANY............................68
ARTICLE TEN. CONSOLIDATION, MERGER, CONVEYANCE OR OTHER TRANSFER
SECTION 1001. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.....69
SECTION 1002. SUCCESSOR SUBSTITUTED....................................69
SECTION 1003. RELEASE OF COMPANY UPON CONVEYANCE OR OTHER TRANSFER.....70
SECTION 1004. MERGER INTO COMPANY......................................70
SECTION 1005. TRANSFER OF LESS THAN THE ENTIRETY.......................70
ARTICLE ELEVEN. SUPPLEMENTAL INDENTURES
SECTION 1101. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.......73
SECTION 1102. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS..........75
SECTION 1103. EXECUTION OF SUPPLEMENTAL INDENTURES.....................77
SECTION 1104. EFFECT OF SUPPLEMENTAL INDENTURES........................77
SECTION 1105. CONFORMITY WITH TRUST INDENTURE ACT......................77
SECTION 1106. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.......77
SECTION 1107. MODIFICATION WITHOUT SUPPLEMENTAL INDENTURE..............77
6
ARTICLE TWELVE. MEETINGS OF HOLDERS; ACTION WITHOUT MEETING
SECTION 1201. PURPOSES FOR WHICH MEETINGS MAY BE CALLED................78
SECTION 1202. CALL, NOTICE AND PLACE OF MEETINGS.......................78
SECTION 1203. PERSONS ENTITLED TO VOTE AT MEETINGS.....................79
SECTION 1204. QUORUM; ACTION...........................................79
SECTION 1205. ATTENDANCE AT MEETINGS; DETERMINATION OF VOTING
RIGHTS; CONDUCT AND ADJOURNMENT OF MEETINGS............80
SECTION 1206. COUNTING VOTES AND RECORDING ACTION OF MEETINGS..........81
SECTION 1207. ACTION WITHOUT MEETING...................................81
ARTICLE THIRTEEN. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS
SECTION 1301. LIABILITY SOLELY CORPORATE...............................82
ARTICLE FOURTEEN. SUBORDINATION OF SECURITIES
SECTION 1401. SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS............82
SECTION 1402. PAYMENT OVER OF PROCEEDS OF SECURITIES...................83
SECTION 1403. DISPUTES WITH HOLDERS OF CERTAIN SENIOR INDEBTEDNESS.....85
SECTION 1404. SUBROGATION..............................................85
SECTION 1405. OBLIGATION OF THE COMPANY UNCONDITIONAL..................85
SECTION 1406. PRIORITY OF SENIOR INDEBTEDNESS UPON MATURITY............86
SECTION 1407. TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS.................86
SECTION 1408. NOTICE TO TRUSTEE TO EFFECTUATE SUBORDINATION............87
SECTION 1409. MODIFICATION, EXTENSION, ETC. OF SENIOR INDEBTEDNESS
OF THE COMPANY.........................................87
SECTION 1410. TRUSTEE HAS NO FIDUCIARY DUTY TO HOLDERS OF SENIOR
INDEBTEDNESS OF THE COMPANY............................87
SECTION 1411. PAYING AGENTS OTHER THAN THE TRUSTEE.....................88
SECTION 1412. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT IMPAIRED....88
SECTION 1413. EFFECT OF SUBORDINATION PROVISIONS; TERMINATION..........88
ARTICLE FIFTEEN. EXCHANGE OF PREFERRED SECURITIES FOR SECURITIES
SECTION 1501. EXCHANGE OF PREFERRED SECURITIES FOR SECURITIES..........89
7
INDENTURE, dated as of _____ 1, 2004 between AVISTA CORPORATION, a
corporation duly organized and existing under the laws of the State of
Washington (hereinafter sometimes called the "Company"), and UNION BANK OF
CALIFORNIA, N.A., a corporation duly organized and existing under the laws of
California, as trustee (hereinafter sometimes called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery of this
Indenture to provide for the issuance from time to time of its unsecured
subordinated debentures, notes or other evidences of indebtedness (herein called
the "Securities"), to be issued in one or more series as contemplated herein;
and all acts necessary to make this Indenture a valid agreement of the Company
have been performed.
NOW, THEREFORE, THIS INDENTURE WITNESSETH that in consideration of
the premises and of the purchase of the Securities by the Holders thereof, it is
hereby covenanted and agreed, for the equal and ratable benefit of all Holders
of the Securities or of series thereof (except as otherwise contemplated
herein), as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. GENERAL DEFINITIONS.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as
the singular;
(b) all terms used herein without definition which are
defined in the Trust Indenture Act, either directly or by
reference therein, have the meanings assigned to them therein;
(c) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with generally
accepted accounting principles in the United States, and, except
as otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any computation
required or permitted hereunder shall mean such accounting
principles as are generally accepted in the United States at the
date of such computation or, at the election of the Company, at
the date of the execution and delivery of this Indenture;
8
(d) any reference to an "Article" or a "Section" refers
to an Article or a Section, as the case may be, of this Indenture;
and
(e) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a whole
and not to any particular Article, Section or other subdivision.
"ACT", when used with respect to any Holder of a Security, has the
meaning specified in Section 104.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"CONTROL" when used with respect to any specified Person means the power to
direct generally the management and policies of such Person, directly or
indirectly, whether through the ownership of voting securities, by contract or
otherwise; and the terms "CONTROLLING" and "CONTROLLED" have meanings
correlative to the foregoing.
"AUTHENTICATING AGENT" means any Person (other than the Company or
any Affiliate thereof) authorized by the Trustee to act on behalf of the Trustee
to authenticate the Securities of one or more series.
"AUTHORIZED OFFICER" means the Chairman of the Board, the
President, any Vice President, the Treasurer, any Assistant Treasurer or the
Corporate Secretary or any other duly authorized officer, agent or
attorney-in-fact of the Company named in an Officer's Certificate of the Company
signed by any of the aforesaid corporate officers.
"BOARD OF DIRECTORS" means either the board of directors of the
Company or any committee thereof duly authorized to act in respect of matters
relating to this Indenture.
"BOARD RESOLUTION" means a copy of a resolution certified by the
Corporate Secretary or an Assistant Corporate Secretary of the Company to have
been duly adopted by the Board of Directors of the Company and to be in full
force and effect on the date of such certification, and delivered to the
Trustee.
"BUSINESS DAY", when used with respect to a Place of Payment or
any other particular location specified in the Securities or this Indenture,
means any day, other than a Saturday or Sunday, which is not a day on which
banking institutions or trust companies in such Place of Payment or other
location are generally authorized or required by law, regulation or executive
order to remain closed, except as may be otherwise specified as contemplated by
Section 301.
"COMMISSION" means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the date of the execution and delivery of this
Indenture such Commission is not existing and
9
performing the duties now assigned to it under the Trust Indenture Act, then the
body, if any, performing such duties at such time.
"COMMON SECURITIES" means any common trust interests issued by a
Trust or similar securities issued by permitted successors to such Trust in
accordance with the Declaration pertaining to such Trust.
"COMPANY" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Company" shall mean such successor Person.
"COMPANY ORDER" or "COMPANY REQUEST" means, respectively, a
written order or request, as the case may be, signed in the name of the Company
by an Authorized Officer and delivered to the Trustee.
"CORPORATE TRUST OFFICE" means the office of the Trustee at which
at any particular time its corporate trust business shall be principally
administered, which office at the date of the execution and delivery of this
Indenture is located at _____.
"CORPORATION" means a corporation, association, company, joint
stock company or business trust.
"DECLARATION", with respect to a Trust, means the Declaration of
Trust establishing such Trust, as the same shall be amended and restated from
time to time.
"DISCOUNT SECURITY" means any Security which provides for an
amount less than the principal amount thereof to be due and payable upon a
declaration of acceleration of the Maturity thereof pursuant to Section 702.
"INTEREST" with respect to a Discount Security means interest, if any, borne by
such Security at a Stated Interest Rate.
"DOLLAR" or "$" means a dollar or other equivalent unit in such
coin or currency of the United States as at the time shall be legal tender for
the payment of public and private debts.
"ELIGIBLE OBLIGATIONS" means:
(a) with respect to Securities denominated in Dollars,
Government Obligations; or
(b) with respect to Securities denominated in a currency
other than Dollars or in a composite currency, such other
obligations or instruments as shall be specified with respect to
such Securities as contemplated by Section 301.
"EVENT OF DEFAULT" has the meaning specified in Section 701.
10
"FAIR VALUE" has the meaning specified in Section 1005.
"GOVERNMENTAL AUTHORITY" means the government of the United States
or of any State or Territory thereof or of the District of Columbia or of any
county, municipality or other political subdivision of any thereof, or any
department, agency, authority or other instrumentality of any of the foregoing.
"GOVERNMENT OBLIGATIONS" means:
(a) direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed by, the
United States entitled to the benefit of the full faith and credit
thereof; and
(b) certificates, depositary receipts or other
instruments which evidence a direct ownership interest in
obligations described in clause (a) above or in any specific
interest or principal payments due in respect thereof; provided,
however, that the custodian of such obligations or specific
interest or principal payments shall be a bank or trust company
(which may include the Trustee or any Paying Agent) subject to
Federal or State supervision or examination with a combined
capital and surplus of at least Fifty Million Dollars
($50,000,000); and provided, further, that except as may be
otherwise required by law, such custodian shall be obligated to
pay to the holders of such certificates, depositary receipts or
other instruments the full amount received by such custodian in
respect of such obligations or specific payments and shall not be
permitted to make any deduction therefrom.
"HOLDER" means a Person in whose name a Security is registered in
the Security Register.
"INDENTURE" means this instrument as originally executed and
delivered and as it may from time to time be amended and/or supplemented by one
or more indentures or other instruments supplemental thereto or hereto entered
into pursuant to the applicable provisions hereof and shall include the terms of
particular series of Securities established as contemplated by Section 301.
"INDEPENDENT EXPERT'S CERTIFICATE" has the meaning specified in
Section 1005.
"INSTITUTIONAL TRUSTEE", with respect to a Trust, has the meaning
set forth in the Declaration establishing such Trust.
"INTEREST PAYMENT DATE", when used with respect to any Security,
means the Stated Maturity of an installment of interest on such Security.
"MATURITY", when used with respect to any Security, means the date
on which the principal of such Security or an installment of principal becomes
due and payable as provided in
11
such Security or in this Indenture, whether at the Stated Maturity, by
declaration of acceleration, upon call for redemption or otherwise.
"NOTICE OF DEFAULT" has the meaning specified in Section 701.
"OFFICER'S CERTIFICATE" means a certificate signed by an
Authorized Officer of the Company and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who may
be counsel for the Company or other counsel acceptable to the Trustee and who
may be an employee or Affiliate of the Company.
"OUTSTANDING", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(a) Securities theretofore canceled or delivered to the
Trustee for cancellation;
(b) Securities deemed to have been paid for all purposes
of this Indenture in accordance with Section 601 (whether or not
the Company's indebtedness in respect thereof shall be satisfied
and discharged for any other purpose); and
(c) Securities which have been paid pursuant to Section
306 or in exchange for or in lieu of which other Securities have
been authenticated and delivered pursuant to this Indenture, other
than any such Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it and the Company
that such Securities are held by a bona fide purchaser or
purchasers in whose hands such Securities are valid obligations of
the Company;
provided, however, that in determining whether or not the Holders of the
requisite principal amount of the Securities Outstanding under this Indenture,
or the Outstanding Securities of any series or Tranche, have given any request,
demand, authorization, direction, notice, consent or waiver hereunder or whether
or not a quorum is present at a meeting of Holders of Securities,
(x) Securities owned by the Company or any other obligor
upon the Securities or any Affiliate of the Company or of such
other obligor (unless the Company, such obligor or such Affiliate
owns all Securities Outstanding under this Indenture, or all
Outstanding Securities of each such series and each such Tranche,
as the case may be, determined without regard to this clause (x))
shall be disregarded and deemed not to be Outstanding, except
that, in determining whether the Trustee shall be protected in
relying upon any such request, demand, authorization, direction,
notice, consent or waiver or upon any such determination as to the
presence of a quorum, only Securities which the Trustee knows to
be so owned shall be so
12
disregarded; provided, however, that Securities so owned which
have been pledged in good faith may be regarded as Outstanding if
it is established to the reasonable satisfaction of the Trustee
that the pledgee, and not the Company, any such other obligor or
Affiliate of either thereof, has the right so to act with respect
to such Securities and that the pledgee is not the Company or any
other obligor upon the Securities or any Affiliate of the Company
or of such other obligor; and
(y) the principal amount of a Discount Security that
shall be deemed to be Outstanding for such purposes shall be the
amount of the principal thereof that would be due and payable as
of the date of such determination upon a declaration of
acceleration of the Maturity thereof pursuant to Section 702; and
provided, further, that, in the case of any Security the principal of which is
payable from time to time without presentment or surrender, the principal amount
of such Security that shall be deemed to be Outstanding at any time for all
purposes of this Indenture shall be the original principal amount thereof less
the aggregate amount of principal thereof theretofore paid.
"PAYING AGENT" means any Person, including the Company, authorized
by the Company to pay the principal of and premium, if any, or interest, if any,
on any Securities on behalf of the Company.
"PERIODIC OFFERING" means an offering of Securities of a series
from time to time any or all of the specific terms of which Securities,
including without limitation the rate or rates of interest, if any, thereon, the
Stated Maturity or Maturities thereof and the redemption provisions, if any,
with respect thereto, are to be determined by the Company or its agents from
time to time subsequent to the initial request for the authentication and
delivery of such Securities by the Trustee, all as contemplated in Section 301
and clause (b) of Section 303.
"PERSON" means any individual, corporation, partnership, limited
liability partnership, limited liability company, joint venture, trust or
unincorporated organization or any Governmental Authority.
"PLACE OF PAYMENT", when used with respect to the Securities of
any series, or any Tranche thereof, means the place or places, specified as
contemplated by Section 301, at which, subject to Section 502, principal of and
premium, if any, and interest, if any, on the Securities of such series or
Tranche are payable.
"PREDECESSOR SECURITY" of any particular Security means every
previous Security evidencing all or a portion of the same debt as that evidenced
by such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 306 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed (to the
extent lawful) to evidence the same debt as the mutilated, destroyed, lost or
stolen Security.
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"PREFERRED SECURITIES" means any preferred trust interests issued
by a Trust or similar securities issued by permitted successors to such Trust in
accordance with the Declaration pertaining to such Trust.
"REDEMPTION DATE", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"REDEMPTION PRICE", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"REGULAR RECORD DATE" for the interest payable on any Interest
Payment Date on the Securities of any series means the date specified for that
purpose as contemplated by Section 301.
"REQUIRED CURRENCY" has the meaning specified in Section 311.
"RESPONSIBLE OFFICER", when used with respect to the Trustee,
means any officer of the Trustee assigned by the Trustee to administer its
corporate trust matters.
"SECURITIES" means any bonds, notes and other evidences of
indebtedness authenticated and delivered under this Indenture.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the respective
meanings specified in Section 305.
"SENIOR INDEBTEDNESS" means, with respect to any Person (a)
indebtedness (including premium, if any, and interest, if any, thereon) of such
Person for money borrowed or for the deferred purchase price of property or
services in transactions not in the ordinary course of business; (b) all other
indebtedness (including premium, if any, and interest, if any, thereon)
evidenced by bonds, debentures, notes or other similar instruments (other than
Securities) issued by such Person; (c) all obligations of such Person under
lease agreements designating such Person as lessee, irrespective of the
treatment of any such lease agreement for accounting, tax or other purposes; (d)
all obligations of such Person for reimbursement (including premium, if any, and
interest, if any thereon) in respect of any letter of credit, banker's
acceptance, security purchase facility or similar credit transaction; (e) all
obligations of the character referred to in clauses (a) through (d) above of
other Persons for the payment of which such Person is responsible or liable as
obligor, guarantor or otherwise; and (f) all obligations of the character
referred to in clauses (a) through (d) above of other Persons secured by any
lien on any property or asset of such Person (whether or not such obligation is
assumed by such Person); provided, however, that Senior Indebtedness shall not
include (x) any such indebtedness that is by its terms subordinated to or pari
passu with the Securities; (y) any indebtedness between or among such Person and
its Affiliates, including all other debt securities and guarantees in respect of
such debt securities, issued to (i) any Trust or (ii) any other trust, or a
trustee of such trust, partnership or other entity which is a financing
14
vehicle of such Person in connection with the issuance by such financing vehicle
of preferred securities or (z) indebtedness for goods or materials purchased in
the ordinary course of business or for services obtained in the ordinary course
of business or indebtedness consisting of trade payables.
"SPECIAL RECORD DATE" for the payment of any Unpaid Interest on
the Securities of any series means a date fixed by the Trustee pursuant to
Section 307.
"STATED INTEREST RATE" means a rate (whether fixed or variable) at
which an obligation by its terms is stated to bear simple interest. Any
calculation or other determination to be made under this Indenture by reference
to the Stated Interest Rate on an obligation shall be made (a) if the Company's
obligations in respect of any other indebtedness shall be evidenced or secured
in whole or in part by such obligation, by reference to the lower of the Stated
Interest Rate on such obligation and the Stated Interest Rate on such other
indebtedness and (b) without regard to the effective interest cost to the
Company of such obligation or of any such other indebtedness.
"STATED MATURITY", when used with respect to any obligation or any
installment of principal thereof or interest thereon, means the date on which
the principal of such obligation or such installment of principal or interest is
stated to be due and payable (without regard to any provisions for redemption,
prepayment, acceleration, purchase or extension).
"SUCCESSOR" has the meaning set forth in Section 1001.
"TRANCHE" means a group of Securities which (a) are of the same
series and (b) have identical terms except as to principal amount and/or date of
issuance.
"TRUST" means AVA Capital Trust III, a statutory trust established
under the laws of the State of Delaware, and any other Trust established for the
purpose of issuing securities upon the issuance and delivery to it of
Securities.
"TRUSTEE" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor trustee shall have become such
with respect to one or more series of Securities pursuant to the applicable
provisions of this Indenture, and thereafter "Trustee" shall mean or include
each Person who is then a Trustee hereunder, and, if at any time there is more
than one such Person, acting as trustee hereunder, "Trustee" shall mean each
such Person so acting.
"TRUST INDENTURE ACT" means, as of any time, the Trust Indenture
Act of 1939, or any successor statute, as in effect at such time.
"TRUST SECURITIES", with respect to a Trust, means the securities
issued by such Trust, as established in the Declaration of such Trust.
"TRUST SECURITIES GUARANTEE" means the Guarantee Agreement between
the Company, as Trust Securities Guarantor, and a guarantee trustee for the
benefit of the holders of Preferred Securities and Common Securities issued by
the Trust.
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"UNITED STATES" means the United States of America, its
territories, its possessions and other areas subject to its political
jurisdiction.
"UNPAID INTEREST" has the meaning specified in Section 307.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Except as otherwise expressly provided in this Indenture, upon any
application or request by the Company to the Trustee to take any action under
any provision of this Indenture, the Company shall furnish to the Trustee an
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with, it being understood that
in the case of any such application or request as to which the furnishing of
such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition and the
definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such
individual, such individual has made such examination or
investigation as is necessary to enable such individual to express
an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been complied
with.
SECTION 103. CONTENT AND FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
(a) Any Officer's Certificate may be based (without
further examination or investigation), insofar as it relates to or
is dependent upon legal matters, upon an opinion of, or
representations by, counsel, unless, in any case, such officer has
actual knowledge that the certificate or opinion or
representations with respect to the matters upon which such
Officer's Certificate may be based as aforesaid are erroneous.
16
Any Opinion of Counsel may be based (without further examination
or investigation), insofar as it relates to or is dependent upon factual
matters, information with respect to which is in the possession of the Company,
upon a certificate of, or representations by, an officer or officers of the
Company, unless such counsel has actual knowledge that the certificate or
opinion or representations with respect to the matters upon which his opinion
may be based as aforesaid are erroneous. In addition, any Opinion of Counsel may
be based (without further examination or investigation), insofar as it relates
to or is dependent upon matters covered in an Opinion of Counsel rendered by
other counsel, upon such other Opinion of Counsel, unless such counsel has
actual knowledge that the Opinion of Counsel rendered by such other counsel with
respect to the matters upon which his Opinion of Counsel may be based as
aforesaid are erroneous. If, in order to render any Opinion of Counsel provided
for herein, the signer thereof shall deem it necessary that additional facts or
matters be stated in any Officer's Certificate provided for herein, then such
certificate may state all such additional facts or matters as the signer of such
Opinion of Counsel may request.
(b) In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is not
necessary that all such matters be certified by, or covered by the opinion of,
only one such Person, or that they be so certified or covered by only one
document, but one such Person may certify or give an opinion with respect to
some matters and one or more other such Persons as to other matters, and any
such Person may certify or give an opinion as to such matters in one or several
documents. Where (i) any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, or (ii) two or more Persons are each required
to make, give or execute any such application, request, consent, certificate,
statement, opinion or other instrument, any such applications, requests,
consents, certificates, statements, opinions or other instruments may, but need
not, be consolidated and form one instrument.
(c) Whenever, subsequent to the receipt by the Trustee of any
Board Resolution, Officer's Certificate, Opinion of Counsel or other document or
instrument, a clerical, typographical or other inadvertent or unintentional
error or omission shall be discovered therein, a new document or instrument may
be substituted therefor in corrected form with the same force and effect as if
originally filed in the corrected form and, irrespective of the date or dates of
the actual execution and/or delivery thereof, such substitute document or
instrument shall be deemed to have been executed and/or delivered as of the date
or dates required with respect to the document or instrument for which it is
substituted. Anything in this Indenture to the contrary notwithstanding, if any
such corrective document or instrument indicates that action has been taken by
or at the request of the Company which could not have been taken had the
original document or instrument not contained such error or omission, the action
so taken shall not be invalidated or otherwise rendered ineffective but shall be
and remain in full force and effect, except to the extent that such action was a
result of willful misconduct or bad faith. Without limiting the generality of
the foregoing, any Securities issued under the authority of such defective
document or instrument shall nevertheless be
17
the valid obligations of the Company entitled to the benefits provided by this
Indenture equally and ratably with all other Outstanding Securities, except as
aforesaid.
SECTION 104. ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice,
consent, election, waiver or other action provided by this Indenture to be made,
given or taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person or
by an agent duly appointed in writing or, alternatively, may be embodied in and
evidenced by the record of Holders voting in favor thereof, either in person or
by proxies duly appointed in writing, at any meeting of Holders duly called and
held in accordance with the provisions of Article Twelve, or a combination of
such instruments and any such record. Except as herein otherwise expressly
provided, such action shall become effective when such instrument or instruments
or record or both are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments and any such record
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "ACT" of the Holders signing such instrument or instruments
and so voting at any such meeting. Proof of execution of any such instrument or
of a writing appointing any such agent, or of the holding by any Person of a
Security, shall be sufficient for any purpose of this Indenture and (subject to
Section 801) conclusive in favor of the Trustee and the Company, if made in the
manner provided in this Section. The record of any meeting of Holders shall be
proved in the manner provided in Section 1206.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof or may be
proved in any other manner which the Trustee and the Company deem sufficient.
Where such execution is by a signer acting in a capacity other than his
individual capacity, such certificate or affidavit shall also constitute
sufficient proof of his authority.
(c) The ownership, principal amount (except as otherwise
contemplated in clause (y) of the first proviso to the definition of
Outstanding) and serial numbers of Securities held by any Person, and the date
of holding the same, shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice,
consent, election, waiver or other Act of a Holder shall bind every future
Holder of the same Security and the Holder of every Security issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Security.
(e) Until such time as written instruments shall have been
delivered to the Trustee with respect to the requisite percentage of principal
amount of Securities for the action contemplated by such instruments, any such
instrument executed and delivered by or on behalf of a
18
Holder may be revoked with respect to any or all of such Securities by written
notice by such Holder or any subsequent Holder, proven in the manner in which
such instrument was proven.
(f) Securities of any series, or any Tranche thereof,
authenticated and delivered after any Act of Holders may, and shall if required
by the Trustee, bear a notation in form approved by the Trustee as to any action
taken by such Act of Holders. If the Company shall so determine, new Securities
of any series, or any Tranche thereof, so modified as to conform, in the opinion
of the Trustee and the Company, to such action may be prepared and executed by
the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series or Tranche.
(g) The Company may, at its option, by Company Order, fix in
advance a record date for the determination of Holders entitled to give any
request, demand, authorization, direction, notice, consent, waiver or other Act
solicited by the Company, but the Company shall have no obligation to do so;
provided, however, that the Company may not fix a record date for the giving or
making of any notice, declaration, request or direction referred to in the next
sentence. In addition, the Trustee may, at its option, fix in advance a record
date for the determination of Holders of Securities of any series entitled to
join in the giving or making of any Notice of Default, any declaration of
acceleration referred to in Section 702, any request to institute proceedings
referred to in Section 707 or any direction referred to in Section 712, in each
case with respect to Securities of such series. If any such record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act, or such notice, declaration, request or direction, may be given
before or after such record date, but only the Holders of record at the close of
business on the record date shall be deemed to be Holders for the purposes of
determining (i) whether Holders of the requisite proportion of the Outstanding
Securities have authorized or agreed or consented to such Act (and for that
purpose the Outstanding Securities shall be computed as of the record date)
and/or (ii) which Holders may revoke any such Act (notwithstanding subsection
(e) of this Section); and any such Act, given as aforesaid, shall be effective
whether or not the Holders which authorized or agreed or consented to such Act
remain Holders after such record date and whether or not the Securities held by
such Holders remain Outstanding after such record date.
SECTION 105. NOTICES, ETC. TO TRUSTEE OR COMPANY.
Any request, demand, authorization, direction, notice, consent,
election, waiver or Act of Holders or other document provided or permitted by
this Indenture to be made upon, given or furnished to, or filed with, the
Trustee by any Holder or by the Company, or the Company by the Trustee or by any
Holder, shall be sufficient for every purpose hereunder (unless otherwise
expressly provided herein) if in writing and delivered personally to an officer
or other responsible employee of the addressee, or transmitted by facsimile
transmission, telex or other direct written electronic means to the telephone
number or other electronic communications address set forth for such party below
or otherwise as such party shall from time to time designate, or transmitted by
registered mail, charges prepaid, to the applicable address set forth for such
party below or to such other address as such party may from time to time
designate:
19
If to the Trustee, to:
Union Bank of California, N.A.
Attention:
--------------------------------
Facsimile:
--------------------------------
If to the Company, to:
Avista Corporation
1411 East Mission Avenue
Spokane, Washington 99202
Attention: [Treasurer]
Facsimile: [(509) 482-4879]
Any communication contemplated herein shall be deemed to have been
made, given, furnished and filed if personally delivered, on the date of
delivery, if transmitted by facsimile transmission, telex or other direct
written electronic means, on the date of transmission, and if transmitted by
registered mail, on the date of receipt.
SECTION 106. NOTICE TO HOLDERS OF SECURITIES; WAIVER.
Except as otherwise expressly provided herein, where this
Indenture provides for notice to Holders of any event, such notice shall be
sufficiently given, and shall be deemed given, to Holders if in writing and
mailed, first-class postage prepaid, to each Holder affected by such event, at
the address of such Holder as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice to
Holders by mail, then such notification as shall be made with the approval of
the Trustee shall constitute a sufficient notification for every purpose
hereunder. In any case where notice to Holders is given by mail, neither the
failure to mail such notice, nor any defect in any notice so mailed, to any
particular Holder shall affect the sufficiency of such notice with respect to
other Holders.
Any notice required by this Indenture may be waived in writing by
the Person entitled to receive such notice, either before or after the event
otherwise to be specified therein, and such waiver shall be the equivalent of
such notice. Waivers of notice by Holders shall be filed with the Trustee, but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
20
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision of this Indenture limits, qualifies or conflicts
with another provision hereof which is required or deemed to be included in this
Indenture by, or is otherwise governed by, any provision of the Trust Indenture
Act, such other provision shall control; and if any provision hereof otherwise
conflicts with the Trust Indenture Act, the Trust Indenture Act shall control.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings in this Indenture and the Table
of Contents are for convenience only and shall not affect the construction
hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or the Securities shall be
held to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or the Securities, express or implied,
shall give to any Person, other than the parties hereto, their successors
hereunder and the Holders and, to the extent provided in Sections 104(a) and
716, registered holders of Trust Securities (other than Trust Securities
initially issued and sold to the Company) and, so long as the notice described
in Section 1413 shall not have been given, holders of Senior Indebtedness, any
benefit or any legal or equitable right, remedy or claim under this Indenture,
provided, however, that so long as any Preferred Securities remain outstanding,
the holders of such Preferred Securities, subject to certain limitations set
forth in this Indenture, may enforce the Company's obligations hereunder,
directly against the Company, as third party beneficiaries of this Indenture
without proceeding against the Trust issuing such Preferred Securities.
SECTION 112. GOVERNING LAW.
This Indenture and the Securities shall be governed by and
construed in accordance with the law of the State of New York (including without
limitation Section 5-1401 of the New York General Obligations Law or any
successor to such statute), except to the extent that the Trust Indenture Act
shall be applicable.
21
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date or
Stated Maturity of any Security shall not be a Business Day at any Place of
Payment, then (notwithstanding any other provision of this Indenture or of the
Securities other than a contrary provision in the Securities of any series, or
any Tranche thereof, or in the indenture supplemental hereto, Board Resolution
or Officer's Certificate which establishes the terms of the Securities of such
series or Tranche) payment of interest or principal and premium, if any, need
not be made at such Place of Payment on such date, but may be made on the next
succeeding Business Day at such Place of Payment with the same force and effect
as if made on the Interest Payment Date or Redemption Date, or at the Stated
Maturity, and, if such payment is made or duly provided for on such Business
Day, no interest shall accrue on the amount so payable for the period from and
after such Interest Payment Date, Redemption Date or Stated Maturity, as the
case may be, to such Business Day.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The definitive Securities of each series shall be in substantially
the form or forms established in the Officer's Certificate, the indenture
supplemental hereto or the Board Resolution establishing such series, in any
case with such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Securities, as evidenced by their execution thereof. If
the form or forms of Securities of any series are established in an Officer's
Certificate or a Board Resolution, such Officer's Certificate or Board
Resolution shall be delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 303 for the authentication and delivery of
such Securities.
[Unless otherwise specified as contemplated by Section 301 or
1101(f), the] Securities of each series shall be issuable in registered form
without coupons. The definitive Securities shall be produced in such manner as
shall be determined by the officers executing such Securities, as evidenced by
their execution thereof.
SECTION 202. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be in
substantially the form set forth below:
22
This is one of the Securities of the series designated therein referred
to in the within-mentioned Indenture.
- ---------------------------------
as Trustee
By: _____________________________
Authorized Officer
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued from time to time in one or more
series. Subject to the last paragraph of this Section, prior to the
authentication and delivery of Securities of any series there shall be
established by specification in an Officer's Certificate, a supplemental
indenture or in a Board Resolution:
(a) the title of the Securities of such series (which
shall distinguish the Securities of such series from Securities of
all other series);
(b) any limit upon the aggregate principal amount of the
Securities of such series which may be authenticated and delivered
under this Indenture (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or
in lieu of, other Securities of such series pursuant to Section
304, 305, 306, 406 or 1106 and except for any Securities which,
pursuant to Section 303, are deemed never to have been
authenticated and delivered hereunder);
(c) the Persons (without specific identification) to
whom interest, if any, on Securities of such series, or any
Tranche thereof, shall be payable, if other than the Persons in
whose names such Securities (or one or more Predecessor
Securities) are registered at the close of business on the Regular
Record Date for such interest;
(d) the date or dates on which the principal of the
Securities of such series, or any Tranche thereof, is payable or
any formulary or other method or other means by which such date or
dates shall be determined, by reference to an index or
23
other fact or event ascertainable outside of this Indenture or
otherwise (without regard to any provisions for redemption,
prepayment, acceleration, purchase or extension)[; and the right,
if any, to extend the Maturity of the Securities of such series,
or any Tranche thereof, and the duration of any such extension;]
(e) the rate or rates at which the Securities of such
series, or any Tranche thereof, shall bear interest, if any
(including the rate or rates at which overdue principal shall bear
interest, and the right, if any, to extend the interest payment
periods and the duration of any such extension; if different from
the rate or rates at which such Securities shall bear interest
prior to Maturity, and, if applicable, the rate or rates at which
overdue premium or interest shall bear interest, if any), or any
formulary or other method or other means by which such rate or
rates shall be determined by reference to an index or other fact
or event ascertainable outside of this Indenture or otherwise; the
date or dates from which such interest shall accrue; the Interest
Payment Dates on which such interest shall be payable and the
Regular Record Date, if any, for the interest payable on such
Securities on any Interest Payment Date; the basis of computation
of interest, if other than as provided in Section 310; and the
right, if any, to extend the interest payment periods and the
duration of any such extension;
(f) the place or places at which and/or the methods (if
other than as provided elsewhere in this Indenture) by which (i)
the principal of and premium, if any, and interest, if any, on
Securities of such series, or any Tranche thereof, shall be
payable, (ii) registration of transfer of Securities of such
series, or any Tranche thereof, may be effected, (iii) exchanges
of Securities of such series, or any Tranche thereof, may be
effected and (iv) notices and demands to or upon the Company in
respect of the Securities of such series, or any Tranche thereof,
and this Indenture may be served; the Security Registrar and any
Paying Agent or Agents for such series or Tranche; and, if such is
the case, that the principal of such Securities shall be payable
without the presentment or surrender thereof;
(g) the period or periods within which or the date or
dates on which, the price or prices at which and the terms and
conditions upon which the Securities of such series, or any
Tranche thereof, may be redeemed, in whole or in part, at the
option of the Company [and any restrictions on such redemptions];
(h) the obligation or obligations, if any, of the
Company to redeem or purchase the Securities of such series, or
any Tranche thereof, pursuant to any sinking fund or other
mandatory redemption provisions or at the option of a Holder
thereof and the period or periods within which or the date or
dates on which, the price or prices at which and the terms and
conditions upon which such Securities shall be redeemed or
purchased, in whole or in part, pursuant to such obligation, and
24
applicable exceptions to the requirements of Section 404 in the
case of mandatory redemption or redemption at the option of the
Holder;
(i) the denominations in which Securities of such
series, or any Tranche thereof, shall be issuable if other than
denominations of One Thousand Dollars ($1,000) and any integral
multiple thereof (in the case of Securities issued to a Trust or a
trustee of such trust in connection with the issuance of Trust
Securities by such Trust, the denomination in which such
Securities shall be issuable if other than denominations of
Twenty-Five Dollars ($25) and any integral multiple thereof);
(j) the currency or currencies, including composite
currencies, in which payment of the principal of or premium, if
any, or interest, if any, on the Securities of such series, or any
Tranche thereof, shall be payable (if other than in Dollars) and
the formulary or other method or other means by which the
equivalent of any such amount in Dollars is to be determined for
any purpose, including for the purpose of determining the
principal amount of such Securities deemed to be outstanding at
any time;
(k) if the principal of or premium, if any, or interest,
if any, on the Securities of such series, or any Tranche thereof,
are to be payable, at the election of the Company or a Holder
thereof, in a coin or currency other than that in which the
Securities are stated to be payable, the period or periods within
which, and the terms and conditions upon which, such election may
be made;
(l) if the principal of or premium, if any, or interest,
if any, on the Securities of such series, or any Tranche thereof,
are to be payable, or are to be payable at the election of the
Company or a Holder thereof, in securities or other property, the
type and amount of such securities or other property, or the
formulary or other method or other means by which such amount
shall be determined, and the period or periods within which, and
the terms and conditions upon which, any such election may be
made;
(m) if the amount payable in respect of the principal of
or premium, if any, or interest, if any, on the Securities of such
series, or any Tranche thereof, may be determined with reference
to an index or other fact or event ascertainable outside of this
Indenture, the manner in which such amounts shall be determined
(to the extent not established pursuant to clause (e) of this
paragraph);
(n) if other than the entire principal amount thereof,
the portion of the principal amount of Securities of such series,
or any Tranche thereof, which shall be payable upon declaration of
acceleration of the Maturity thereof pursuant to Section 702;
25
(o) the terms, if any, pursuant to which the Securities
of such series, or any Tranche thereof, may be converted into or
exchanged for shares of capital stock or other securities of the
Company or any other Person;
(p) the obligations or instruments, if any, which shall
be considered to be Eligible Obligations in respect of the
Securities of such series, or any Tranche thereof, denominated in
a currency other than Dollars or in a composite currency, and any
additional or alternative provisions for the reinstatement of the
Company's indebtedness in respect of such Securities after the
satisfaction and discharge thereof as provided in Section 601;
(q) if the Securities of such series, or any Tranche
thereof, are to be issued in global form, (i) any limitations on
the rights of the Holder or Holders of such Securities to transfer
or exchange the same or to obtain the registration of transfer
thereof, (ii) any limitations on the rights of the Holder or
Holders thereof to obtain certificates therefor in definitive form
in lieu of temporary form and (iii) any and all other matters
incidental to such Securities;
(r) if the Securities of such series, or any Tranche
thereof, are to be issuable as bearer securities, any and all
matters incidental thereto which are not specifically addressed in
a supplemental indenture as contemplated by clause (f) of Section
1101;
(s) to the extent not established pursuant to clause (q)
of this paragraph, any limitations on the rights of the Holders of
the Securities of such Series, or any Tranche thereof, to transfer
or exchange such Securities or to obtain the registration of
transfer thereof; and if a service charge will be made for the
registration of transfer or exchange of Securities of such series,
or any Tranche thereof, the amount or terms thereof;
(t) any exceptions to Section 113, or variation in the
definition of Business Day, with respect to the Securities of such
series, or any Tranche thereof; and
(u) the designation of the Trust to which Securities of
such series are to be issued;
(v) any other terms of the Securities of such series, or
any Tranche thereof.
With respect to Securities of a series subject to a Periodic
Offering, the Officer's Certificate, the indenture supplemental hereto or the
Board Resolution which establishes such series, as the case may be, may provide
general terms or parameters for Securities of such series and
26
provide either that the specific terms of Securities of such series, or any
Tranche thereof, shall be specified in a Company Order or that such terms shall
be determined by the Company or its agents in accordance with procedures
specified in a Company Order as contemplated by clause (b) of Section 303.
Unless otherwise specified with respect to a series of Securities
as contemplated by Section 301(b), any limit upon the aggregate principal amount
of a series of Securities may be increased without the consent of any Holders
and additional Securities of such series may be authenticated and delivered up
to the limit upon the aggregate principal amount authorized with respect to such
series as so increased.
Anything herein to the contrary notwithstanding, the Trustee shall
be under no obligation to authenticate and deliver Securities of any series the
terms of which, established as contemplated by this Section, would affect the
rights, duties, obligations, liabilities or immunities of the Trustee under this
Indenture or otherwise.
SECTION 302. DENOMINATIONS.
Unless otherwise provided as contemplated by Section 301 with
respect to any series of Securities, or any Tranche thereof, the Securities of
each series shall be issuable in denominations of One Thousand Dollars ($1,000)
and any integral multiple thereof (in the case of securities issued to a Trust
or a trustee of such trust in connection with the issuance of Trust Securities
by such Trust, the Securities of each series shall be issuable in denominations
of Twenty-Five Dollars ($25) and any integral multiple thereof).
SECTION 303. EXECUTION, DATING, AUTHENTICATION.
Unless otherwise specified as contemplated by Section 301 with
respect to any series of Securities, or any Tranche thereof, the Securities
shall be executed on behalf of the Company by an Authorized Officer, and may
have the corporate seal of the Company affixed thereto or reproduced thereon and
attested by its Secretary, one of its Assistant Secretaries or any other
Authorized Officer. The signature of any or all of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at the time of execution Authorized Officers shall bind the
Company, notwithstanding that such individuals, or any of them, have ceased to
be such Authorized Officers prior to the authentication and delivery of such
Securities or were not such Authorized Officers at the date of such Securities.
The Trustee shall authenticate and deliver Securities of a series,
for original issue, at one time or from time to time in accordance with the
Company Order referred to below, upon receipt by the Trustee of:
27
(a) the instrument or instruments establishing the form
or forms and terms of the Securities of such series, as provided
in Sections 201 and 301;
(b) a Company Order requesting the authentication and
delivery of such Securities and, to the extent that the terms of
such Securities shall not have been established in an Officer's
Certificate, an indenture supplemental hereto or in a Board
Resolution, all as contemplated by Sections 201 and 301, either
(i) establishing such terms or (ii) in the case of Securities of a
series subject to a Periodic Offering, specifying procedures,
acceptable to the Trustee, by which such terms are to be
established (which procedures may provide, to the extent
acceptable to the Trustee, for authentication and delivery
pursuant to oral or electronic instructions from the Company or
any agent or agents thereof, which oral instructions are to be
promptly confirmed electronically or in writing), in either case
in accordance with the instrument or instruments delivered
pursuant to clause (a) above;
(c) the Securities of such series, each executed on
behalf of the Company by an Authorized Officer;
(d) an Opinion of Counsel to the effect that:
(i) (A) the form or forms of such Securities have
been duly authorized by the Company and (B) the forms of
such Securities have been established in conformity with
the provisions of this Indenture;
(ii) (A) the terms of such Securities have been
duly authorized by the Company and (B) the terms of such
Securities have been established in conformity with the
provisions of this Indenture; and
(iii) when such Securities shall have been
authenticated and delivered by the Trustee and issued and
delivered by the Company in the manner and subject to any
conditions specified in such Opinion of Counsel, such
Securities will constitute valid obligations of the
Company, entitled to the benefits provided by this
Indenture equally and ratably with all other Securities
then Outstanding;
provided, however, that, with respect to the Securities of a
series subject to a Periodic Offering, the Trustee shall be
entitled to receive such Opinion of Counsel only once at or prior
to the time of the first authentication and delivery of the
Securities of such series (provided that such Opinion of Counsel
addresses the authentication and delivery of all Securities of
such series) and that, in lieu of the opinions described in
clauses (ii) and (iii) above, such Counsel may opine that:
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(x) when the terms of such Securities shall have
been established pursuant to a Company Order or Orders or
pursuant to such procedures as may be specified from time
to time by a Company Order or Orders, all as contemplated
by and in accordance with the instrument or instruments
delivered pursuant to clause (a) above, such terms will
have been duly authorized by the Company and will have been
established in conformity with the provisions of this
Indenture; and
(y) when such Securities shall have been (1)
authenticated and delivered by the Trustee in accordance
with this Indenture and the Company Order or Orders or the
specified procedures referred to in clause (x) above and
(2) issued and delivered by the Company in the manner and
subject to any conditions specified in such Opinion of
Counsel, such Securities will constitute valid obligations
of the Company, entitled to the benefits provided by this
Indenture equally and ratably with all other Securities
then Outstanding.
With respect to Securities of a series subject to a Periodic
Offering, the Trustee may conclusively rely, as to the authorization by the
Company of any of such Securities, the forms and terms thereof, the validity
thereof and the compliance of the authentication and delivery thereof with the
terms and conditions of this Indenture, upon the Opinion or Opinions of Counsel
and the certificates and other documents delivered pursuant to this Article at
or prior to the time of the first authentication and delivery of Securities of
such series until any of such opinions, certificates or other documents have
been superseded or revoked or expire by their terms. In connection with the
authentication and delivery of Securities of a series subject to a Periodic
Offering, the Trustee shall be entitled to assume that the Company's
instructions to authenticate and deliver such Securities do not violate any
applicable law or any applicable rule, regulation or order of any Governmental
Authority having jurisdiction over the Company.
If the form or terms of the Securities of any series have been
established by or pursuant to an Officer's Certificate or Board Resolution as
permitted by Sections 201 or 301, the Trustee shall not be required to
authenticate such Securities if the issuance of such Securities pursuant to this
Indenture will adversely affect the Trustee's own rights, duties or immunities
under the Securities and this Indenture or otherwise in a manner which is not
reasonably acceptable to the Trustee.
Unless otherwise specified as contemplated by Section 301 with
respect to any series of Securities, or any Tranche thereof, each Security shall
be dated the date of the authentication of such Security.
Unless otherwise specified as contemplated by Section 301 with
respect to any series of Securities, or any Tranche thereof, no Security shall
be entitled to any benefit under this Indenture or be valid or obligatory for
any purpose unless there appears on such Security a
29
certificate of authentication substantially in the form provided for herein
executed by the Trustee or an Authenticating Agent by manual signature of an
authorized officer thereof, and such certificate upon any Security shall be
conclusive evidence, and the only evidence, that such Security has been duly
authenticated and delivered hereunder and is entitled to the benefits of this
Indenture. Notwithstanding the foregoing, if (a) any Security shall have been
authenticated and delivered hereunder to the Company, or any Person acting on
its behalf, but shall never have been issued and sold by the Company, (b) the
Company shall deliver such Security to the Security Registrar for cancellation
or shall cancel such Security and deliver evidence of such cancellation to the
Trustee, in each case as provided in Section 309, and (c) the Company, at its
election, shall deliver to the Trustee a written statement (which need not
comply with Section 102 and need not be accompanied by an Officer's Certificate
or an Opinion of Counsel) stating that such Security has never been issued and
sold by the Company, then, for all purposes of this Indenture, such Security
shall be deemed never to have been authenticated and delivered hereunder and
shall never be entitled to the benefits hereof.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any series, or
any Tranche thereof, the Company may execute, and upon Company Order the Trustee
shall authenticate and deliver, temporary Securities which are printed,
lithographed, typewritten, mimeographed, photocopied or otherwise produced, in
any authorized denomination, substantially of the tenor of the definitive
Securities in lieu of which they are issued, with such appropriate insertions,
omissions, substitutions and other variations as the officers executing such
Securities may determine, as evidenced by their execution of such Securities;
provided, however, that temporary Securities need not recite specific
redemption, sinking fund, conversion or exchange provisions.
Except as otherwise specified as contemplated by Section 301 with
respect to the Securities of any series, or any Tranche thereof, after the
preparation of definitive Securities of such series or Tranche, the temporary
Securities of such series or Tranche shall be exchangeable, without charge to
the Holder thereof, for definitive Securities of such series or Tranche upon
surrender of such temporary Securities at the office or agency of the Company
maintained pursuant to Section 502 in a Place of Payment for such Securities.
Upon such surrender of temporary Securities, the Company shall, except as
aforesaid, execute and the Trustee shall authenticate and deliver in exchange
therefor definitive Securities of the same series and Tranche, of authorized
denominations and of like tenor and aggregate principal amount.
Until exchanged in full as hereinabove provided, temporary
Securities shall in all respects be entitled to the same benefits under this
Indenture as definitive Securities of the same series and Tranche and of like
tenor authenticated and delivered hereunder.
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SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.
The Company shall cause to be kept in one of the offices
designated pursuant to Section 502, with respect to the Securities of each
series, or any Tranche thereof, a register (the "SECURITY REGISTER") in which,
subject to such reasonable regulations as it may prescribe, the Company shall
provide for the registration of Securities of such series or Tranche and the
registration of transfer thereof. The Company shall designate one Person to
maintain the Security Register for the Securities of each series and such Person
is referred to herein, with respect to such series, as the "SECURITY REGISTRAR".
Anything herein to the contrary notwithstanding, the Company may designate one
or more of its offices or an office of any Affiliate as an office in which a
register with respect to the Securities of one or more series, or any Tranche or
Tranches thereof, shall be maintained, and the Company may designate itself or
any Affiliate as the Security Registrar with respect to one or more of such
series. The Security Register shall be open for inspection by the Trustee and
the Company at all reasonable times.
Except as otherwise specified as contemplated by Section 301 with
respect to the Securities of any series, or any Tranche thereof, upon
presentment for registration of transfer of any Security of such series or
Tranche at the office or agency of the Company maintained pursuant to Section
502 in a Place of Payment for such series or Tranche, and further upon
satisfaction of any conditions prescribed by applicable law, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of the same
series and Tranche, of authorized denominations and of like tenor and aggregate
principal amount.
Except as otherwise specified as contemplated by Section 301 with
respect to the Securities of any series, or any Tranche thereof, any Security of
such series or Tranche may be exchanged at the option of the Holder, for one or
more new Securities of the same series and Tranche, of authorized denominations
and of like tenor and aggregate principal amount, upon presentment of the
Securities to be exchanged at any such office or agency. Whenever any Securities
are so presented for exchange and upon satisfaction of any conditions prescribed
by applicable law, the Company shall execute, and the Trustee shall authenticate
and deliver, the Securities which the Holder making the exchange is entitled to
receive.
All Securities delivered upon any registration of transfer or
exchange of Securities shall be valid obligations of the Company, evidencing the
same respective obligations, and being entitled to the same benefits under this
Indenture, as the Securities presented upon such registration of transfer or
exchange.
Every Security presented for registration of transfer or for
exchange shall (if so required by the Company, the Trustee or the Security
Registrar) be duly endorsed or shall be accompanied by a written instrument of
transfer in form satisfactory to the Company, and the Trustee or the Security
Registrar, as the case may be, duly executed by the Holder thereof or his
attorney duly authorized in writing.
31
Unless otherwise specified as contemplated by Section 301 with
respect to Securities of any series, or any Tranche thereof, no service charge
shall be made for any registration of transfer or exchange of Securities, but
the Company may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Securities, other than exchanges pursuant to Section
304, 406 or 1106 not involving any transfer.
The Company shall not be required to execute or to provide for the
registration of transfer of or the exchange of (a) Securities of any series, or
any Tranche thereof, during a period of fifteen (15) days immediately preceding
the date notice is to be given identifying the serial numbers of the Securities
of such series or Tranche called for redemption or (b) any Security so selected
for redemption in whole or in part, except the unredeemed portion of any
Security being redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is presented to the Trustee, the Company
shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of the same series and Tranche, and of like tenor and
principal amount and bearing a number not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (a)
evidence to their satisfaction of the ownership of and the destruction, loss or
theft of any Security and (b) such security or indemnity as may be reasonably
required by them to save each of them and any agent of any of them harmless,
then, in the absence of notice to the Company or the Trustee that such Security
is held by a Person deemed to be a protected purchaser under applicable law, the
Company shall execute and the Trustee shall authenticate and deliver, in lieu of
any such destroyed, lost or stolen Security, a new Security of the same series
and Tranche, and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
Notwithstanding the foregoing, in case any such mutilated,
destroyed, lost or stolen Security has become or is about to become due and
payable, the Company in its discretion may, but subject to compliance with the
conditions set forth in the next preceding paragraph, instead of issuing a new
Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
reasonable expenses (including the fees and expenses of the Trustee) in
connection therewith.
Every new Security of any series issued pursuant to this Section
in lieu of any destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the destroyed,
lost or stolen Security shall be at any time enforceable by
32
anyone other than the Holder of such new Security, and any such new Security
shall be entitled to all the benefits of this Indenture equally and ratably with
any and all other Securities of such series duly issued hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Unless otherwise specified as contemplated by Section 301 with
respect to the Securities of any series, or any Tranche thereof, interest on any
Security which is payable, and is punctually paid or duly provided for, on any
Interest Payment Date shall be paid to the Person in whose name that Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest.
Any interest on any Security of any series which is payable, but
is not punctually paid or duly provided for, on any Interest Payment Date,
including without limitation interest the payment period for which has been
extended as specified with respect to such series as contemplated by Section 301
(herein called "UNPAID INTEREST"), shall forthwith cease to be payable to the
Holder on the related Regular Record Date by virtue of having been such Holder,
and such Unpaid Interest may be paid by the Company, at its election in each
case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Unpaid
Interest to the Persons in whose names the Securities of such
series (or their respective Predecessor Securities) are registered
at the close of business on a date (herein called a "SPECIAL
RECORD DATE") for the payment of such Unpaid Interest, which shall
be fixed in the following manner. The Company shall notify the
Trustee in writing of the amount of Unpaid Interest proposed to be
paid on each Security of such series and the date of the proposed
payment, and at the same time the Company shall deposit with the
Trustee an amount of money equal to the aggregate amount proposed
to be paid in respect of such Unpaid Interest or shall make
arrangements satisfactory to the Trustee for such deposit prior to
the date of the proposed payment, such money when deposited to be
held in trust for the benefit of the Persons entitled to such
Unpaid Interest as in this clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Unpaid
Interest which shall be not more than thirty (30) days and not
less than ten (10) days prior to the date of the proposed payment
and not less than twenty-five (25) days after the receipt by the
Trustee of the notice of the proposed payment. The Trustee shall
promptly notify the Company of such Special Record Date and, in
the name and at the expense of the Company, shall, not less than
fifteen (15) days prior to such Special Record Date, cause notice
of the proposed payment of such Unpaid Interest and the Special
Record
33
Date therefor to be mailed, first-class postage prepaid, to each
Holder of Securities of such series at the address of such Holder
as it appears in the Security Register. Notice of the proposed
payment of such Unpaid Interest and the Special Record Date
therefor having been so mailed, such Unpaid Interest shall be paid
to the Persons in whose names the Securities of such series (or
their respective Predecessor Securities) are registered at the
close of business on such Special Record Date.
(b) The Company may make payment of any Unpaid Interest
on the Securities of any series in any other lawful manner not
inconsistent with the requirements of any securities exchange on
which such Securities may be listed, and upon such notice as may
be required by such exchange, if, after notice given by the
Company to the Trustee of the proposed payment pursuant to this
clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section and Section
305, each Security delivered under this Indenture upon registration of transfer
of or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.
SECTION 308. PERSONS DEEMED OWNERS.
Prior to the due presentment of any Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the absolute
owner of such Security (subject to Sections 305 and 307) for the purpose of
receiving payment of principal of and premium, if any, and interest, if any, on
such Security and for all other purposes whatsoever, whether or not such
Security be overdue, and neither the Company, nor the Trustee, or any agent of
the Company or the Trustee shall be affected by notice to the contrary.
SECTION 309. CANCELLATION BY SECURITY REGISTRAR.
All Securities presented for payment, redemption, registration of
transfer or exchange shall, if presented to any Person other than the Security
Registrar, be delivered to the Security Registrar and, if not theretofore
canceled, shall be promptly canceled by the Security Registrar. The Company may
at any time deliver to the Security Registrar for cancellation any Securities
previously authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever or which the Company shall not have issued and
sold, and all Securities so delivered shall be promptly canceled by the Security
Registrar. Unless by a Company Order the Company shall direct that canceled
Securities be returned to it, all canceled Securities held by the Security
Registrar shall be disposed of in accordance with the Security Registrar's
customary procedures. The Security Registrar shall promptly deliver to the
Company and the Trustee evidence of any cancellation by it of a Security, and of
any disposition by it of a canceled Security, in accordance with this Section
309 to the Trustee and the Company.
34
SECTION 310. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section 301 for
Securities of any series, or any Tranche thereof, interest on the Securities of
each series shall be computed on the basis of a three hundred sixty (360) day
year consisting of twelve (12) thirty (30) day months and, with respect to any
period less than a full calendar month, on the basis of the actual number of
days elapsed during such period.
SECTION 311. PAYMENT TO BE IN PROPER CURRENCY.
In the case of the Securities of any series, or any Tranche
thereof, denominated in any currency other than Dollars or in a composite
currency (the "REQUIRED CURRENCY"), except as otherwise specified with respect
to such Securities as contemplated by Section 301, the obligation of the Company
to make any payment of the principal thereof, or the premium, if any, or
interest, if any, thereon, shall not be discharged or satisfied by any tender by
the Company, or recovery by the Trustee, in any currency other than the Required
Currency, except to the extent that such tender or recovery shall result in the
Trustee timely holding the full amount of the Required Currency then due and
payable. If any such tender or recovery is in a currency other than the Required
Currency, the Trustee may take such actions as it considers appropriate to
exchange such currency for the Required Currency. The costs and risks of any
such exchange, including without limitation the risks of delay and exchange rate
fluctuation, shall be borne by the Company and the Company shall remain fully
liable for any shortfall or delinquency in the full amount of Required Currency
then due and payable, and in no circumstances shall the Trustee be liable
therefor except in the case of its negligence or willful misconduct.
ARTICLE FOUR
REDEMPTION OF SECURITIES
SECTION 401. APPLICABILITY OF ARTICLE.
Securities of any series, or any Tranche thereof, which are
redeemable before their Stated Maturity shall be redeemable in accordance with
their terms and (except as otherwise specified as contemplated by Section 301
for Securities of such series or Tranche) in accordance with this Article.
SECTION 402. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall be
evidenced by a Board Resolution or an Officer's Certificate. The Company shall,
at least forty-five (45) days prior to the Redemption Date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee and in the case of Securities of a Series held by a Trust, the Property
Trustee under the related Declaration establishing such Trust in writing of such
Redemption Date
35
and of the principal amount of such Securities to be redeemed. In the case of
any redemption of Securities (a) prior to the expiration of any restriction on
such redemption provided in the terms of such Securities or elsewhere in this
Indenture or (b) pursuant to an election of the Company which is subject to a
condition specified in the terms of such Securities, the Company shall furnish
the Trustee with an Officer's Certificate evidencing compliance with such
restriction or condition.
SECTION 403. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all the Securities of any series, or any Tranche
thereof, are to be redeemed, the particular Securities to be redeemed shall be
selected by the Security Registrar from the Outstanding Securities of such
series or Tranche not previously called for redemption, by such method as shall
be provided for such series or Tranche, or, in the absence of any such
provision, by such method of random selection as the Security Registrar shall
deem fair and appropriate and which may, in any case, provide for the selection
for redemption of portions (in any authorized denomination for Securities of
such series or Tranche) of the principal amount of Securities of such series or
Tranche having a denomination larger than the minimum authorized denomination
for Securities of such series or Tranche; provided, however, that if, as
indicated in an Officer's Certificate, the Company shall have offered to
purchase all or any principal amount of the Securities then Outstanding of any
series, or any Tranche thereof, and less than all of such Securities as to which
such offer was made shall have been tendered to the Company for such purchase,
the Security Registrar, if so directed by Company Order, shall select for
redemption all or any principal amount of such Securities which have not been so
tendered.
The Security Registrar shall promptly notify the Company and the
Trustee in writing of the Securities selected for redemption and, in the case of
any Securities selected to be redeemed in part, the principal amount thereof to
be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
SECTION 404. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided in
Section 106 to the Holders of the Securities to be redeemed not less than thirty
(30) nor more than sixty (60) days prior to the Redemption Date.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
36
(c) if less than all the Securities of any series or
Tranche are to be redeemed, the identification of the particular
Securities to be redeemed and the portion of the principal amount
of any Security to be redeemed in part,
(d) that on the Redemption Date the Redemption Price,
together with accrued interest, if any, to the Redemption Date,
will become due and payable upon each such Security to be redeemed
and, if applicable, that interest thereon will cease to accrue on
and after said date,
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price and accrued
interest, if any, unless it shall have been specified as
contemplated by Section 301 with respect to such Securities that
such surrender shall not be required,
(f) that the redemption is for a sinking or other fund,
if such is the case, and
(g) such other matters as the Company shall deem
desirable or appropriate.
With respect to any notice of redemption of Securities at the
election of the Company, unless, upon the giving of such notice, such Securities
shall be deemed to have been paid in accordance with Section 601, such notice
may state that such redemption shall be conditional upon the receipt by the
Paying Agent or Agents for such Securities, on or prior to the date fixed for
such redemption, of money sufficient to pay the principal of and premium, if
any, and interest, if any, on such Securities and that if such money shall not
have been so received such notice shall be of no force or effect and the Company
shall not be required to redeem such Securities. In the event that such notice
of redemption contains such a condition and such money is not so received, the
redemption shall not be made and within a reasonable time thereafter notice
shall be given, in the manner in which the notice of redemption was given, that
such money was not so received and such redemption was not required to be made,
and the Paying Agent or Agents for the Securities otherwise to have been
redeemed shall promptly return to the Holders thereof any of such Securities
which had been surrendered for payment upon such redemption.
Notice of redemption of Securities to be redeemed at the election
of the Company, and any notice of non-satisfaction of a condition for redemption
as aforesaid, shall be given by the Company or, at the Company's Request, by the
Security Registrar in the name and at the expense of the Company. Notice of
mandatory redemption of Securities shall be given by the Security Registrar in
the name and at the expense of the Company.
37
SECTION 405. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, and the
conditions, if any, set forth in such notice having been satisfied, the
Securities or portions thereof so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified, and from and
after such date (unless, in the case of an unconditional notice of redemption,
the Company shall default in the payment of the Redemption Price and accrued
interest, if any) such Securities or portions thereof, if interest-bearing,
shall cease to bear interest. Upon surrender of any such Security for redemption
in accordance with such notice, such Security or portion thereof shall be paid
by the Company at the Redemption Price, together with accrued interest, if any,
to the Redemption Date; provided, however, that no such surrender shall be a
condition to such payment if so specified as contemplated by Section 301 with
respect to such Security; and provided, further, that, except as otherwise
specified as contemplated by Section 301 with respect to such Security, any
installment of interest on any Security the Stated Maturity of which installment
is on or prior to the Redemption Date shall be payable to the Holder of such
Security, or one or more Predecessor Securities, registered as such at the close
of business on the related Regular Record Date according to the terms of such
Security and subject to the provisions of Sections 305 and 307.
SECTION 406. SECURITIES REDEEMED IN PART.
Upon the surrender of any Security which is to be redeemed only in
part at a Place of Payment therefor (with, if the Company or the Trustee so
requires, due endorsement by, or a written instrument of transfer in form
satisfactory to the Company or the Trustee, as the case may be, duly executed
by, the Holder thereof or his attorney duly authorized in writing), the Company
shall execute, and the Trustee shall authenticate and deliver to the Holder of
such Security, without service charge, a new Security or Securities of the same
series and Tranche, of any authorized denomination requested by such Holder and
of like tenor and in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal of the Security so surrendered.
ARTICLE FIVE
COVENANTS
SECTION 501. PAYMENT OF SECURITIES.
The Company shall pay the principal of and premium, if any, and
interest, if any, on the Securities of each series in accordance with the terms
of such Securities and this Indenture.
SECTION 502. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in each Place of Payment for the
Securities of each series, or any Tranche thereof, an office or agency where
payment of such Securities shall be made, where the registration of transfer or
exchange of such Securities may be effected and where notices and demands to or
upon the Company in respect of such Securities and this Indenture may be served.
The Company shall give prompt written notice to the Trustee of the location, and
any
38
change in the location, of each such office or agency and prompt notice to the
Holders of any such change in the manner specified in Section 106. If at any
time the Company shall fail to maintain any such required office or agency in
respect of Securities of any series, or any Tranche thereof, or shall fail to
furnish the Trustee with the address thereof, payment of such Securities shall
be made, registration of transfer or exchange thereof may be effected and
notices and demands in respect thereof may be served at the Corporate Trust
Office of the Trustee, and the Company hereby appoints the Trustee as its agent
for all such purposes in any such event.
The Company may also from time to time designate one or more other
offices or agencies with respect to the Securities of one or more series, or any
Tranche thereof, for any or all of the foregoing purposes and may from time to
time rescind such designations; provided, however, that, unless otherwise
specified as contemplated by Section 301 with respect to the Securities of such
series or Tranche, no such designation or rescission shall in any manner relieve
the Company of its obligation to maintain an office or agency for such purposes
in each Place of Payment for such Securities in accordance with the requirements
set forth above. The Company shall give prompt written notice to the Trustee,
and prompt notice to the Holders in the manner specified in Section 106, of any
such designation or rescission and of any change in the location of any such
other office or agency.
Anything herein to the contrary notwithstanding, any office or
agency required by this Section may be maintained at an office of the Company or
any Affiliate thereof, in which event the Company or such Affiliate, as the case
may be, shall perform all functions to be performed at such office or agency.
SECTION 503. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent with
respect to the Securities of any series, or any Tranche thereof, it shall, on or
before each due date of the principal of and premium, if any, and interest, if
any, on any of such Securities, segregate and hold in trust for the benefit of
the Persons entitled thereto a sum sufficient to pay the principal and premium
or interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided. The Company shall promptly notify the
Trustee of any failure by the Company (or any other obligor on such Securities)
to make any payment of principal of or premium, if any, or interest, if any, on
such Securities.
Whenever the Company shall have one or more Paying Agents for the
Securities of any series, or any Tranche thereof, it shall, on or before each
due date of the principal of and premium, if any, and interest, if any, on such
Securities, deposit with such Paying Agents sums sufficient (without
duplication) to pay the principal and premium or interest so becoming due, such
sums to be held in trust for the benefit of the Persons entitled to such
principal, premium or interest, and (unless such Paying Agent is the Trustee)
the Company shall promptly notify the Trustee of any failure by it so to act.
39
The Company shall cause each Paying Agent for the Securities of
any series, or any Tranche thereof, other than the Company or the Trustee, to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent shall:
(a) hold all sums held by it for the payment of the
principal of and premium, if any, or interest, if any, on such
Securities in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided;
(b) give the Trustee notice of any failure by the
Company (or any other obligor upon such Securities) to make any
payment of principal of or premium, if any, or interest, if any,
on such Securities; and
(c) at any time during the continuance of any such
failure, upon the written request of the Trustee, forthwith pay to
the Trustee all sums so held in trust by such Paying Agent and
furnish to the Trustee such information as it possesses regarding
the names and addresses of the Persons entitled to such sums.
The Company may at any time pay, or by Company Order direct any
Paying Agent to pay, to the Trustee all sums held in trust by the Company or
such Paying Agent, such sums to be held by the Trustee upon the same trusts as
those upon which such sums were held by the Company or such Paying Agent and, if
so stated in a Company Order delivered to the Trustee, in accordance with the
provisions of Article Six; and, upon such payment by any Paying Agent to the
Trustee, such Paying Agent shall be released from all further liability with
respect to such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of and premium,
if any, or interest, if any, on any Security and remaining unclaimed for two
years after such principal and premium, if any, or interest, if any, has become
due and payable shall be paid to the Company on Company Request, or, if then
held by the Company, shall be discharged from such trust; and, upon such payment
or discharge, the Holder of such Security shall, as an unsecured general
creditor and not as the Holder of an Outstanding Security, look only to the
Company for payment of the amount so due and payable and remaining unpaid
[(subject, however, to the provisions of Article Fourteen)], and all liability
of the Trustee or such Paying Agent with respect to such trust money, and all
liability of the Company as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such payment to the Company, may at the expense of the Company cause to be
mailed, on one occasion only, notice to such Holder that such money remains
unclaimed and that, after a date specified therein, which shall not be less than
thirty (30) days from the date of such mailing, any unclaimed balance of such
money then remaining will be paid to the Company.
40
SECTION 504. CORPORATE EXISTENCE.
Subject to the rights of the Company under Article Ten, the
Company shall do or cause to be done all things necessary to preserve and keep
its corporate existence in full force and effect.
SECTION 505. MAINTENANCE OF PROPERTIES .
The Company shall cause (or, with respect to property owned in
common with others, make reasonable efforts to cause) all its properties used or
useful in the conduct of its businesses, considered as a whole, to be maintained
and kept in good condition, repair and working order and shall cause (or, with
respect to property owned in common with others, make reasonable effort to
cause) to be made such repairs, renewals, replacement, betterments and
improvements thereof, as, in the judgment of the Company, may be necessary in
order that the operation of such properties, considered as a whole, may be
conducted in accordance with common industry practice; provided, however, that
nothing in this section shall prevent the Company from discontinuing, or causing
the discontinuance of, the operation and maintenance of any of its properties;
and provided, further, that nothing in this Section shall prevent the Company
from selling, transferring or otherwise disposing of, or causing the sale,
transfer or other disposition of any of its properties.
SECTION 506. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any
term, provision or condition set forth in
(a) any covenant or restriction specified with respect
to the Securities of any one or more series, or any Tranche or
Tranches thereof, as contemplated by Section 301, or by Section
1201(b) if before the time for such compliance the Holders of a
majority in aggregate principal amount of the Outstanding
Securities of all series and Tranches with respect to which
compliance with such covenant or restriction is to be omitted,
considered as one class, shall, by Act of such Holders, either
waive such compliance in such instance or generally waive
compliance with such term, provision or condition; provided,
however, that no such waiver shall be effective as to any matters
contemplated in clause (a), (b) or (c) in Section 1102 without
consent of the Holders specified in such Section; and
(b) Section 504 or Article Ten if before the time for
such compliance the Holders of a majority in principal amount of
Securities Outstanding under this Indenture shall, by Act of such
Holders, either waive such compliance in such instance or
generally waive compliance with such term, provision or condition;
but, in either case, no such waiver shall extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver shall become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition shall remain in
full force and effect; provided, however, so long as a Trust holds Securities of
any series,
41
such Trust may not waive compliance or waive any default in compliance by the
Company with any covenant or other term contained in this Indenture or the
Securities of such series without the approval of the holders of at least a
majority in aggregate liquidation preference of the outstanding Trust Securities
issued by such Trust, obtained as provided in the Declaration pertaining to such
Trust.
SECTION 507. ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.
Not later than December 1 in each year, commencing December 1,
____, the Company shall deliver to the Trustee an Officer's Certificate which
need not comply with Section 102, executed by the principal executive officer,
the principal financial officer or the principal accounting officer of the
Company, as to such officer's knowledge of the Company's compliance with all
conditions and covenants under this Indenture, such compliance to be determined
without regard to any period of grace or requirement of notice under this
Indenture.
SECTION 508. RESTRICTION ON PAYMENT OF DIVIDENDS, ETC.
So long as any preferred securities of any series remain
outstanding, if, at any time (a) there shall have occurred and be continuing an
Event of Default described in clause (a) or (b) of Section 701 with respect to
the Securities of any series, (b) the Company shall have elected to extend any
interest payment period as specified with respect to the Securities of any
series, or any Tranche thereof, as contemplated by Section 301 and any such
period, as so extended, shall be continuing, or (c) the Company shall be in
default in respect of its payment or other obligations under the Trust
Securities Guarantee relating to any Trust Securities (other than Trust
Securities initially issued and sold to the Company), then the Company shall not
(x) declare or pay any dividend on, make any distribution or liquidation payment
with respect to, or redeem, purchase or exchange any of its capital stock, (y)
make any payment of principal, premium, if any, or interest, if any, on or
repay, repurchase or redeem any debt securities (including other Securities)
that rank pari passu with or junior in right of payment to the Securities and
(z) make any guarantee payments with respect to any of the foregoing (other than
payments under the Trust Securities Guarantee); provided, however, that nothing
in this Section shall be deemed to prohibit (i) dividends or distributions
payable in shares of the Company's capital stock, or in the form of warrants,
options or other rights, where the dividend or distributed stock issuable upon
exercise of the warrants, options or other rights are the same stock as that on
which the dividend is being paid or is PARI PASSU or junior to the stock, (ii)
reclassification of the Company's capital stock or exchange or conversion of
shares of one class or series of the Company's capital stock into shares of
another class or series of the Company's capital stock, (iii) purchases or other
acquisitions of fractional interests in shares of the Company's capital stock
pursuant to the conversion or exchange provisions of the capital stock or the
security being converted or exchanged; (iv) redemption, purchases or other
acquisitions of the Company's capital stock in connection with the satisfaction
by the Company of its obligations under provisions of the Company's Restated
Articles of Incorporation, as amended, under any direct purchase, dividend
reinvestment, customer purchase or employee benefit plans or under any contract
or security requiring the Company to purchase shares of its capital stock; and
(v) payments
42
under any Trust Securities Guarantee executed and delivered by the Company
concurrently with the issuance of any Preferred Securities.
SECTION 509. AVA CAPITAL TRUST III.
If Securities of any series are issued and delivered to a Trust
(or a trustee thereof) in connection with the issuance by such trust of Trust
Securities, so long as such Trust Securities remain outstanding the Company
shall (a) maintain 100% direct ownership, by the Company or any Affiliate
thereof, of the Trust Securities initially issued and sold to the Company by
such Trust, except as otherwise provided in Section 1005, and (b) use all
reasonable efforts to cause such Trust (i) to maintain its existence as a
business trust, except in connection with a distribution of Securities, with the
redemption, purchase or other acquisition and retirement of all Trust Securities
of such trust or with certain mergers, consolidations or other business
combinations, in each case as permitted by the Declaration establishing such
Trust, and (ii) to otherwise continue not to be treated as an association
taxable as a corporation for United States federal income tax purposes.
SECTION 510. HOLDERS OF PREFERRED SECURITIES
The Company agrees that, for so long as any Preferred Securities
remain outstanding, its obligations under this Indenture will also be for the
benefit of the holders from time to time of Preferred Securities, and the
Company acknowledges and agrees that such holders will be entitled to enforce
this Indenture, as third party beneficiaries, directly against the Company to
the same extent as if such holders of Preferred Securities held a principal
amount of Securities equal to the stated liquidation preference of the Preferred
Securities held by such holders.
ARTICLE SIX
SATISFACTION AND DISCHARGE
SECTION 601. SATISFACTION AND DISCHARGE OF SECURITIES.
Any Security or Securities, or any portion of the principal amount
thereof, shall be deemed to have been paid for all purposes of this Indenture,
and the entire indebtedness of the Company in respect thereof shall be satisfied
and discharged, if there shall have been irrevocably deposited with the Trustee
or any Paying Agent (other than the Company), in trust:
(a) money in an amount which shall be sufficient, or
(b) in the case of a deposit made prior to the Maturity
of such Securities or portions thereof, Eligible Obligations,
which shall not contain provisions permitting the redemption or
other prepayment thereof at the option of the issuer thereof, the
principal of and the interest on which when due, without any
regard to
43
reinvestment thereof, will provide moneys which, together with the
money, if any, deposited with or held by the Trustee or such
Paying Agent, shall be sufficient, or
(c) a combination of (a) or (b) which shall be
sufficient,
to pay when due the principal of and premium, if any, and interest, if any, due
and to become due on such Securities or portions thereof; provided, however,
that in the case of the provision for payment or redemption of less than all the
Securities of any series or Tranche, such Securities or portions thereof shall
have been selected by the Security Registrar as provided herein and, in the case
of a redemption, the notice requisite to the validity of such redemption shall
have been given or irrevocable authority shall have been given by the Company to
the Trustee to give such notice, under arrangements satisfactory to the Trustee;
and provided, further, that the Company shall have delivered to the Trustee and
such Paying Agent:
(x) if such deposit shall have been made prior to the
Maturity of such Securities, a Company Order stating that the
money and Eligible Obligations deposited in accordance with this
Section shall be held in trust, as provided in Section 603;
(y) if Eligible Obligations shall have been deposited,
an Opinion of Counsel to the effect that such obligations
constitute Eligible Obligations and do not contain provisions
permitting the redemption or other prepayment thereof at the
option of the issuer thereof, and an opinion of an independent
public accountant of nationally recognized standing, selected by
the Company, to the effect that the other requirements set forth
in clause (b) and, if applicable, (c) above have been satisfied;
and
(z) if such deposit shall have been made prior to the
Maturity of such Securities, an Officer's Certificate stating the
Company's intention that, upon delivery of such Officer's
Certificate, its indebtedness in respect of such Securities or
portions thereof will have been satisfied and discharged as
contemplated in this Section.
Upon the deposit of money or Eligible Obligations, or both, in
accordance with this Section, together with the documents required by clauses
(x), (y) and (z) above, the Trustee shall, upon Company Request, acknowledge in
writing that such Securities or portions thereof are deemed to have been paid
for all purposes of this Indenture and that the entire indebtedness of the
Company in respect thereof has been satisfied and discharged as contemplated in
this Section. In the event that all of the conditions set forth in the preceding
paragraph shall have been satisfied in respect of any Securities or portions
thereof except that, for any reason, the Officer's Certificate specified in
clause (z) (if otherwise required) shall not have been delivered, such
Securities or portions thereof shall nevertheless be deemed to have been paid
for all purposes of this Indenture, and the Holders of such Securities or
portions thereof shall nevertheless be no longer entitled to the benefits
provided
44
by this Indenture or of any of the covenants of the Company under Article Five
(except the covenants contained in Sections 502 and 503) or any other covenants
made in respect of such Securities or portions thereof as contemplated by
Section 301 or Section 1201(b), but the indebtedness of the Company in respect
of such Securities or portions thereof shall not be deemed to have been
satisfied and discharged prior to Maturity for any other purpose; and, upon
Company Request, the Trustee shall acknowledge in writing that such Securities
or portions thereof are deemed to have been paid for all purposes of this
Indenture.
If payment at Stated Maturity of less than all of the Securities
of any series, or any Tranche thereof, is to be provided for in the manner and
with the effect provided in this Section, the Security Registrar shall select
such Securities, or portions of principal amount thereof, in the manner
specified by Section 403 for selection for redemption of less than all the
Securities of a series or Tranche.
In the event that Securities which shall be deemed to have been
paid for purposes of this Indenture, and, if such is the case, in respect of
which the Company's indebtedness shall have been satisfied and discharged, all
as provided in this Section, do not mature and are not to be redeemed within the
sixty (60) day period commencing with the date of the deposit of moneys or
Eligible Obligations, as aforesaid, the Company shall, as promptly as
practicable, give a notice, in the same manner as a notice of redemption with
respect to such Securities, to the Holders of such Securities to the effect that
such deposit has been made and the effect thereof.
Notwithstanding that any Securities shall be deemed to have been
paid for purposes of this Indenture, as aforesaid, the obligations of the
Company and the Trustee in respect of such Securities under Sections 304, 305,
306, 404, 502, 503, 807 and 814 and this Article shall survive.
The Company shall pay, and shall indemnify the Trustee or any
Paying Agent with which Eligible Obligations shall have been deposited as
provided in this Section against, any tax, fee or other charge imposed on or
assessed against such Eligible Obligations or the principal or interest received
in respect of such Eligible Obligations, including, but not limited to, any such
tax payable by any entity deemed, for tax purposes, to have been created as a
result of such deposit.
Anything herein to the contrary notwithstanding, (a) if, at any
time after a Security would be deemed to have been paid for purposes of this
Indenture, and, if such is the case, the Company's indebtedness in respect
thereof would be deemed to have been satisfied and discharged, pursuant to this
Section (without regard to the provisions of this paragraph), the Trustee or any
Paying Agent, as the case may be, (i) shall be required to return the money or
Eligible Obligations, or combination thereof, deposited with it as aforesaid to
the Company or any representative thereof, under any applicable Federal or State
bankruptcy, insolvency or other similar law or (ii) are unable to apply any
money held by the Trustee as provided in this Section with respect to such
Security by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, such
Security shall thereupon be deemed retroactively not to have been paid and any
satisfaction and discharge of the Company's indebtedness in respect thereof
45
shall retroactively be deemed not to have been effected, and such Security shall
be deemed to remain Outstanding and (b) any satisfaction and discharge of the
Company's indebtedness in respect of any Security shall be subject to the
provisions of the last paragraph of Section 503.
SECTION 602. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of further
effect (except as hereinafter expressly provided), and the Trustee, at the
expense of the Company, shall execute such instruments as the Company shall
reasonably request to evidence and acknowledge the satisfaction and discharge of
this Indenture, when:
(a) no Securities remain Outstanding hereunder; and
(b) the Company has paid or caused to be paid all other
sums payable hereunder by the Company;
provided, however, that if, in accordance with the last paragraph of Section
601, any Security, previously deemed to have been paid for purposes of this
Indenture, shall be deemed retroactively not to have been so paid, this
Indenture shall thereupon be deemed retroactively not to have been satisfied and
discharged, as aforesaid, and to remain in full force and effect, and the
Company shall execute and deliver such instruments as the Trustee shall
reasonably request to evidence and acknowledge the same.
Notwithstanding the satisfaction and discharge of this Indenture
as aforesaid, the obligations of the Company and the Trustee under Sections 304,
305, 306, 404, 502, 503, 807 and 814 and this Article shall survive.
Upon satisfaction and discharge of this Indenture as provided in
this Section, the Trustee shall turn over to the Company any and all money,
securities and other property then held by the Trustee for the benefit of the
Holders of the Securities (other than money and Eligible Obligations held by the
Trustee pursuant to Section 603) and shall execute and deliver to the Company
such instruments as, in the judgment of the Company, shall be necessary,
desirable or appropriate to effect or evidence the satisfaction and discharge of
this Indenture.
SECTION 603. APPLICATION OF TRUST MONEY.
Neither the Eligible Obligations nor the money deposited pursuant
to Section 601, nor the principal or interest payments on any such Eligible
Obligations, shall be withdrawn or used for any purpose other than, and shall be
held in trust for, the payment of the principal of and premium, if any, and
interest, if any, on the Securities or portions of principal amount thereof in
respect of which such deposit was made, all subject, however, to the provisions
of Section 503; provided, however, that any cash received from such principal or
interest payments on such Eligible Obligations, if not then needed for such
purpose, shall, to the extent practicable and upon Company
46
Request and delivery to the Trustee of the documents referred to in clause (y)
in the first paragraph of Section 601, be invested in Eligible Obligations of
the type described in clause (b) in the first paragraph of Section 601 maturing
at such times and in such amounts as shall be sufficient, together with any
other moneys and the proceeds of any other Eligible Obligations then held by the
Trustee, to pay when due the principal of and premium, if any, and interest, if
any, due and to become due on such Securities or portions thereof on and prior
to the Maturity thereof, and interest earned from such reinvestment shall be
paid over to the Company as received, free and clear of any trust, lien or
pledge under this Indenture [(except the lien provided by Section 807)]; and
provided, further, that any moneys held in accordance with this Section on the
Maturity of all such Securities in excess of the amount required to pay the
principal of and premium, if any, and interest, if any, then due on such
Securities shall be paid over to the Company free and clear of any trust, lien
or pledge under this Indenture [(except the lien provided by Section 807)]; and
provided, further, that if an Event of Default shall have occurred and be
continuing, moneys to be paid over to the Company pursuant to this Section shall
be held until such Event of Default shall have been waived or cured.
ARTICLE SEVEN
EVENTS OF DEFAULT; REMEDIES
SECTION 701. EVENTS OF DEFAULT.
"EVENT OF DEFAULT", wherever used herein with respect to the
Securities of any series, means any of the following events which shall have
occurred and be continuing:
(a) failure to pay interest, if any, on any Security of such
series within sixty (60) days after the same becomes due and payable
[(whether or not payment is prohibited by the provisions of Article
Fourteen)]; provided, however, that no such failure shall constitute an
"Event of Default" if the Company shall have made a valid extension of
the interest payment period with respect to the Securities of such series
if so provided with respect to such series as contemplated by Section
301; or
(b) failure to pay the principal of or premium, if any, on any
Security of such series within three (3) Business Days after its Maturity
[(whether or not payment is prohibited by the provisions of Article
Fourteen)]; provided, however, that no such failure shall constitute an
"Event of Default" if the Company shall have made a valid extension of
the Maturity of the Securities of such series if so provided with respect
to such series as contemplated by Section 301; or
(c) failure to perform or breach of any covenant or warranty of
the Company in this Indenture (other than a covenant or warranty a
default in the performance of which or breach of which is elsewhere in
this Section specifically dealt with or which has expressly been included
in this Indenture solely for the benefit of one or more series of
Securities
47
other than such series) for a period of ninety (90) days after there has
been given, by registered or certified mail, to the Company by the
Trustee, or to the Company and the Trustee by the Holders of at least
thirty-three per centum (33%) in principal amount of the Outstanding
Securities of such series, a written notice specifying such default or
breach and requiring it to be remedied and stating that such notice is a
"NOTICE OF DEFAULT" hereunder, unless the Trustee, or the Trustee and the
Holders of a principal amount of Securities of such series not less than
the principal amount of Securities the Holders of which gave such notice,
as the case may be, shall agree in writing to an extension of such period
prior to its expiration; provided, however, that the Trustee, or the
Trustee and the Holders of such principal amount of Securities of such
series, as the case may be, shall be deemed to have agreed to an
extension of such period if corrective action is initiated by the Company
within such period and is being diligently pursued; or
(d) the entry by a court having jurisdiction in the premises of
(i) a decree or order for relief in respect of the Company in an
involuntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or (ii) a
decree or order adjudging the Company a bankrupt or insolvent, or
approving as properly filed a petition by one or more Persons other than
the Company seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any applicable Federal
or State law, or appointing a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official for the Company or for
any substantial part of its property, or ordering the winding-up or
liquidation of its affairs, and any such decree or order for relief or
any such other decree or order shall have remained unstayed and in effect
for a period of ninety (90) consecutive days; or
(e) the commencement by the Company of a voluntary case or
proceeding under any applicable Federal or State bankruptcy, insolvency,
reorganization or other similar law or of any other case or proceeding to
be adjudicated a bankrupt or insolvent, or the consent by the Company to
the entry of a decree or order for relief in respect of the Company in a
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement of
any bankruptcy or insolvency case or proceeding against the Company, or
the filing by the Company of a petition or answer or consent seeking
reorganization or relief under any applicable Federal or State law, or
the consent by the Company to the filing of such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee, sequestrator or similar official of the Company or of
any substantial part of its property, or the making by the Company of an
assignment for the benefit of creditors, or the admission by the Company
in writing of its inability to pay its debts generally as they become
due, or the authorization of such action by the Board of Directors of the
Company; or
(f) if such Securities shall have been issued and delivered to
a Trust (or trustee thereof) in connection with the issuance by such
Trust of Trust Securities and so long as such Trust Securities remain
outstanding, such Trust shall have voluntarily or involuntarily
48
dissolved, wound up its business or otherwise terminated its existence
except in connection with (i) the distribution of Securities to holders
of Trust Securities in liquidation of their interests in such Trust; (ii)
the redemption of all or the outstanding Trust Securities of such Trust
or (iii) certain mergers, consolidations or other business combinations,
each as permitted by the Declaration establishing such Trust, or
(g) any other Event of Default specified with respect to
Securities of such series.
SECTION 702. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default shall have occurred and be continuing with
respect to Securities of any series at the time Outstanding, then in every such
case the Trustee or the Holders of not less than thirty-three per centum (33%)
in principal amount of the Outstanding Securities of such series may declare the
principal amount (or, if any of the Securities of such series are Discount
Securities, such portion of the principal amount of such Securities as may be
specified in the terms thereof as contemplated by Section 301) of all of the
Outstanding Securities of such series to be due and payable immediately
(provided that the payment of principal and interest on such Securities shall
remain subordinated to the extent provided in this Indenture), by a notice in
writing to the Company (and to the Trustee if given by Holders), and upon
receipt by the Company of notice of such declaration such principal amount (or
specified amount), together with premium, if any, and accrued interest, if any,
thereon, shall become immediately due and payable; provided, however, that if an
Event of Default shall have occurred and be continuing with respect to more than
one series of Securities, the Trustee or the Holders of not less than
thirty-three per centum (33%) in aggregate principal amount of the Outstanding
Securities of all such series, considered as one class, may make such
declaration of acceleration, and not the Holders of the Securities of any one of
such series (provided that the payment of principal and interest on such
Securities shall remain subordinated to the extent provided in this Indenture).
At any time after such a declaration of acceleration of the
maturity of the Securities of any series shall have been made, but before a
judgment or decree for payment of the money due shall have been obtained by the
Trustee as provided in this Article, [the Event or Events of Default giving rise
to such declaration of acceleration shall, without further act, be deemed to
have been cured, and] such declaration and its consequences shall, without
further act, be deemed to have been rescinded and annulled, if
(a) the Company shall have paid or deposited with the
Trustee a sum sufficient to pay
(i) all overdue interest, if any, on all
Securities of such series then Outstanding;
(ii) the principal of and premium, if any, on any
Securities of such series then Outstanding which have
become due otherwise than by such
49
declaration of acceleration and interest, if any, thereon
at the rate or rates prescribed therefor in such
Securities;
(iii) interest, if any, upon overdue interest, if
any, at the rate or rates prescribed therefor in such
Securities, to the extent that payment of such interest is
lawful; and
(iv) all amounts due to the Trustee under Section
807; and
(b) all Event or Events of Default with respect to
Securities of such series, other than the non-payment of the
principal of Securities of such series which shall have become due
solely by such declaration of acceleration, shall have been cured
or waived as provided in Section 713.
No such rescission shall affect any subsequent Event of Default or impair any
right consequent thereon.
SECTION 703. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
If an Event of Default described in clause (a) or (b) of Section
701 shall have occurred and be continuing, the Company shall, upon demand of the
Trustee, pay to it, for the benefit of the Holders of the Securities of the
series with respect to which such Event of Default shall have occurred, the
whole amount then due and payable on such Securities for principal and premium,
if any, and interest, if any, and, in addition thereto, such further amount as
shall be sufficient to cover any amounts due to the Trustee under Section 807.
If the Company shall fail to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree and may
enforce the same against the Company or any other obligor upon such Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon such
Securities, wherever situated.
If an Event of Default with respect to Securities of any series
shall have occurred and be continuing, the Trustee may in its discretion proceed
to protect and enforce its rights and the rights of the Holders of the
Securities of such series then outstanding by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce any
such rights, whether for the specific enforcement of any covenant or agreement
in this Indenture or in aid of the exercise of any power granted herein, or to
enforce any other proper remedy.
SECTION 704. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article shall
be applied in the following order, to the extent permitted by law, at the date
or dates fixed by the Trustee and, in case
50
of the distribution of such money on account of principal or premium, if any, or
interest, if any, upon presentation of the Securities in respect of which or for
the benefit of which such money shall have been collected and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: To the payment of all amounts due the Trustee under Section
807;
SECOND: To the payment of the whole amount then due and unpaid
upon the Outstanding Securities for principal and premium, if any, and
interest, if any, in respect of which or for the benefit of which such
money has been collected; and in case such proceeds shall be insufficient
to pay in full the whole amount so due and unpaid upon such Securities,
then to the payment of such principal and interest, if any, thereon
without any preference or priority, ratably according to the aggregate
amount so due and unpaid, with any balance then remaining to the payment
of premium, if any, and, if so specified as contemplated by Section 301
with respect to the Securities of any series, or any Tranche thereof,
interest, if any, on overdue premium, if any, and overdue interest, if
any, ratably as aforesaid, all to the extent permitted by applicable law;
THIRD: To the payment of the remainder, if any, to the Company or
to whomsoever may be lawfully entitled to receive the same or as a court
of competent jurisdiction may direct.
SECTION 705. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company for the payment of overdue principal or interest) shall be entitled
and empowered, by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of
principal, premium, if any, and interest, if any, owing and unpaid in
respect of the Securities and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee
(including any claim for amounts due to the Trustee under Section 807)
and of the Holders allowed in such judicial proceeding, and
(b) to collect and receive any moneys or other property payable
or deliverable on any such claims and to distribute the same;
51
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amounts due it under Section 807.
Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any plan
of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding.
SECTION 706. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or on the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders in respect of which such judgment has been
recovered.
SECTION 707. LIMITATION ON SUITS.
No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the appointment of
a receiver or trustee, or for any other remedy hereunder, unless:
(a) such Holder shall have previously given written notice to
the Trustee of a continuing Event of Default with respect to the
Securities of such series;
(b) the Holders of a majority in aggregate principal amount of
the Outstanding Securities of all series in respect of which an Event of
Default shall have occurred and be continuing, considered as one class,
shall have made written request to the Trustee to institute proceedings
in respect of such Event of Default in its own name as Trustee hereunder;
(c) such Holder or Holders shall have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities to be
incurred in compliance with such request;
(d) the Trustee for sixty (60) days after its receipt of such
notice, request and offer of indemnity shall have failed to institute any
such proceeding; and
(e) no direction inconsistent with such written request shall
have been given to the Trustee during such sixty (60) day period by the
Holders of a majority in aggregate
52
principal amount of the Outstanding Securities of all series in respect
of which an Event of Default shall have occurred and be continuing,
considered as one class.
it being understood and intended that no one or more of such Holders shall have
any right in any manner whatever by virtue of, or by availing of, any provision
of this Indenture to affect, disturb or prejudice the rights of any other of
such Holders or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Indenture, except in
the manner herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 708. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL, PREMIUM AND
INTEREST.
Notwithstanding any other provision in this Indenture, the Holder
of any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of and premium, if any, and (subject to
Sections 307) interest, if any, on such Security on the Stated Maturity or
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such rights shall not be impaired without the consent of such Holder. In
addition, in the case of Securities of a series held by a Trust, a holder of
Preferred Securities may directly institute a proceeding against the Company for
enforcement of payment to such holder of principal of or interest on the
Securities having a principal amount equal to the aggregate liquidation
preference amount of the Preferred Securities of such holder on or after the due
dates specified or provided for in the Securities.
SECTION 709. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding shall have
been discontinued or abandoned for any reason, or shall have been determined
adversely to the Trustee or to such Holder, then and in every such case, subject
to any determination in such proceeding, the Company, the Trustee and such
Holder shall be restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and such Holder
shall continue as though no such proceeding had been instituted.
SECTION 710. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided in the last paragraph of Section 306,
no right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
53
SECTION 711. DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder to exercise
any right or remedy accruing upon any Event of Default shall impair any such
right or remedy or constitute a waiver of any such Event of Default or an
acquiescence therein. Every right and remedy given by this Article or by law to
the Trustee or to the Holders may be exercised from time to time, and as often
as may be deemed expedient, by the Trustee or by the Holders, as the case may
be.
SECTION 712. CONTROL BY HOLDERS OF SECURITIES.
If an Event of Default shall have occurred and be continuing in
respect of a series of Securities, the Holders of a majority in principal amount
of the Outstanding Securities of such series shall have the right to direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred on the Trustee with
respect to the Securities of such series; provided, however, that if an Event of
Default shall have occurred and be continuing with respect to more than one
series of Securities, the Holders of a majority in aggregate principal amount of
the Outstanding Securities of all such series, considered as one class, shall
have the right to make such direction, and not the Holders of the Securities of
any one of such series; and provided, further, that
(a) such direction shall not be in conflict with any rule of
law or with this Indenture, and could not involve the Trustee in personal
liability in circumstances where indemnity would not, in the Trustee's
sole discretion, be adequate,
(b) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
SECTION 713. WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities of any series may on behalf of the Holders
of all the Securities of such series then outstanding waive any past default
with respect to such series hereunder and its consequences, except a default
(a) in the payment of the principal of or premium, if any, or
interest, if any, on any Security of such series then outstanding, or
(b) in respect of a covenant or provision hereof which under
Section 1102 cannot be modified or amended without the consent of the
Holder of each Outstanding Security of such series affected; provided,
however, that so long as a Trust holds the Securities of any series, such
trust may not waive any past default without the consent of at least a
majority in aggregate liquidation preference of the outstanding Trust
Securities issued by such Trust, obtained as provided in the Declaration
pertaining to such Trust. Any such waiver by
54
holders of a majority in aggregate liquidation preference of outstanding
Preferred Securities issued by any such Trust shall be deemed to be on
behalf of all holders of Preferred Securities issued by any such Trust.
Upon any such waiver, such default shall cease to exist, and any
and all Events of Default arising therefrom shall be deemed to have been cured,
for every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or impair any right consequent thereon.
SECTION 714. UNDERTAKING FOR COSTS.
The Company and the Trustee agree, and each Holder by its
acceptance of a Security shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Trustee for any action taken,
suffered or omitted by it as Trustee, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that such court may in
its discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant all in the
manner, to the extent and except as provided in the Trust Indenture Act; but the
provisions of this Section shall not apply to any suit instituted by the
Company, [to any suit instituted by the Trustee, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than ten per centum
(10%) in aggregate principal amount of the Outstanding Securities of all series
in respect of which such suit may be brought, considered as one class, or to any
suit instituted by any Holder for the enforcement of the payment of the
principal of or premium, if any, or interest, if any, on any Security on or
after the Stated Maturity or Maturities expressed in such Security (or, in the
case of redemption, on or after the Redemption Date).]
SECTION 715. WAIVER OF STAY OR EXTENSION LAWS.
To the full extent that it may lawfully so agree, the Company
shall not at any time set up, claim or otherwise seek to take the benefit or
advantage of any stay or extension law, now or hereafter in effect, in order to
prevent or hinder the enforcement of this Indenture; and the Company, for itself
and all who may claim under it, so far as it or they now or hereafter may
lawfully do so, hereby waives the benefit of all such laws.
SECTION 716. ACTION BY HOLDERS OF CERTAIN TRUST SECURITIES.
If the Securities of any series shall be held by the Institutional
Trustee of a Trust and if such Institutional Trustee, as such Holder, shall have
failed to exercise any of the rights and remedies available under this Indenture
to the Holders of such Securities, the holders of the Trust Securities issued by
such Trust (other than Trust Securities initially issued and sold to the
Company) shall have and may exercise all such rights and remedies, to the same
extent as if such holders of such Trust Securities held a principal amount of
Securities of such series equal to the
55
liquidation preference of such Trust Securities, without first proceeding
against such trustee or trust. Notwithstanding the foregoing, in the case of an
Event of Default described in clause (a) or (b) of Section 701, each holder of
such Trust Securities shall have and may exercise all rights available to the
Institutional Trustee under Section 708 as the Holder of the Securities of such
series.
If action shall have been taken by both the Holders and the
holders of Trust Securities (other than Trust Securities initially issued and
sold to the Company) to exercise such rights as contemplated in the preceding
paragraph, the action taken by holders of Trust Securities shall control. Any
such action taken by registered holders of Trust Securities shall be evidenced
to the Trustee in the same manner as an Act of Holders, as provided in Section
104(a). The Trustee shall be entitled to rely on the books and records of the
related Trust in determining the identities of the holders of Trust Securities
(and, upon the reasonable request of the Trustee, the Company, as the sponsor of
such Trust, shall, at its own expense, promptly provide copies of applicable
portions of such books and records to the Trustee to the extent reasonably
necessary to enable the Trustee to make such determination).
ARTICLE EIGHT
THE TRUSTEE
SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of Default with
respect to Securities of any series,
(i) the Trustee undertakes to perform, with respect to
Securities of such series, such duties and only such duties as are
specifically set forth in this Indenture, and no implied covenants
or obligations shall be read into this Indenture against the
Trustee; and
(ii) in the absence of bad faith on its part, the Trustee
may, with respect to Securities of such series, conclusively rely,
as to the truth of the statements and the correctness of the
opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such certificates or
opinions which by any provisions hereof are specifically required
to be furnished to the Trustee, the Trustee shall be under a duty
to examine the same to determine whether or not they conform to
the requirements of this Indenture.
(b) In case an Event of Default with respect to Securities of
any series shall have occurred and be continuing, the Trustee shall exercise,
with respect to Securities of such series, such of the rights and powers vested
in it by this Indenture, and use the same degree of care and skill in
56
their exercise, as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) this subsection shall not be construed to limit the
effect of subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts;
(iii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a majority in
principal amount of the Outstanding Securities of any one or more
series, as provided herein, relating to the time, method and place
of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture with respect to the Securities of
such series; and
(iv) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if
it shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
SECTION 802. NOTICE OF DEFAULTS.
The Trustee shall give notice of any default hereunder with
respect to the Securities of any series to the Holders of Securities of such
series in the manner and to the extent required to do so by the Trust Indenture
Act, unless such default shall have been cured or waived; provided, however,
that in the case of any default of the character specified in Section 701(c), no
such notice to Holders shall be given until at least seventy-five (75) days
after the occurrence thereof; and provided, further, that, subject to the
provisions of Section 801, the Trustee shall not be deemed to have knowledge of
such default unless either (i) a Responsible Officer of the Trustee shall have
actual knowledge of such default or (ii) the Trustee shall have received written
notice thereof from the Company or any Holder or, in the case of a default
described in Section 701(d), from the holder
57
of any indebtedness or from the trustee under any mortgage, indenture or other
instrument referred to in such Section. For the purpose of this Section, the
term "DEFAULT" means any event which is, or after notice or lapse of time, or
both, would become, an Event of Default with respect to the Securities of such
series.
SECTION 803. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 801 and to the applicable
provisions of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed, sent or
presented by the proper party or parties;
(b) any request, direction or act of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company
Order, or as otherwise expressly provided herein, and any resolution of
the Board of Directors of the Company may be sufficiently evidenced by a
Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or established
prior to taking, suffering or omitting any action hereunder, the Trustee
(unless other evidence is specifically prescribed herein) may, in the
absence of bad faith on its part, rely upon an Officer's Certificate of
the Company;
(d) the Trustee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any Holder pursuant to this Indenture, unless such Holder
shall have offered to the Trustee reasonable security or indemnity
against the costs, expenses and liabilities which might be incurred by it
complying with such request or direction;
(f) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document, but the Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as it
may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall (subject to applicable legal
requirements)
58
be entitled to examine, during normal business hours, the books, records
and premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder; and
(h) the Trustee shall not be charged with knowledge of any
Event of Default with respect to the Securities of any series for which
it is acting as Trustee unless either (i) a Responsible Officer of the
Trustee shall have actual knowledge of the Event of Default or (ii)
written notice of such Event of Default shall have been given to the
Trustee by the Company, any other obligor on such Securities or by any
Holder of such Securities.
SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Securities (except the
Trustee's certificates of authentication) shall be taken as the statements of
the Company, and neither the Trustee nor any Authenticating Agent assumes any
responsibility for their correctness. The Trustee makes no representations as to
the validity or sufficiency of this Indenture or of the Securities. Neither the
Trustee nor any Authenticating Agent shall be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 805. MAY HOLD SECURITIES.
Each of the Trustee, any Authenticating Agent, any Paying Agent,
any Security Registrar or any other agent of the Company or the Trustee, in its
individual or any other capacity, may become the owner or pledgee of Securities
and/or Preferred Securities, subject to Sections 808 and 813, may otherwise deal
with the Company with the same rights it would have if it were not such Trustee,
Authenticating Agent, Paying Agent, Security Registrar or other agent.
SECTION 806. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be
segregated from other funds, except to the extent required by law. The Trustee
shall be under no liability for interest on or investment of any money received
by it hereunder except as expressly provided herein or otherwise agreed with,
and for the sole benefit of, the Company.
SECTION 807. COMPENSATION AND REIMBURSEMENT.
The Company agrees
59
(a) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements
and advances reasonably incurred or made by the Trustee in accordance
with any provision of this Indenture (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except to the extent that any such expense, disbursement or
advance as may be attributable to its negligence, willful misconduct or
bad faith; and
(c) to indemnify the Trustee and hold it harmless from and
against any loss, liability or expense reasonably incurred by it arising
out of or in connection with the acceptance or administration of the
trust or trusts hereunder or the performance of its duties hereunder,
including the reasonable costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of
any of its powers or duties hereunder, except to the extent that any such
loss, liability or expense may be attributable to its negligence, willful
misconduct or bad faith.
As security for the performance of the obligations of the Company
under this Section, the Trustee shall have a lien prior to the Securities upon
all property and funds held or collected by the Trustee as such other than
property and funds held in trust under Section 603 (except moneys payable to the
Company as provided in Section 603). "TRUSTEE" for purposes of this Section
shall include any predecessor Trustee; provided, however, that the negligence,
willful misconduct or bad faith of any Trustee hereunder shall not affect the
rights of any other Trustee hereunder.
SECTION 808. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee shall have or acquire any conflicting interest
within the meaning of the Trust Indenture Act, it shall either eliminate such
conflicting interest or resign to the extent, in the manner and with the effect,
and subject to the conditions, provided in the Trust Indenture Act and this
Indenture. For purposes of Section 310(b)(1) of the Trust Indenture Act and to
the extent permitted thereby, the Trustee, in its capacity as trustee in respect
of the Securities of any series, shall not be deemed to have a conflicting
interest arising from its capacity as trustee in respect of (i) the Securities
of any other series and (ii) the Declaration and the Trust Securities Guarantee
Agreement pertaining to each Trust.
SECTION 809. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be
60
(a) a corporation organized and doing business under the laws
of the United States, any State or Territory thereof or the District of
Columbia, authorized under such laws to exercise corporate trust powers,
having a combined capital and surplus of at least Fifty Million Dollars
($[50],000,000) and subject to supervision or examination by Federal,
State, Territorial or District of Columbia authority, or
(b) if and to the extent permitted by the Commission by rule,
regulation or order upon application, a corporation or other Person
organized and doing business under the laws of a foreign government,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least Fifty Million Dollars
($50,000,000) or the Dollar equivalent of the applicable foreign currency
and subject to supervision or examination by authority of such foreign
government or a political subdivision thereof substantially equivalent to
supervision or examination applicable to United States institutional
trustees,
and, in either case, qualified and eligible under this Article and the Trust
Indenture Act. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of such supervising or
examining authority, then for the purposes of this Section, the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section or the Trust Indenture Act, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 810. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 811.
(b) The Trustee may resign at any time with respect to the
Securities of one or more series by giving written notice thereof to the
Company. If the instrument of acceptance by a successor Trustee required by
Section 811 shall not have been delivered to the Trustee within thirty (30) days
after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee with respect to the Securities of such series.
(c) The Trustee may be removed at any time with respect to the
Securities of any series by Act of the Holders of a majority in principal amount
of the Outstanding Securities of such series delivered to the Trustee and to the
Company; provided that so long as any Preferred Securities remain outstanding,
the Trust which issued such Preferred Securities shall not execute any Act to
remove the Trustee without the consent of the holders of a majority in aggregate
liquidation preference of Preferred Securities issued by such Trust outstanding,
obtained as provided in the Declaration pertaining to such Trust.
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(d) If at any time:
(i) the Trustee shall fail to comply with Section 808
after written request therefor by the Company or by any Holder who
has been a bona fide Holder for at least six months, or
(ii) the Trustee shall cease to be eligible under Section
809 or Section 310(a) of the Trust Indenture Act and shall fail to
resign after written request therefor by the Company or by any
such Holder, or
(iii) the Trustee shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the
Trustee or of its property shall be appointed or any public
officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation,
conservation or liquidation,
then, in any such case, (x) the Company may remove the Trustee with respect to
all Securities or (y) subject to Section 714, any Holder who has been a bona
fide Holder for at least six (6) months may, on behalf of itself and all others
similarly situated, petition any court of competent jurisdiction for the removal
of the Trustee with respect to all Securities and the appointment of a successor
Trustee or Trustees.
(e) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Trustee for any cause
(other than as contemplated in clause (y) in subsection (d) of this Section),
with respect to the Securities of one or more series, the Company shall take
prompt steps to appoint a successor Trustee or Trustees with respect to the
Securities of that or those series (it being understood that any such successor
Trustee may be appointed with respect to the Securities of one or more or all of
such series and that at any time there shall be only one Trustee with respect to
the Securities of any particular series) and shall comply with the applicable
requirements of Section 811. If, within one (1) year after such resignation,
removal or incapability, or the occurrence of such vacancy, a successor Trustee
with respect to the Securities of any series shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities of such
series delivered to the Company and the retiring Trustee, the successor Trustee
so appointed shall, forthwith upon its acceptance of such appointment in
accordance with the applicable requirements of Section 811, become the successor
Trustee with respect to the Securities of such series and to that extent
supersede the successor Trustee appointed by the Company. If no successor
Trustee with respect to the Securities of any series shall have been so
appointed by the Company or the Holders and accepted appointment in the manner
required by Section 811, any Holder who has been a bona fide Holder of a
Security of such series for at least six (6) months may, on behalf of itself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Trustee with respect to the Securities of such
series.
(f) So long as no event which is, or after notice or lapse of
time, or both, would become, an Event of Default shall have occurred and be
continuing, if the Company shall have
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delivered to the Trustee or Trustees with respect to the Securities of one or
more series (i) an instrument executed by an Authorized Officer of the Company
appointing a successor Trustee or Trustees with respect to such series,
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 or
Trustees in accordance with Section 811, the Trustee or Trustees with respect to
such series shall be deemed to have resigned as contemplated in subsection (b)
of this Section, the successor Trustee or Trustees shall be deemed to have been
appointed by the Company pursuant to subsection (e) of this Section and such
appointment shall be deemed to have been accepted as contemplated in Section
811, all as of such date, and all other provisions of this Section and Section
811 shall be applicable to such resignation, appointment and acceptance except
to the extent inconsistent with this subsection (f).
(g) The Company shall give notice of each resignation and each
removal of the Trustee with respect to the Securities of any series and each
appointment of a successor Trustee with respect to the Securities of any series
to all Holders of Securities of such series. Each notice shall include the name
of the successor Trustee with respect to the Securities of such series and the
address of its corporate trust office.
SECTION 811. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Trustee
with respect to the Securities of all series, every such successor Trustee so
appointed shall execute, acknowledge and deliver to the Company and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee shall become effective and such
successor Trustee, without any further act, shall become vested with all the
rights, powers, trusts and duties of the retiring Trustee; but, on the request
of the Company or the successor Trustee, such retiring Trustee shall, upon
payment of all sums owed to it, execute and deliver an instrument transferring
to such successor Trustee all the rights, powers and trusts of the retiring
Trustee and shall duly assign, transfer and deliver to such successor Trustee
all property and money held by such retiring Trustee hereunder.
(b) In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the Securities
of such series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and which (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
if the retiring Trustee is not retiring with respect to all Securities, shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the retiring Trustee with
respect to the Securities of that or those series as to which the retiring
Trustee is not retiring shall continue to be vested in the retiring Trustee and
(3) shall add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee, it being understood that nothing
63
herein or in such supplemental indenture shall constitute such Trustees
co-trustees of the same trust and that each such Trustee shall be trustee of a
trust or trusts hereunder separate and apart from any trust or trusts hereunder
administered by any other such Trustee; and upon the execution and delivery of
such supplemental indenture the resignation or removal of the retiring Trustee
shall become effective to the extent provided therein and each such successor
Trustee, without any further act, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee with respect to the Securities
of that or those series to which the appointment of such successor Trustee
relates; but, on request of the Company or any successor Trustee, such retiring
Trustee, upon payment of all sums owed to it, shall duly assign, transfer and
deliver to such successor Trustee all property and money held by such retiring
Trustee hereunder with respect to the Securities of that or those series to
which the appointment of such successor Trustee relates.
(c) Upon reasonable request of any such successor Trustee, the
Company shall execute instruments to more fully and certainly vest in and
confirm to such successor Trustee all rights, powers and trusts referred to in
subsection (a) or (b) of this Section, as the case may be.
(d) No successor Trustee shall accept its appointment unless at
the time of such acceptance such successor Trustee shall be qualified and
eligible under this Article.
SECTION 812. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 813. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If the Trustee shall be or become a creditor of the Company or any
other obligor upon the Securities (other than by reason of a relationship
described in Section 311(b) of the Trust Indenture Act), the Trustee shall be
subject to any and all applicable provisions of the Trust Indenture Act
regarding the collection of claims against the Company or such other obligor.
For purposes of Section 311(b) of the Trust Indenture Act:
(a) the term "CASH TRANSACTION" means any transaction in which
full payment for goods or securities sold is made within seven days after
delivery of the goods or securities in
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currency or in checks or other orders drawn upon banks or bankers and
payable upon demand; and
(b) the term "SELF-LIQUIDATING PAPER" means any draft, bill of
exchange, acceptance or obligation which is made, drawn, negotiated or
incurred by the Company or such obligor for the purpose of financing the
purchase, processing, manufacturing, shipment, storage or sale of goods,
wares or merchandise and which is secured by documents evidencing title
to, possession of, or a lien upon, the goods, wares or merchandise or the
receivables or proceeds arising from the sale of the goods, wares or
merchandise previously constituting the security, provided the security
is received by the Trustee simultaneously with the creation of the
creditor relationship with the Company or such obligor arising from the
making, drawing, negotiating or incurring of the draft, bill of exchange,
acceptance or obligation.
SECTION 814. APPOINTMENT OF AUTHENTICATING AGENT.
The Trustee may appoint an Authenticating Agent or Agents with
respect to the Securities of one or more series, or any Tranche thereof, which
shall be authorized to act on behalf of the Trustee to authenticate Securities
of such series or Tranche issued upon original issuance, exchange, registration
of transfer or partial redemption thereof or pursuant to Section 306, and
Securities so authenticated shall be entitled to the benefits of this Indenture
and shall be valid and obligatory for all purposes as if authenticated by the
Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States, any State or Territory thereof or the
District of Columbia or the Commonwealth of Puerto Rico, authorized under such
laws to act as Authenticating Agent, having a combined capital and surplus of
not less than Fifty Million Dollars ($50,000,000) and subject to supervision or
examination by Federal or State authority. If such Authenticating Agent
publishes reports of condition at least annually, pursuant to law or to the
requirements of said supervising or examining authority, then for the purposes
of this Section, the combined capital and surplus of such Authenticating Agent
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time an Authenticating Agent
shall cease to be eligible in accordance with the provisions of this Section,
such Authenticating Agent shall resign immediately in the manner and with the
effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate agency or corporate trust business of an Authenticating Agent,
shall continue to be an Authenticating Agent, provided such corporation shall be
otherwise
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eligible under this Section, without the execution or filing of any paper or any
further act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company. Any successor Authenticating
Agent upon acceptance of its appointment hereunder shall become vested with all
the rights, powers and duties of its predecessor hereunder, with like effect as
if originally named as an Authenticating Agent. No successor Authenticating
Agent shall be appointed unless eligible under the provisions of this Section.
The Company agrees to pay to each Authenticating Agent from time
to time reasonable compensation for its services under this Section.
The provisions of Sections 308, 804 and 805 shall be applicable to
each Authenticating Agent.
If an appointment with respect to the Securities of one or more
series, or any Tranche thereof, shall be made pursuant to this Section, the
Securities of such series or Tranche may have endorsed thereon, in addition to
the Trustee's certificate of authentication, an alternate certificate of
authentication substantially in the following form:
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
------------------------
As Trustee
By______________________
As Authenticating Agent
By______________________
Authorized Officer
If all of the Securities of a series may not be originally issued
at one time, and if the Trustee does not have an office capable of
authenticating Securities upon original issuance located in a Place of Payment
where the Company wishes to have Securities of such series authenticated upon
original issuance, the Trustee, if so requested by the Company in writing (which
writing need
66
not comply with Section 102 and need not be accompanied by an Opinion of
Counsel), shall appoint, in accordance with this Section and in accordance with
such procedures as shall be acceptable to the Trustee, an Authenticating Agent
having an office in a Place of Payment designated by the Company with respect to
such series of Securities.
ARTICLE NINE
LISTS OF HOLDERS; REPORTS BY TRUSTEE AND COMPANY
SECTION 901. LISTS OF HOLDERS.
Semiannually, not later than __________ and __________ in each
year, commencing __________, ____, and within thirty (30) days of such other
times as the Trustee may request in writing, the Company shall furnish or cause
to be furnished to the Trustee information as to the names and addresses of the
Holders, as of a date no more than fifteen (15) days prior to the date such
information is so furnished, and the Trustee shall preserve such information and
similar information received by it in any other capacity and afford to the
Holders access to information so preserved by it, all to such extent, if any,
and in such manner as shall be required by the Trust Indenture Act; provided,
however, that no such list need be furnished so long as the Trustee shall be the
Security Registrar.
SECTION 902. REPORTS BY TRUSTEE AND COMPANY.
Not later than __________ in each year, commencing __________,
____, the Trustee shall transmit to the Holders, the Commission and each
securities exchange upon which any Securities are listed, a report, dated as of
the next preceding ______, with respect to any events and other matters
described in Section 313(a) of the Trust Indenture Act, in such manner and to
the extent required by the Trust Indenture Act. The Trustee shall transmit to
the Holders, the Commission and each securities exchange upon which any
Securities are listed, and the Company shall file with the Trustee (within
thirty (30) days after filing with the Commission in the case of reports which
pursuant to the Trust Indenture Act must be filed with the Commission and
furnished to the Trustee) and transmit to the Holders, such other information,
reports and other documents, if any, at such times and in such manner, as shall
be required by the Trust Indenture Act. The Company shall notify the Trustee of
the listing of any Securities on any securities exchange.
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ARTICLE TEN
CONSOLIDATION, MERGER, CONVEYANCE
OR OTHER TRANSFER
SECTION 1001. COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not consolidate with or merge into any other
Person, or convey or otherwise transfer, or lease, all of its properties, as or
substantially as an entirety, to any Person, unless:
(a) the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or other
transfer, or which leases (for a term extending beyond the last Stated
Maturity of the Securities then Outstanding), all of the properties of
the Company, as or substantially as an entirety, shall be a Person
organized and existing under the laws of the United States, any State or
Territory thereof or the District of Columbia or under the laws of Canada
or any Province thereof (such Person being hereinafter sometimes called
the "SUCCESSOR") and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Trustee, in form reasonably
satisfactory to the Trustee, the due and punctual payment of the
principal of and premium, if any, and interest, if any, on all the
Securities then Outstanding and the performance and observance of every
other covenant and condition of this Indenture to be performed or
observed by the Company; and
(b) the Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each of which shall
state that such consolidation, merger, conveyance or other transfer or
lease, and such supplemental indenture, comply with this Article and that
all conditions precedent herein provided for relating to such transaction
have been complied with.
Anything in this Indenture to the contrary notwithstanding, the
conveyance or other transfer by the Company of all of its facilities(a) for the
generation of electric energy, (b) for the transmission of electric energy or
(c) for the distribution of electric energy and/or natural gas, in each case
considered alone, or all of its facilities described in clauses (a) and (b),
considered together, or all of its facilities described in clauses (b) and (c),
considered together, shall in no event be deemed to constitute a conveyance or
other transfer of all the properties of the Company, as or substantially as an
entirety, unless, immediately following such conveyance or other transfer, the
Company shall own no properties in the other such categories of property not so
conveyed or otherwise transferred. The character of particular facilities shall
be determined by reference to the Uniform System of Accounts prescribed for
public utilities and licensees subject to the Federal Power Act, as amended, to
the extent applicable.
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SECTION 1002. SUCCESSOR SUBSTITUTED.
Upon any consolidation or merger or any conveyance or other
transfer of all the properties of the Company, as or substantially as an
entirety, in accordance with Section 1001, the Successor shall succeed to, and
be substituted for, and may exercise every power and right of, the Company under
this Indenture with the same effect as if such Successor had been named as the
"Company" herein. Without limiting the generality of the foregoing, the
Successor may execute and deliver to the Trustee, and thereupon the Trustee
shall, subject to the provisions of Article Three, authenticate and deliver,
Securities. All Securities so executed by the Successor, and authenticated and
delivered by the Trustee, shall in all respects be entitled to the benefits
provided by this Indenture equally and ratably with all Securities executed,
authenticated and delivered prior to the time such consolidation, merger,
conveyance or other transfer became effective.
SECTION 1003. RELEASE OF COMPANY UPON CONVEYANCE OR OTHER TRANSFER.
In the case of a conveyance or other transfer to any Person or
Persons as contemplated in Section 1001, upon the satisfaction of all the
conditions specified in Section 1001 the Company (such term being used in this
Section without giving effect to such transaction) shall be released and
discharged from all obligations and covenants under this Indenture and on and
under all Securities then Outstanding (unless the Company shall have delivered
to the Trustee an instrument in which it shall waive such release and discharge)
and the Trustee shall acknowledge in writing that the Company has been so
released and discharged.
SECTION 1004. MERGER INTO COMPANY.
Nothing in this Indenture shall be deemed to prevent or restrict
any consolidation or merger after the consummation of which the Company would be
the surviving or resulting corporation or any conveyance or other transfer, or
lease of any part of the properties of the Company which does not constitute the
entirety, or substantially the entirety, thereof.
SECTION 1005. TRANSFER OF LESS THAN THE ENTIRETY.
(a) If the Company shall have conveyed or otherwise transferred any
part of its properties which does not constitute the entirety, or substantially
the entirety, thereof to another corporation meeting the requirements set forth
in clause (a) of the first paragraph of Section 1001 and if:
(i) the transferee of such part of the properties of the
Company shall have executed and delivered to the Trustee an indenture
supplemental hereto, in form reasonably satisfactory to the Trustee,
which contains an assumption by such transferee of the due and punctual
payment of the principal of and premium, if any, and interest, if any, on
all the Securities then Outstanding and the performance and observance of
every covenant and condition of this Indenture to be performed or
observed by the Company;
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(ii) there shall have been delivered to the Trustee an
Independent Expert's Certificate
(A) describing the property so conveyed or otherwise
transferred (such description of property to be made by reference
either to specific items, units and/or elements of property or
portions thereof, on a percentage or Dollar basis, or to
properties reflected in specified accounts in the Company's books
of account or portions thereof, on a Dollar basis); provided,
however, that such property shall be identified in such
certificate as facilities for the generation, transmission or
distribution of electric energy or for the storage, transportation
or distribution of natural gas;
(B) stating, in the judgment of the signers, the Fair
Value to the transferee of the property so conveyed or otherwise
transferred;
(C) stating an amount equal to seventy percent (70%) of
the amount stated pursuant to clause (B) above; provided, however,
that there shall be excluded from the property so evaluated any
property subject to any mortgage, deed of trust, security interest
or other lien which secures indebtedness for borrowed money or for
the deferred purchase price of property;
(D) stating an amount equal to the aggregate principal
amount of the Securities then Outstanding; and
(E) stating that the amount stated pursuant to clause
(D) above does not exceed the amount stated pursuant to clause (C)
above;
(iii) the Company shall have assigned or otherwise transferred to
such transferee all Trust Securities (initially issued and sold to the
Company) then outstanding, and such transferee shall have expressly
assumed all obligations under all Trust Securities Guarantees; and
(iv) the Company shall have delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel each of which shall state
that such conveyance or other transfer and such supplemental indenture
comply with this Section and that all conditions precedent relating to
such transactions provided for in this Section and otherwise in this
Indenture have been complied with;
then, upon the satisfaction of all such conditions,
(x) the Company shall be released and discharged from all
obligations and covenants under this Indenture and on and under all
Securities then Outstanding (unless the Company shall have delivered to
the Trustee an instrument in which it shall waive such
70
release and discharge), and the Trustee shall acknowledge in writing that
the Company has been so released and discharged; and
(y) if the Company shall have been released and discharged as
contemplated in clause (x) above, such transferee shall succeed to, and
be substituted for, and may exercise every right and power of, the
Company under this Indenture with the same effect as if such transferee
had been named the "Company" herein; and without limiting the generality
of the foregoing, such transferee shall be deemed a "Successor" for
purposes of Section 1002 and for all other purposes of this Indenture.
(b) For purposes of this Section:
"FAIR VALUE" means the fair value of such property so conveyed or
otherwise transferred as may be determined by reference to (a) the amount
which would be likely to be obtained in an arm's-length transaction with
respect to such property between an informed and willing buyer and an
informed and willing seller, under no compulsion, respectively, to buy or
sell, (b) the amount of investment with respect to such property which,
together with a reasonable return thereon, would be likely to be
recovered through ordinary business operations or otherwise, (c) the
cost, accumulated depreciation and replacement cost with respect to such
property and/or (d) any other relevant factors; provided, however, that
(x) the Fair Value of property shall be determined without deduction for
any mortgage, deed of trust, pledge, security interest, encumbrance,
lease, reservation, restriction, servitude, charge or similar right or
any other lien of any kind on such property and (y) the Fair Value to the
transferee of any property shall not reflect any reduction relating to
the fact that such property may be of less value to a Person which is not
the owner or operator of the property or any portion thereof than to a
Person which is such owner or operator. Fair Value may be determined,
without physical inspection, by the use of accounting and engineering
records and other data maintained by the Company or the transferee or
otherwise available to the Expert certifying the same.
"INDEPENDENT EXPERT'S CERTIFICATE" means a certificate signed by
an authorized officer of the transferee and by an Independent Expert
(which Independent Expert shall be selected either by the board of
directors or by an authorized officer of the transferee, the execution of
such certificate by such authorized officer to be conclusive evidence of
such selection) and delivered to the Trustee. For purposes of this
definition, (a) "EXPERT" means a Person which is an engineer, appraiser
or other expert and which, with respect to any certificate to be signed
by such Person and delivered to the Trustee, is qualified to pass upon
the matter set forth in such certificate; (b) "ENGINEER" means a Person
engaged in the engineering profession or otherwise qualified to pass upon
engineering matters (including, but not limited to, a Person licensed as
a professional engineer, whether
71
or not then engaged in the engineering profession) and (c) "APPRAISER"
means a Person engaged in the business of appraising property or
otherwise qualified to pass upon the Fair Value or fair market value of
property. "INDEPENDENT", when applied to any Expert, means such a Person
who (a) is in fact independent, (b) does not have any direct material
financial interest in the transferee or in any obligor upon the
Securities or in any Affiliate of the transferee, (c) is not connected
with the transferee or such other obligor as an officer, employee,
promoter, underwriter, trustee, partner, director or any person
performing similar functions and (d) is approved by the Trustee in the
exercise of reasonable care.
ARTICLE ELEVEN
SUPPLEMENTAL INDENTURES
SECTION 1101. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company and the Trustee,
at any time and from time to time, may enter into one or more indentures
supplemental hereto, in form reasonably satisfactory to the Trustee, for any of
the following purposes:
(a) to evidence the succession of another Person to the
Company and the assumption by any such successor of the covenants
of the Company herein and in the Securities, all as provided in
Article Ten; or
(b) to add one or more covenants of the Company or other
provisions for the benefit of all Holders or for the benefit of
the Holders of, or to remain in effect only so long as there shall
be Outstanding, Securities of one or more specified series, or one
or more specified Tranches thereof, or to surrender any right or
power herein conferred upon the Company; or
(c) to change or eliminate any provision of this
Indenture or to add any new provision to this Indenture; provided,
however, that if such change, elimination or addition shall
adversely affect the interests of the Holders of Outstanding
Securities of any series or Tranche in any material respect, such
change, elimination or addition shall become effective with
respect to such series or Tranche only in accordance with the
provisions of Section 1102 or when no Security of such series or
Tranche remains Outstanding; or
(d) to provide collateral security for the Securities or
any series thereof; or
(e) to establish the form or terms of Securities of any
series or Tranche as contemplated by Sections 201 and 301; or
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(f) to provide for the authentication and delivery of
bearer securities and coupons appertaining thereto representing
interest, if any, thereon and for the procedures for the
registration, exchange and replacement thereof and for the giving
of notice to, and the solicitation of the vote or consent of, the
holders thereof, and for any and all other matters incidental
thereto; or
(g) to evidence and provide for the acceptance of
appointment hereunder by a successor Trustee with respect to the
Securities of one or more series and to add to or change any of
the provisions of this Indenture as shall be necessary to provide
for or facilitate the administration of the trusts hereunder by
more than one Trustee, pursuant to the requirements of Section
811(b); or
(h) 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 or Tranche of, the Securities;
or
(i) 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 Securities, or any Tranche thereof, shall be
payable, (2) all or any series of Securities, or any Tranche
thereof, may be surrendered for registration of transfer, (3) all
or any series of Securities, or any Tranche thereof, may be
surrendered for exchange and (4) notices and demands to or upon
the Company in respect of all or any series of Securities, or any
Tranche thereof, and this Indenture may be served; or
(j) 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 Securities of any series or Tranche in
any material respect.
Without limiting the generality of the foregoing, if the Trust
Indenture Act as in effect at the date of the execution and delivery of this
Indenture or at any time thereafter shall be amended and
(x) if any such amendment 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
otherwise, this Indenture shall be deemed to have been amended so
as to conform to such amendment to the Trust Indenture Act, and
the Company and the Trustee may, without the consent of any
Holders, enter into an indenture supplemental hereto to evidence
such amendment hereof; or
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(y) if any such amendment shall permit one or more
changes to, or the elimination of, any provisions hereof which, at
the date of the execution and delivery hereof or at any time
thereafter, are required by the Trust Indenture Act to be
contained herein or are contained herein to reflect any provisions
of the Trust Indenture Act as in effect at such date, this
Indenture shall be deemed to have been amended to effect such
changes or elimination, and the Company and the Trustee may,
without the consent of any Holders, enter into an indenture
supplemental hereto to evidence such amendment.
SECTION 1102. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.
Subject to the provisions of Section 1101, with the consent of the
Holders of a majority in aggregate principal amount of the Securities of all
series then Outstanding under this Indenture, considered as one class, by Act of
said Holders delivered to the Company and the Trustee, the Company and the
Trustee may enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture; provided, however, that if there shall
be Securities of more than one series Outstanding hereunder and if a proposed
supplemental indenture shall directly affect the rights of the Holders of
Securities of one or more, but less than all, of such series, then the consent
only of the Holders of a majority in aggregate principal amount of the
Outstanding Securities of all series so directly affected, considered as one
class, shall be required; and provided, further, that if the Securities of any
series shall have been issued in more than one Tranche and if the proposed
supplemental indenture shall directly affect the rights of the Holders of
Securities of one or more, but less than all, of such Tranches, then the consent
only of the Holders of a majority in aggregate principal amount of the
Outstanding Securities of all Tranches so directly affected, considered as one
class, shall be required; and provided, further, that no such supplemental
indenture shall:
(a) change the Stated Maturity of the principal of, or
any installment of principal of or interest on, any Security other
than pursuant to the terms thereof, or reduce the principal amount
thereof or the rate of interest thereon (or the amount of any
installment of interest thereon) or change the method of
calculating such rate or reduce any premium payable thereon, or
reduce the amount of the principal of any Discount Security that
would be due and payable upon a declaration of acceleration of the
Maturity thereof pursuant to Section 702, or change the coin or
currency (or other property), in which any Security or premium, if
any, or interest, if any, thereon is payable, or impair the right
to institute suit for the enforcement of any such payment on or
after the Maturity of any Security, without, in any such case, the
consent of the Holder of such Security; or
(b) reduce the percentage in principal amount of the
Outstanding Securities of any series (or, if applicable, in
liquidation preference of any series of Trust Securities), or any
Tranche thereof, the consent of the Holders of which is required
for any such supplemental indenture, or the consent of the Holders
of which
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is required for any waiver of compliance with any provision of
this Indenture or of any default hereunder and its consequences,
or reduce the requirements of Section 1204 for quorum or voting,
without, in any such case, the consent of the Holder of each
Outstanding Security of such series or Tranche; or
(c) modify any of the provisions of this Section,
Section 506 or Section 713 with respect to the Securities of any
series or any Tranche thereof (except to increase the percentages
in principal amount referred to in this Section or such other
Sections or to provide that other provisions of this Indenture
cannot be modified or waived) without, in any such case, the
consent of the Holder of each Outstanding Security of such series
or Tranche; provided, however, that this clause shall not be
deemed to require the consent of any Holder with respect to
changes in the references to "the Trustee" and concomitant changes
in this Section, or the deletion of this proviso, in accordance
with the requirements of Sections 811(b) and 1101(g).
A supplemental indenture which (x) changes or eliminates any
covenant or other provision of this Indenture which has expressly been included
solely for the benefit of the Holders of, or which is to remain in effect only
so long as there shall be Outstanding, Securities of one or more specified
series, or one or more Tranches thereof, or (y) modifies the rights of the
Holders of Securities of such series or Tranches with respect to such covenant
or other provision, shall be deemed not to affect the rights under this
Indenture of the Holders of Securities of any other series or Tranche.
Notwithstanding the foregoing, so long as any of the Preferred
Securities remain outstanding, the Trustee may not consent to a supplemental
indenture under this Section 1102 without the prior consent, obtained as
provided in a Declaration pertaining to a Trust which issued such Preferred
Securities of the holders of not less than a majority in aggregate liquidation
preference of all Trust Securities issued by such Trust affected, considered as
one class, or, in the case of changes described in clauses (a), (b) and (c)
above, 100% in aggregate liquidation preference of all such Preferred Securities
then outstanding which would be affected thereby, considered as one class.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
Anything in this Indenture to the contrary notwithstanding, if the
Officer's Certificate, supplemental indenture or Board Resolution, as the case
may be, establishing the Securities of any series or Tranche shall so provide,
(a) the Holders of such Securities shall be deemed to have consented to a
supplemental indenture containing the additions, changes or eliminations to or
from the Indenture which shall be specified in such Officer's Certificate,
supplemental indenture or Board Resolution establishing such series or Tranche,
(b) no Act of such Holders shall be required to evidence such consent and (c)
such consent may be counted in the
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determination of whether or not the Holders of the requisite principal amount of
Securities shall have consented to such supplemental indenture.
SECTION 1103. EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 801) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties, immunities or liabilities under this Indenture or
otherwise.
SECTION 1104. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution and delivery of any supplemental indenture
under this Article this Indenture shall be modified in accordance therewith, and
such supplemental indenture shall form a part of this Indenture for all
purposes; and every Holder of Securities theretofore or thereafter authenticated
and delivered hereunder shall be bound thereby. Any supplemental indenture
permitted by this Article may restate this Indenture in its entirety, and, upon
the execution and delivery thereof, any such restatement shall supersede this
Indenture as theretofore in effect for all purposes.
SECTION 1105. CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
SECTION 1106. REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Securities of any series, or any Tranche thereof, authenticated
and delivered after the execution of any supplemental indenture pursuant to this
Article may, and shall if required by the Trustee, bear a notation in form
approved by the Trustee as to any matter provided for in such supplemental
indenture. If the Company shall so determine, new Securities of any series, or
any Tranche thereof, so modified as to conform, in the opinion of the Trustee
and the Company, to any such supplemental indenture may be prepared and executed
by the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series or Tranche.
SECTION 1107. MODIFICATION WITHOUT SUPPLEMENTAL INDENTURE.
To the extent, if any, that the terms of any particular series of
Securities shall have been established in or pursuant to an Officer's
Certificate or a Board Resolution as contemplated by Section 301, and not in a
supplemental indenture hereto, additions to, changes in or the elimination of
any of such terms may be effected by means of a supplemental Officer's
Certificate or a
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supplemental Board Resolution, as the case may be, delivered to, and accepted
by, the Trustee; provided, however, that such supplemental Officer's Certificate
or supplemental Board Resolution shall not be accepted by the Trustee or
otherwise be effective unless all conditions set forth in this Indenture which
would be required to be satisfied if such additions, changes or elimination were
contained in a supplemental indenture shall have been appropriately satisfied.
Upon the acceptance thereof by the Trustee, any supplemental Officer's
Certificate or supplemental Board Resolution shall be deemed to be a
"supplemental indenture" for purposes of Section 1104 and 1106.
ARTICLE TWELVE
MEETINGS OF HOLDERS; ACTION WITHOUT MEETING
SECTION 1201. PURPOSES FOR WHICH MEETINGS MAY BE CALLED.
A meeting of Holders of Securities of one or more, or all, series,
or any Tranche or Tranches thereof, may be called at any time and from time to
time pursuant to this Article to make, give or take any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be made, given or taken by Holders of Securities of such
series or Tranches.
SECTION 1202. CALL, NOTICE AND PLACE OF MEETINGS.
(a) The Trustee may at any time call a meeting of Holders of
Securities of one or more, or all, series, or any Tranche or Tranches thereof,
for any purpose specified in Section 1201, to be held at such time and (except
as provided in subsection (b) of this Section) at such place in the Borough of
Manhattan, The City of New York, as the Trustee shall determine, or, with the
approval of the Company, at any other place. Notice of every such meeting,
setting forth the time and the place of such meeting and in general terms the
action proposed to be taken at such meeting, shall be given, in the manner
provided in Section 106, not less than twenty-one (21) nor more than one hundred
eighty (180) days prior to the date fixed for the meeting.
(b) The Trustee may be asked to call a meeting of the Holders
of Securities of one or more, or all, series, or any Tranche or Tranches
thereof, by the Company or by the Holders of thirty-three per centum (33%) in
aggregate principal amount of all of such series and Tranches, considered as one
class, for any purpose specified in Section 1201, by written request setting
forth in reasonable detail the action proposed to be taken at the meeting. If
the Trustee shall have been asked by the Company to call such a meeting, the
Company shall determine the time and place for such meeting and may call such
meeting by giving notice thereof in the manner provided in subsection (a) of
this Section, or shall direct the Trustee, in the name and at the expense of the
Company, to give such notice. If the Trustee shall have been asked to call such
a meeting by Holders in accordance with this subsection (b), and the Trustee
shall not have given the notice of such meeting within twenty-one (21) days
after receipt of such request or shall not thereafter proceed to cause the
meeting to be held as provided herein, then the Holders of Securities of such
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series and Tranches, in the principal amount above specified, may determine the
time and the place in the Borough of Manhattan, The City of New York, or in such
other place as shall be determined or approved by the Company for such meeting
and may call such meeting for such purposes by giving notice thereof as provided
in subsection (a) of this Section.
(c) Any meeting of Holders of Securities of one or more, or
all, series, or any Tranche or Tranches thereof, shall be valid without notice
if the Holders of all Outstanding Securities of such series or Tranches are
present in person or by proxy and if representatives of the Company and the
Trustee are present, or if notice is waived in writing before or after the
meeting by the Holders of all Outstanding Securities of such series, or any
Tranche or Tranches thereof, or by such of them as are not present at the
meeting in person or by proxy, and by the Company and the Trustee.
SECTION 1203. PERSONS ENTITLED TO VOTE AT MEETINGS.
To be entitled to vote at any meeting of Holders of Securities of
one or more, or all, series, or any Tranche or Tranches thereof, a Person shall
be (a) a Holder of one or more Outstanding Securities of such series or
Tranches, or (b) a Person appointed by an instrument in writing as proxy for a
Holder or Holders of one or more Outstanding Securities of such series or
Tranches by such Holder or Holders. The only Persons who shall be entitled to
attend any meeting of Holders of Securities of any series or Tranche shall be
the Persons entitled to vote at such meeting and their counsel, any
representatives of the Trustee and its counsel and any representatives of the
Company and its counsel.
SECTION 1204. QUORUM; ACTION.
The Persons entitled to vote a majority in aggregate principal
amount of the Outstanding Securities of the series and Tranches 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 Securities of
such series and Tranches; 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 a specified percentage, which is less than a majority, in principal
amount of the Outstanding Securities of such series and Tranches, considered as
one class, the Persons entitled to vote such specified percentage in principal
amount of the Outstanding Securities of such series and Tranches, 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 Securities of such series and Tranches, be dissolved.
In any other case the meeting may be adjourned for such period as may be
determined by the chairman of the meeting prior to the adjournment of such
meeting. In the absence of a quorum at any such adjourned meeting, such
adjourned meeting may be further adjourned for such period as may be determined
by the chairman of the meeting prior to the adjournment of such adjourned
meeting. Except as provided by Section 1205(e), notice of the reconvening of any
meeting adjourned for more than thirty (30) days shall be given as provided in
Section 106 not less than ten (10) days prior to the date on which the meeting
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is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting
shall state expressly the percentage, as provided above, of the principal amount
of the Outstanding Securities of such series and Tranches which shall constitute
a quorum.
Except as limited by Section 1102, any resolution presented to a
meeting or adjourned meeting duly reconvened at which a quorum is present as
aforesaid may be adopted only by the affirmative vote of the Holders of a
majority in aggregate principal amount of the Outstanding Securities of the
series and Tranches with respect to which such meeting shall have been called,
considered as one class; provided, however, that, except as so limited, any
resolution with respect to any action 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 Outstanding Securities of such series and
Tranches, considered as one class, may be adopted at a meeting or an adjourned
meeting duly reconvened and at which a quorum is present as aforesaid by the
affirmative vote of the Holders of such specified percentage in principal amount
of the Outstanding Securities of such series and Tranches, considered as one
class.
Any resolution passed or decision taken at any meeting of Holders
of Securities duly held in accordance with this Section shall be binding on all
the Holders of Securities of the series and Tranches with respect to which such
meeting shall have been held, whether or not present or represented at the
meeting.
SECTION 1205. ATTENDANCE AT MEETINGS; DETERMINATION OF VOTING RIGHTS; CONDUCT
AND ADJOURNMENT OF MEETINGS.
(a) Attendance at meetings of Holders of Securities may be in
person or by proxy; and, to the extent permitted by law, any such proxy shall
remain in effect and be binding upon any future Holder of the Securities with
respect to which it was given unless and until specifically revoked by the
Holder or future Holder (except as provided in Section 104(g)) of such
Securities before being voted.
(b) Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Holders of Securities in regard to proof of the holding of such
Securities and of the appointment of proxies and in regard to the appointment
and duties of inspectors of votes, the submission and examination of proxies,
certificates and other evidence of the right to vote, and such other matters
concerning the conduct of the meeting as it shall deem appropriate. Except as
otherwise permitted or required by any such regulations and approved by the
Company, the holding of Securities shall be proved in the manner specified in
Section 104 and the appointment of any proxy shall be proved in the manner
specified in Section 104. Such regulations may provide that written instruments
appointing proxies, regular on their face, may be presumed valid and genuine
without the proof specified in Section 104 or other proof.
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(c) The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Company or by Holders as provided in Section 1202(b), in which case the
Company or the Holders of Securities of the series and Tranches calling the
meeting, as the case may be, shall in like manner appoint a temporary chairman.
A permanent chairman and a permanent secretary of the meeting shall be elected
by vote of the Persons entitled to vote a majority in aggregate principal amount
of the Outstanding Securities of all series and Tranches represented at the
meeting, considered as one class.
(d) At any meeting each Holder or proxy shall be entitled to
one vote for each One Thousand Dollars ($1,000) principal amount of Outstanding
Securities held or represented by such Holder; provided, however, that no vote
shall be cast or counted at any meeting in respect of any Security challenged as
not Outstanding and ruled by the chairman of the meeting to be not Outstanding.
The chairman of the meeting shall have no right to vote, except as a Holder of a
Security or proxy.
(e) Any meeting duly called pursuant to Section 1202 at which a
quorum is present may be adjourned from time to time by Persons entitled to vote
a majority in aggregate principal amount of the Outstanding Securities of all
series and Tranches represented at the meeting, considered as one class; and the
meeting may be held as so adjourned without further notice.
SECTION 1206. COUNTING VOTES AND RECORDING ACTION OF MEETINGS.
The vote upon any resolution submitted to any meeting of Holders
shall be by written ballots on which shall be subscribed the signatures of the
Holders or of their representatives by proxy and the principal amounts and
serial numbers of the Outstanding Securities, of the series and Tranches with
respect to which the meeting shall have been called, held or represented by
them. The permanent chairman of the meeting shall appoint two inspectors of
votes who shall count all votes cast at the meeting for or against any
resolution and who shall make and file with the secretary of the meeting their
verified written reports of all votes cast at the meeting. A record in duplicate
of the proceedings of each meeting of Holders shall be prepared by the secretary
of the meeting and there shall be attached to such record the original reports
of the inspectors of votes on any vote by ballot taken thereat and affidavits by
one or more persons having knowledge of the facts setting forth a copy of the
notice of the meeting and showing that such notice was given as provided in
Section 1202 and, if applicable, Section 1204. Each copy shall be signed and
verified by the affidavits of the permanent chairman and secretary of the
meeting and one such copy shall be delivered to the Company, and another to the
Trustee to be preserved by the Trustee, the latter to have attached thereto the
ballots voted at the meeting. Any record so signed and verified shall be
conclusive evidence of the matters therein stated.
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SECTION 1207. ACTION WITHOUT MEETING.
In lieu of a vote of Holders at a meeting as hereinbefore
contemplated in this Article, any request, demand, authorization, direction,
notice, consent, waiver or other action may be made, given or taken by Holders
by written instruments as provided in Section 104.
ARTICLE THIRTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS
SECTION 1301. LIABILITY SOLELY CORPORATE.
No recourse shall be had for the payment of the principal of or
premium, if any, or interest, if any, on any Securities, or any part thereof, or
for any claim based thereon or otherwise in respect thereof, or of the
indebtedness represented thereby, or upon any obligation, covenant or agreement
under this Indenture, against any incorporator, stockholder, officer or
director, as such, past, present or future, of the Company or of any predecessor
or successor of either of them (either directly or through the Company or a
predecessor or successor of either of them), whether by virtue of any
constitutional provision, statute or rule of law or by the enforcement of any
assessment or penalty or otherwise; it being expressly agreed and understood
that this Indenture and all the Securities are solely corporate obligations and
that no personal liability whatsoever shall attach to, or be incurred by, any
incorporator, stockholder, officer or director, past, present or future, of the
Company or of any predecessor or successor, either directly or indirectly
through the Company or any predecessor or successor, because of the indebtedness
hereby authorized or under or by reason of any of the obligations, covenants or
agreements contained in this Indenture or in any of the Securities or to be
implied herefrom or therefrom; and such personal liability, if any, is hereby
expressly waived and released as a condition of, and as part of the
consideration for, the execution and delivery of this Indenture and the issuance
of the Securities.
ARTICLE FOURTEEN
SUBORDINATION OF SECURITIES
SECTION 1401. SECURITIES SUBORDINATE TO SENIOR INDEBTEDNESS.
The Company, for itself, its successors and assigns, covenants and
agrees, and each Holder of the Securities of each series, by its acceptance
thereof, likewise covenants and agrees, that the payment of the principal of and
premium, if any, and interest, if any, on each and all of the Securities is
hereby expressly subordinated and subject to the extent and in the manner set
forth in this Article, in right of payment to the prior payment in full of all
Senior Indebtedness of the Company.
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Each Holder of the Securities of each series, by its acceptance
thereof, authorizes and directs the Trustee on its behalf to take such action as
may be necessary or appropriate to effectuate the subordination as provided in
this Article, and appoints the Trustee its attorney-in-fact for any and all such
purposes.
SECTION 1402. PAYMENT OVER OF PROCEEDS OF SECURITIES.
In the event (a) of any insolvency or bankruptcy proceedings or
any receivership, liquidation, reorganization or other similar proceedings in
respect of the Company or a substantial part of its property, or of any
proceedings for liquidation, dissolution or other winding-up of the Company,
whether or not involving insolvency or bankruptcy, or (b) subject to the
provisions of Section 1403, that (i) a default shall have occurred with respect
to the payment of principal of or interest on or other monetary amounts due and
payable on any Senior Indebtedness of the Company, or (ii) there shall have
occurred a default (other than a default in the payment of principal or interest
or other monetary amounts due and payable) in respect of any Senior
Indebtedness, as defined therein or in the instrument under which the same is
outstanding, permitting the holder or holders thereof to accelerate the maturity
thereof (with notice or lapse of time, or both), and such default shall have
continued beyond the period of grace, if any, in respect thereof, and, in the
case of subclauses (i) and (ii) of this clause (b), such default shall not have
been cured or waived or shall not have ceased to exist, or (c) that the
principal of and accrued interest on the Securities of any Series shall have
been declared due and payable pursuant to Section 701 and such declaration shall
not have been rescinded and annulled as provided in Section 702, then:
(1) the holders of all Senior Indebtedness of the
Company shall first be entitled to receive payment of the full
amount due thereon, or provision shall be made for such payment in
money or money's worth, before the Holders of any of the
Securities are entitled to receive a payment on account of the
principal of or interest on the indebtedness evidenced by the
Securities, including, without limitation, any payments made
pursuant to Article Four;
(2) any payment by, or distribution of assets of, the
Company of any kind or character, whether in cash, property or
securities, to which any Holder or the Trustee would be entitled
except for the provisions of this Article, shall be paid or
delivered by the Person making such payment or distribution,
whether a trustee in bankruptcy, a receiver or liquidating trustee
or otherwise, directly to the holders of such Senior Indebtedness
of the Company or their representative or representatives or to
the trustee or trustees under any indenture under which any
instruments evidencing any of such Senior Indebtedness of the
Company may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of such Senior Indebtedness of
the Company held or represented by each, to the extent necessary
to make payment in full of all Senior Indebtedness of the Company
remaining unpaid after giving effect to any concurrent payment or
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distribution (or provision therefor) to the holders of such Senior
Indebtedness of the Company, before any payment or distribution is
made to the Holders of the indebtedness evidenced by the
Securities or to the Trustee under this Indenture; and
(3) in the event that, notwithstanding the foregoing,
any payment by, or distribution of assets of, the Company of any
kind or character, whether in cash, property or securities, in
respect of principal of or interest on the Securities or in
connection with any repurchase by the Company of the Securities,
shall be received by the Trustee or any Holder before all Senior
Indebtedness of the Company is paid in full, or provision is made
for such payment in money or money's worth, such payment or
distribution in respect of principal of or interest on the
Securities or in connection with any repurchase by the Company of
the Securities shall be paid over to the holders of such Senior
Indebtedness of the Company or their representative or
representatives or to the trustee or trustees under any indenture
under which any instruments evidencing any such Senior
Indebtedness of the Company may have been issued, ratably as
aforesaid, for application to the payment of all Senior
Indebtedness of the Company remaining unpaid until all such Senior
Indebtedness of the Company shall have been paid in full, after
giving effect to any concurrent payment or distribution (or
provision therefor) to the holders of such Senior Indebtedness of
the Company.
Notwithstanding the foregoing, at any time after the 123rd day
following the date of deposit of cash or Eligible Obligations pursuant to
Section 601 (provided all conditions set out in such Section shall have been
satisfied), the funds so deposited and any interest thereon will not be subject
to any rights of holders of Senior Indebtedness of the Company including,
without limitation, those arising under this Article Fourteen; provided that no
event described in clause (e) of Section 701 with respect to the Company has
occurred during such 123-day period.
For purposes of this Article only, the words "cash, property or
securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other corporation
provided for by a plan or reorganization or readjustment which are subordinate
in right of payment to all Senior Indebtedness of the Company which may at the
time be outstanding to the same extent as, or to a greater extent than, the
Securities are so subordinated as provided in this Article. The consolidation of
the Company with, or the merger of the Company into, another corporation or the
liquidation or dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety, to another
corporation upon the terms and conditions provided for in Article Ten hereof
shall not be deemed a dissolution, winding-up, liquidation or reorganization for
the purposes of this Section 1402 if such other corporation shall, as a part of
such consolidation, merger, conveyance or transfer, comply with the conditions
stated in Article Ten hereof. Nothing in Section 1401 or in this Section 1402
shall apply to claims of, or payments to, the Trustee under or pursuant to
Section 807.
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SECTION 1403. DISPUTES WITH HOLDERS OF CERTAIN SENIOR INDEBTEDNESS.
Any failure by the Company to make any payment on or perform any
other obligation in respect of Senior Indebtedness of the Company, other than
any indebtedness incurred by the Company or assumed or guaranteed, directly or
indirectly, by the Company for money borrowed (or any deferral, renewal,
extension or refunding thereof) or any other obligation as to which the
provisions of this Section shall have been waived by the Company in the
instrument or instruments by which the Company incurred, assumed, guaranteed or
otherwise created such indebtedness or obligation, shall not be deemed a default
under clause (b) of Section 1402 if (i) the Company shall be disputing its
obligation to make such payment or perform such obligation and (ii) either (A)
no final judgment relating to such dispute shall have been issued against the
Company which is in full force and effect and is not subject to further review,
including a judgment that has become final by reason of the expiration of the
time within which a party may seek further appeal or review, or (B) in the event
that a judgment that is subject to further review or appeal has been issued, the
Company shall in good faith be prosecuting an appeal or other proceeding for
review and a stay or execution shall have been obtained pending such appeal or
review.
SECTION 1404. SUBROGATION.
Senior Indebtedness of the Company shall not be deemed to have
been paid in full unless the holders thereof shall have received cash (or
securities or other property satisfactory to such holders) in full payment of
such Senior Indebtedness of the Company then outstanding. Subject to the prior
payment in full of all Senior Indebtedness of the Company, the rights of the
Holders of the Securities shall be subrogated to the rights of the holders of
Senior Indebtedness of the Company to receive any further payments or
distributions of cash, property or securities of the Company applicable to the
holders of the Senior Indebtedness of the Company until all amounts owing on the
Securities shall be paid in full; and such payments or distributions of cash,
property or securities received by the Holders of the Securities, by reason of
such subrogation, which otherwise would be paid or distributed to the holders of
such Senior Indebtedness of the Company shall, as between the Company, its
creditors other than the holders of Senior Indebtedness of the Company, and the
Holders, be deemed to be a payment by the Company to or on account of Senior
Indebtedness of the Company, it being understood that the provisions of this
Article are and are intended solely for the purpose of defining the relative
rights of the Holders, on the one hand, and the holders of the Senior
Indebtedness of the Company, on the other hand.
SECTION 1405. OBLIGATION OF THE COMPANY UNCONDITIONAL.
Nothing contained in this Article or elsewhere in this Indenture
or in the Securities is intended to or shall impair, as among the Company, its
creditors other than the holders of Senior Indebtedness of the Company and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders the principal of and interest on the Securities as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Company other than the holders of
84
Senior Indebtedness of the Company, nor shall anything herein or therein prevent
the Trustee or any Holder from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the rights, if any,
under this Article of the holders of Senior Indebtedness of the Company in
respect of cash, property or securities of the Company received upon the
exercise of any such remedy.
Upon any payment or distribution of assets or securities of the
Company referred to in this Article, the Trustee and the Holders shall be
entitled to rely upon any order or decree of a court of competent jurisdiction
in which such dissolution, winding-up, liquidation or reorganization proceedings
are pending for the purpose of ascertaining the Persons entitled to participate
in such distribution, the holders of the Senior Indebtedness of the Company and
other indebtedness of the Company, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon, and all other facts pertinent
thereto or to this Article.
[The Trustee shall be entitled to conclusively rely on the
delivery to it of a written notice by a Person representing himself to be a
holder of Senior Indebtedness of the Company (or a representative of such holder
or a trustee under any indenture under which any instruments evidencing any such
Senior Indebtedness of the Company may have been issued) to establish that such
notice has been given by a holder of such Senior Indebtedness of the Company or
such representative or trustee on behalf of such holder. In the event that the
Trustee determines in good faith that further evidence is required with respect
to the right of any Person as a holder of Senior Indebtedness of the Company to
participate in any payment or distribution pursuant to this Article, the Trustee
may request such Person to furnish evidence to the reasonable satisfaction of
the Trustee as to the amount of Senior Indebtedness of the Company held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the right of such
Person under this Article, and, if such evidence is not furnished, the Trustee
may defer any payment to such Person pending judicial determination as to the
right of such Person to receive such payment or distribution.]
SECTION 1406. PRIORITY OF SENIOR INDEBTEDNESS UPON MATURITY.
Upon the maturity of the principal of any Senior Indebtedness of
the Company by lapse of time, acceleration or otherwise, all matured principal
of Senior Indebtedness of the Company and interest and premium, if any, thereon
shall first be paid in full before any payment of principal or premium, if any,
or interest, if any, is made upon the Securities or before any Securities can be
acquired by the Company or any sinking fund payment is made with respect to the
Securities (except that required sinking fund payments may be reduced by
Securities acquired before such maturity of such Senior Indebtedness of the
Company).
SECTION 1407. TRUSTEE AS HOLDER OF SENIOR INDEBTEDNESS.
The Trustee shall be entitled to all rights set forth in this
Article with respect to any Senior Indebtedness of the Company at any time held
by it, to the same extent as any other holder
85
of Senior Indebtedness of the Company. Nothing in this Article shall deprive the
Trustee of any of its rights as such holder.
SECTION 1408. NOTICE TO TRUSTEE TO EFFECTUATE SUBORDINATION.
Notwithstanding the provisions of this Article or any other
provision of the Indenture, the Trustee shall not be charged with knowledge of
the existence of any facts which would prohibit the making of any payment of
moneys to or by the Trustee unless and until a Responsible Officer of the
Trustee shall have received written notice thereof from the Company, from a
Holder or from a holder of any Senior Indebtedness of the Company or from any
representative or representatives of such holder or any trustee or trustees
under any indenture under which any instruments evidencing any such Senior
Indebtedness of the Company may have been issued and, prior to the receipt of
any such written notice, the Trustee shall be entitled, subject to Section 801,
in all respects to assume that no such facts exist; provided, however, that, if
prior to the fifth Business Day preceding the date upon which by the terms
hereof any such moneys may become payable for any purpose, or in the event of
the execution of an instrument pursuant to Section 602 acknowledging that
Securities or portions thereof are deemed to have been paid for all purposes of
this Indenture, acknowledging that the entire indebtedness of the Company in
respect thereof has been satisfied and discharged or acknowledging satisfaction
and discharge of this Indenture, then if prior to the second Business Day
preceding the date of such execution, the Trustee shall not have received with
respect to such moneys the notice provided for in this Section, then, anything
herein contained to the contrary notwithstanding, the Trustee may, in its
discretion, receive such moneys and/or apply the same to the purpose for which
they were received, and shall not be affected by any notice to the contrary,
which may be received by it on or after such date; provided, however, that no
such application shall affect the obligations under this Article of the persons
receiving such moneys from the Trustee.
SECTION 1409. MODIFICATION, EXTENSION, ETC. OF SENIOR INDEBTEDNESS OF THE
COMPANY.
The holders of Senior Indebtedness of the Company may, without
affecting in any manner the subordination of the payment of the principal of and
premium, if any, and interest, if any, on the Securities, at any time or from
time to time and in their absolute discretion, agree with the Company to change
the manner, place or terms of payment, change or extend the time of payment of,
or renew or alter, any Senior Indebtedness of the Company, or amend or
supplement any instrument pursuant to which any Senior Indebtedness of the
Company is issued, or exercise or refrain from exercising any other of their
rights under the Senior Indebtedness of the Company including, without
limitation, the waiver of default thereunder, all without notice to or assent
from the Holders or the Trustee.
86
SECTION 1410. TRUSTEE HAS NO FIDUCIARY DUTY TO HOLDERS OF SENIOR INDEBTEDNESS OF
THE COMPANY.
With respect to the holders of Senior Indebtedness of the Company,
the Trustee undertakes to perform or to observe only such of its covenants and
objectives as are specifically set forth in this Indenture, and no implied
covenants or obligations with respect to the holders of Senior Indebtedness of
the Company shall be read into this Indenture against the Trustee. The Trustee
shall not be deemed to owe any fiduciary duty to the holders of Senior
Indebtedness of the Company, and shall not be liable to any such holders if it
shall mistakenly pay over or deliver to the Holders or the Company or any other
Person, money or assets to which any holders of Senior Indebtedness of the
Company shall be entitled by virtue of this Article or otherwise.
SECTION 1411. PAYING AGENTS OTHER THAN THE TRUSTEE.
In case at any time any Paying Agent other than the Trustee shall
have been appointed by the Company and be then acting hereunder, the term
"Trustee" as used in this Article shall in such case (unless the context shall
otherwise require) be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee; provided,
however, that Sections 1407, 1408 and 1410 shall not apply to the Company if it
acts as Paying Agent.
SECTION 1412. RIGHTS OF HOLDERS OF SENIOR INDEBTEDNESS NOT IMPAIRED.
No right of any present or future holder of Senior Indebtedness of
the Company to enforce the subordination herein shall at any time or in any way
be prejudiced or impaired by any act or failure to act on the part of the
Company or by any noncompliance by the Company with the terms, provisions and
covenants of this Indenture, regardless of any knowledge thereof any such holder
may have or be otherwise charged with.
SECTION 1413. EFFECT OF SUBORDINATION PROVISIONS; TERMINATION.
Notwithstanding anything contained herein to the contrary, other
than as provided in the immediately succeeding sentence, all the provisions of
this Indenture shall be subject to the provisions of this Article, so far as the
same may be applicable thereto.
Notwithstanding anything contained herein to the contrary, the
provisions of this Article Fourteen shall be of no further effect and the
Securities shall no longer be subordinated in right of payment to the prior
payment of such Senior Indebtedness of the Company if the Company shall have
delivered to the Trustee a notice to such effect. Any such notice delivered by
the Company shall not be deemed to be a supplemental indenture for purposes of
Article Twelve hereof.
87
[ARTICLE FIFTEEN
EXCHANGE OF PREFERRED SECURITIES FOR SECURITIES
SECTION 1501. EXCHANGE OF PREFERRED SECURITIES FOR SECURITIES.
(a) If at any time the Company or any of its Affiliates (in
either case, a "Company Affiliated Owner/Holder") is the owner or Holder of any
Preferred Securities of a Trust, such Company Affiliated Owner/Holder shall have
the right to deliver to the Institutional Trustee of such Trust all or such
portion of its Preferred Securities as it elects and receive, in exchange
therefore, a like amount of Securities. Such election (i) shall be exercisable
effective on any Interest Payment Date by such Sponsor Affiliated Owner/Holder
delivering to the Institutional Trustee a written notice of such election
specifying the liquidation amount of Preferred Securities with respect to which
such election is being made and the Interest Payment Date on which such exchange
shall occur, which Interest Payment Date shall be not less than ten Business
Days after the date of receipt by the Institutional Trustee or its designee the
Preferred Securities which are the subject of such election by 10:00 A.M. New
York time, on the Interest Payment Date on which such exchange is to occur.
After the exchange, such Preferred Securities will be canceled and will no
longer be deemed to be outstanding and all rights of the Company or its
Affiliate(s) with respect to such Preferred Securities will cease.
(b) In the case of an exchange described in Section 1501(a),
the Trust will, on the date of such exchange, exchange Securities having a
principal amount equal to the aggregate liquidation amount of the outstanding
Common Securities of such Trust, multiplied by the ratio of the aggregate
liquidation amount of the Preferred Securities exchanged pursuant to Section
1501(a) divided by the aggregate liquidation amount of the Preferred Securities
outstanding immediately prior to such exchange, for such proportional amount of
Common Securities held by the Sponsor (which contemporaneously shall be canceled
and no longer be deemed to be outstanding); provided, that the Sponsor delivers
or caused to be delivered to the Institutional Trustee or its designee the
required amount of Common Securities to be exchanged by 10:00 A.M. New York
time, on the Interest Payment Date on which such exchange is to occur.]
-------------------------
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute one and the same instrument.
88
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed as of the day and year first above written.
AVISTA CORPORATION
By:
--------------------------------
Name: Malyn K. Malquist
Title: Senior Vice President,
Chief Financial Officer and Treasurer
UNION BANK OF CALIFORNIA, N.A., Trustee
By:
--------------------------------
89
Exhibit 4(b)(2)
================================================================================
AVISTA CORPORATION
------------------
OFFICER'S CERTIFICATE
(Under Section 301 of the Indenture,
dated as of _____, 2004)
Establishing Series of Securities Designated
Subordinated Debt Securities, Series ____
------------------
_____________, 2004
================================================================================
AVISTA CORPORATION
OFFICER'S CERTIFICATE
(Under Section 301 of the Indenture,
dated as of _____, 2004)
I, _______________, _________________ of AVISTA CORPORATION
(the "Company"), in accordance with Section 301 of the Indenture, dated as of
_____, 2004 (the "Indenture", capitalized terms used herein and not defined
herein having the meanings specified in the Indenture), of the Company to Union
Bank of California, N.A., trustee (the "Trustee"), do hereby establish a series
of Securities having the terms and characteristics set forth in this Officer's
Certificate.
PART I
Set forth below in this Part I are the terms and
characteristics of the series of Securities established hereby referred to in
clauses (a) through (u) in the second paragraph of Section 301 of the Indenture
(the lettered clauses set forth herein corresponding to such clauses in said
Section 301).
(a) the title of the Securities of such series, being Series
No. 1 under the Indenture, shall be "Subordinated Debt Securities, Series __"
(the Securities of such series, for purposes of this Officer's Certificate,
being sometimes hereinafter called the "Notes"); the Notes are to be issued and
sold to AVA Capital Trust III; and all references herein to the Declaration, the
Institutional Trustee and the Trust Securities relate to the Trust;
(b) the aggregate principal amount of Notes which may be
authenticated and delivered under the Indenture shall be limited to _____,
except as contemplated in Section 301(b) of the Indenture;
(c) interest on the Notes shall be payable to the Person or
Persons in whose names the Notes are registered at the close of business on the
Regular Record Date for such interest, except as otherwise expressly provided in
the form of Note attached hereto and hereby authorized and approved;
(d) the principal of the Notes shall be payable on
___________, _____;
(e) Article 4 of the Declaration sets forth the procedures to
determine the Distribution Rate, Distribution Periods and Distribution Payment
Dates for the Preferred Securities. While the Preferred Securities are
outstanding, the Interest Rate, Interest Periods, Interest Payment Dates and
associated terms relating to the Notes shall be the same as the Distribution
Rate, Distribution Periods and Distribution Payment Dates and associated terms
relating to the Preferred Securities, respectively. If the Trust is dissolved
and the Notes are distributed to the holders of the Preferred Securities, the
interest payable, Interest Rate, Interest Periods, Interest Payment Dates and
the redemption provisions with respect to Fixed Rate Periods for the Preferred
Securities and the Remarketing Procedures shall remain the same with respect to
the Notes distributed to the holders of Preferred Securities except: (i) the
effects of the
1
Declaration Events of Default will only be occasioned by the Events of Default
and (ii) the cure and waiver provisions relating to the Declaration Events of
Default will be superceded by the cure and waiver provisions relating to the
Events of Default. In addition, if the Trust is dissolved and the Notes are
distributed to the holders of the Preferred Securities, the below described
procedures will be applicable to the Notes.
(i) interest payments shall accrue from the date of
original issuance until Maturity or the Redemption Date. During the
Initial Fixed Rate Period, interest will be payable semiannually in
arrears on _____ and _____ of each year, commencing on _____, 2004.
During any Fixed Rate Period, other than the Initial Fixed Rate Period,
interest will be payable semiannually in arrears on Interest Payment
Dates determined based on the Remarketing Date (if the Notes are
remarketed for a new Fixed Rate Period that begins on _____ or _____,
interest will be payable on _____ and _____ of each year, and if the
Notes are remarketed for a new Fixed Rate Period that begins on _____
or _____, interest will be payable on _____ and _____ of each year).
During any Floating Rate Period, interest will be payable quarterly in
arrears on _____, _____, _____ and _____ of each year;
(ii) if any Interest Payment Date with respect to a
Fixed Rate Period is not a Business Day, interest will be payable,
without additional interest, on the immediately succeeding Business
Day, with the same force and effect as if payment was made on the date
such payment was originally payable (and without the accrual of any
additional amount of interest). If any Interest Payment Date with
respect to a Floating Rate Period is not a Business Day, then interest
will be payable on the immediately succeeding Business Day and interest
shall accrue to the actual payment date (except for an Interest Payment
Date that coincides with Maturity or the Redemption Date);
(iii) the amount of interest payable on each Interest
Payment Date relating to a Fixed Rate Period will be computed on the
basis of a 360-day year of twelve 30-day months. The amount of interest
payable on each Interest Payment Date in respect of a Floating Rate
Period will be computed by multiplying the per annum Interest Rate in
effect for such Interest Period by a fraction, the numerator of which
will be the actual number of days in such Interest Period (or portion
thereof) (determined by including the first day thereof and excluding
the last thereof) and the denominator of which will be 360, and
multiplying the rate so obtained by $1,000;
(iv) interest on the Notes will be deferred during
any Extension Period (as defined below) but will continue to accrue.
The payment of such interest, together with any interest thereon, will
be distributed to the holders of Notes at the end of any Extension
Period;
(v) each Note upon registration of transfer or in
exchange for or in lieu of any other Note shall carry the rights of
interest accrued and unpaid, and to accrue, which were carried by such
other Note;
(vi) during the Initial Fixed Rate Period, the
Interest Rate shall be the Initial Interest Rate;
2
(vii) prior to the expiration of the Initial Fixed
Rate Period and any subsequent Fixed Rate Period or an Interest Period
with respect to a Floating Rate Period or an Interest Period in a Fixed
Rate Period during a time in which the Notes are redeemable in such
Fixed Rate Period, the Company will have the option to remarket the
Notes to establish a new Fixed Rate for a new Fixed Rate Period (to be
in effect after the expiration of the then current Interest Period). If
the Company elects to conduct a Remarketing of the Notes for the
purpose of establishing a new Fixed Rate for a new Fixed Rate Period,
the Company shall not less than 20 nor more than 35 Business Days prior
to the related Election Date, notify the Clearing Agency, the
Calculation Agent, the Trustee and the Remarketing Agent. If the Notes
are not issued in global, fully registered form to the Clearing Agency,
such notice shall be delivered to the holders of the Notes instead of
the Clearing Agency. Such notice shall indicate the length of the
proposed new Fixed Rate Period, the proposed Remarketing Date and any
redemption provisions that apply during such new Fixed Rate Period. The
Company shall have the right to terminate a Remarketing at any time
prior to the Election Date by notice of such termination to the
Clearing Agency, the Remarketing Agent, the Trustee and the Calculation
Agent;
(viii) if the Remarketing Agent has determined that
it will be able to remarket all Notes tendered or deemed tendered for
purchase in the Remarketing at a Fixed Rate and at a price of $1,000
per Note, on such Remarketing Date, the Interest Rate for the new Fixed
Rate Period will be the Fixed Rate determined by the Remarketing Agent,
which will be the rate per annum (rounded to the nearest one-thousandth
(0.001) of one percent per annum) which the Remarketing Agent
determines, in its sole judgment, to be the lowest Fixed Rate per annum
that will enable it to remarket all Notes tendered or deemed tendered
for Remarketing at a price of $1,000 per Note;
(ix) if the Company does not elect to remarket the
Notes or has terminated a Remarketing or if the Remarketing Agent is
unable to remarket all of the Notes tendered or deemed tendered for a
purchase price of $1,000 per Note, the Interest Rate for the next
Interest Period shall be the Floating Rate and the new Interest Period
shall be a Floating Rate Period;
(x) the Calculation Agent shall calculate the
Floating Rate on the Floating Rate Determination Date as follows:
(A) Except as provided below, the Floating
Rate for any Floating Rate Period for the Notes will be equal
to the Adjustable Rate (as defined below) plus ___%. The
"Adjustable Rate" for any Interest Period will be equal to the
highest of the 3-month LIBOR Rate, the 10-year Treasury CMT
and the 30-year Treasury CMT (each as defined below and
collectively referred to as the "Benchmark Rates") for such
Interest Period during the Floating Rate Period. In the event
that the Calculation Agent determines in good faith that for
any reason:
(1) any one of the Benchmark Rates cannot be
determined for any Interest Period, the
Adjustable Rate for such Interest Period
will be equal to the higher of whichever two
of such rates can be so determined;
3
(2) only one of the Benchmark Rates can be
determined for any Interest Period, the
Adjustable Rate for such Interest Period
will be equal to whichever such rate can be
so determined; or
(3) none of the Benchmark Rates can be
determined for any Interest Period, the
Adjustable Rate for the preceding Interest
Period will be continued for such Interest
Period.
(B) The "3-month LIBOR Rate" means, for each
Interest Period, the arithmetic average of the two most recent
weekly quotes for deposits for U.S. Dollars having a term of
three months, as published on the first Business Day of each
week immediately preceding the Interest Period for which the
Floating Rate is being determined. Such quotes will be taken
from Telerate Page 3750 at approximately 11:00 a.m. London
time on the Floating Rate Determination Date. If such rate
does not appear on Telerate Page 3750 on the Floating Rate
Determination Date, the 3-month LIBOR Rate will be the
arithmetic mean of the rates quoted by three major banks in
New York City selected by the Calculation Agent, at
approximately 11:00 a.m., New York City time, on the relevant
date for loans in U.S. Dollars to leading European banks for a
period of three months.
(C) The "10-year Treasury CMT" means the
rate determined in accordance with the following provisions:
(1) With respect to any Floating Rate
Determination Date and the Interest Period
that begins immediately thereafter, the
10-year Treasury CMT means the rate
displayed on Telerate Page 7051 under the
caption "...Treasury Constant
Maturities...Federal Reserve Board Release
H.15...Mondays Approximately 3:45 P.M.",
under the column for the Designated CMT
Maturity Index (as defined below).
(2) If such rate is no longer displayed on
the relevant page, or is not so displayed by
3:00 P.M., New York City time, on the
applicable Floating Rate Determination Date,
then the 10-year Treasury CMT for such
Floating Rate Determination Date will be
such treasury constant maturity rate for the
Designated CMT Maturity Index as is
published in H.15(519).
(3) If such rate is no longer displayed on
the relevant page, or if not published by
3:00 P.M., New York City time, on the
applicable Floating Rate Determination Date,
then the 10-year Treasury CMT for such
Floating Rate Determination Date will be
such constant maturity treasury rate for the
Designated CMT Maturity Index (or other
United States Treasury rate for the
Designated CMT Maturity Index) for the
applicable Floating Rate Determination Date
with respect to such interest reset date as
may
4
then be published by either the Board of
Governors of the Federal Reserve System or
the United States Department of the Treasury
that the Calculation Agent determines to be
comparable to the rate formerly displayed on
the Telerate Page 7051 and published in
H.15(519).
(4) If such information is not provided by
3:00 P.M., New York City time, on the
applicable Floating Rate Determination Date,
then the 10-year Treasury CMT for such
Floating Rate Determination Date will be
calculated by the Calculation Agent and will
be a yield to maturity, based on the
arithmetic mean of the secondary market
offered rates as of approximately 3:30 P.M.,
New York City time, on the Floating Rate
Determination Date reported, according to
their written records, by three leading
primary United States government securities
dealers in The City of New York (each, a
"Reference Dealer") selected by the
Calculation Agent (from five such Reference
Dealers selected by the Calculation Agent
and eliminating the highest quotation (or,
in the event of equality, one of the
highest) and the lowest quotation (or, in
the event of equality, one of the lowest)),
for the most recently issued direct
noncallable fixed rate obligations of the
United States ("Treasury Debentures") with
an original maturity of approximately the
Designated CMT Maturity Index and a
remaining term to maturity of not less than
such Designated CMT Maturity Index minus one
year.
(5) If the Calculation Agent is unable to
obtain three such Treasury Debentures
quotations, the 10-year Treasury CMT for the
applicable Floating Rate Determination Date
will be calculated by the Calculation Agent
and will be a yield to maturity based on the
arithmetic mean of the secondary market
offered rates as of approximately 3:30 P.M.,
New York City time, on the applicable
Floating Rate Determination Date of three
Reference Dealers in The City of New York
(from five such Reference Dealers selected
by the Calculation Agent and eliminating the
highest quotation (or, in the event of
equality, one of the highest) and the lowest
quotation (or, in the event of equality, one
of the lowest)), for Treasury Debentures
with an original maturity of the number of
years that is the next highest to the
Designated CMT Maturity Index and a
remaining term to maturity closest to the
Designated CMT Maturity Index and in an
amount of at least $100 million.
(6) If three or four (and not five) of such
Reference Dealers are quoting as set forth
above, then the 10-year Treasury CMT will be
based on the arithmetic mean of the offered
rates obtained and neither the highest nor
lowest of such quotes will be eliminated;
provided, however, that if fewer than three
Reference Dealers
5
selected by the Calculation Agent are
quoting as set forth above, the 10-year
Treasury CMT with respect to the applicable
interest determination date will remain the
10-year Treasury CMT for the immediately
preceding Interest Period. If two Treasury
Debentures with an original maturity as
described in the second preceding sentence
have remaining terms to maturity equally
close to the Designated CMT Maturity Index,
then the quotes for the Treasury Debentures
with the shorter remaining term to maturity
will be used.
(7) "Designated CMT Maturity Index" means
the original period to maturity of the U.S.
Treasury securities (10 years) with respect
to which the 10-year Treasury CMT will be
calculated.
(8) "Telerate Page 3750" means the display
designated on page 3750 on MoneyLine
Telerate (or such other page as may replace
the 3750 page on the service or such other
service as may be nominated by the British
Bankers' Association for the purpose of
displaying London interbank offered rates
for U.S. Dollars deposits).
(9) "Telerate Page 7051" means the display
on MoneyLine Telerate (or any successor
service), on such page (or any other page as
may replace such page on that service), for
the purpose of displaying Treasury Constant
Maturities as reported in H.15(519).
(10) "30-year Treasury CMT" has the meaning
specified under the definition of 10-year
Treasury CMT, except that the Designated CMT
Maturity Index for the 30-year Treasury CMT
shall be 30 years.
(D) The 3-month LIBOR Rate, the 10-year
Treasury CMT and the 30-year Treasury CMT shall each be
rounded to the nearest hundredth of a percent.
(E) The Floating Rate with respect to each
Floating Rate Period will be calculated as promptly as
practicable by the Calculation Agent according to the
appropriate method described above.
(xi) if the Company elects to defer interest during a
Fixed Rate Period, interest will continue to accrue and be compounded
semiannually at the Fixed Rate until the expiration of the Fixed Rate
Period. Prior to the expiration of such Fixed Rate Period and any
subsequent Fixed Rate Period during the Extension Period, the Company
will have the option to remarket the Notes for a new Fixed Rate Period
(to take effect upon expiration of such Fixed Rate Period). If the
Company does not remarket the Notes, the Floating Rate during the
Extension Period shall be determined as provided herein, but shall not
be less than the Fixed Rate for the Fixed Rate Period just ended. If
the Company elects to defer interest during a Floating Rate Period,
interest will continue to
6
accrue and be compounded quarterly at the applicable Floating Rate,
reset quarterly, subject to the right of the Company to remarket the
Notes prior to any Interest Payment Date in order to establish a new
Fixed Rate for a new Fixed Rate Period in accordance with the
Remarketing Procedures;
(xii) in accordance with Part II, clause (b) of this
Officer's Certificate and the Remarketing Procedures, the Company may,
prior to the expiration of the Initial Fixed Rate Period and any
subsequent Fixed Rate Period, prior to any Interest Payment Date during
a time in which the Notes are redeemable in any Fixed Rate Period or
prior to any Interest Payment Date with respect to a Floating Rate
Period, elect to remarket the Notes to establish a new Fixed Rate for a
new Fixed Rate Period (to be in effect after the then current Interest
Period). A Fixed Rate Period must be for a duration of at least six
months, may not extend beyond the Maturity of the Notes and may not end
on a day other than a day immediately preceding an Interest Payment
Date. If a new Fixed Rate for a new Fixed Rate Period is set in a
Remarketing, a new Fixed Rate Period shall commence following the
expiration of the then current Interest Period. If a new Fixed Rate for
a new Fixed Rate Period is not set, for any reason, including after the
expiration of the Initial Fixed Rate Period, a Floating Rate Period,
and the Floating Rate reset quarterly shall be in effect until the
Company remarkets the Notes and sets a new Fixed Rate for a new Fixed
Rate Period in accordance with the Remarketing Procedures;
(xiii) so long as no Event of Default has occurred
and is continuing, the Company has the right at any time, and from time
to time, to defer payments of interest on the Notes by extending the
interest payment period (an "Extension Period"). During an Extension
Period, interest will continue to accrue on the Notes. If the Company
decides to defer interest payments on the Notes, the Extension Period
shall not exceed five consecutive years. An Extension Period shall not
extend beyond the Maturity of the Notes. Prior to the termination of
any Extension Period, the Company may further defer payments of
interest provided that the Extension Period, together with all previous
and further extensions thereof, may not exceed five consecutive years.
There could be multiple Extension Periods of varying lengths throughout
the term of the Notes. Upon the termination of any such Extension
Period and upon the payment of all accrued and unpaid interest then
due, the Company may select a new Extension Period, subject to the
above limitations and requirements. Upon the termination of any
Extension Period, which termination shall be on an Interest Payment
Date, the Company shall pay all Deferred Interest on the next
succeeding Interest Payment Date to the Person in whose name the Notes
are registered on the Regular Record Date for such Interest Payment
Date, provided that Deferred Interest payable at Maturity or on any
Redemption Date will be paid to the Person to whom principal is
payable. The Company shall give the Holder or Holders of the Notes, the
Trustee, the Remarketing Agent and the Calculation Agent, notice as
provided in Sections 105 and 106, respectively, of the Indenture of its
selection or extension of an Extension Period at least one Business Day
prior to the earlier of (i) the Regular Record Date relating to the
Interest Payment Date on which the Extension Period is to commence or
relating to the Interest Payment Date on which an Extension Period that
is being extended would otherwise terminate, or (ii) the date the
Company or the Trust is required to give notice to any applicable
self-regulatory organization of the record date or the date such
distributions are payable. The Company shall cause the Trust
7
to give notice of the Company's selection of such Extension Period to
Holders of the Trust Securities, the Calculation Agent and the
Remarketing Agent.
(f) the corporate trust office of Union Bank of California,
N.A. in _____ shall be the place at which (i) the principal of, premium, if any,
and interest, if any, on the Notes at Maturity shall be payable upon presentment
and interest prior to Maturity shall be payable as specified in the form of Note
attached hereto, (ii) registration of transfer of the Notes may be effected,
(iii) exchanges of Notes may be effected and (iv) notices and demands to or upon
the Company in respect of the Notes and the Indenture may be served; and Union
Bank of California, N.A. shall be the Security Registrar and a Paying Agent for
the Notes; PROVIDED, HOWEVER, that the Company reserves the right to change, by
one or more Officer's Certificates supplemental to this Officer's Certificate,
any such place or the Security Registrar or such Paying Agent; and PROVIDED,
FURTHER, that the Company reserves the right to designate, by one or more
Officer's Certificates supplemental to this Officer's Certificate, its principal
corporate office in Spokane, Washington as any such place or itself as the
Security Registrar;
(g) (i) the Notes shall be subject to redemption, in whole
but not in part, without premium or penalty, on the last Interest Payment Date
relating to the Initial Fixed Rate Period, on such dates with respect to any
other Fixed Rate Period as the Company and the Trust may determine prior to the
remarketing establishing such Fixed Rate Period or on any Interest Payment Date
relating to a Floating Rate Period, at a Redemption Price equal to 100% of the
principal amount to be redeemed plus accrued but unpaid interest to the
Redemption Date;
(ii) the Notes shall be subject to redemption, in
whole but not in part, at the election of the Company, on any date
within 90 days of the occurrence, and during the continuation of, a
Special Event (as defined herein) at a redemption price equal to 100%
of the principal amount thereof plus accrued interest, if any to the
date fixed for redemption;
"Special Event" means an "Investment Company Act
Event" or "Tax Event";
"Investment Company Act Event" means the receipt by
the Company and the Regular Trustees of an Opinion of Counsel to the
Company experienced in these matters to the effect that, as a result of
the occurrence of a change in law or regulation or a written change
(including any announced prospective change) in interpretation or
application of law or regulation by any legislative body, court,
governmental agency or regulatory authority, there is more than an
insubstantial risk that the Trust is or will be considered an
"investment company" that is required to be registered under the
Investment Company Act of 1940, as amended, which change or prospective
change becomes effective or would become effective, as the case may be,
on or after the date of the issuance by the Trust of the Preferred
Securities.
"Tax Event" means the receipt by the Company and the
Regular Trustees of an opinion from independent tax counsel experienced
in such matters (which may be counsel to the Company) to the effect
that, as a result of (a) any amendment to, or change (including any
announced proposed change) in, the laws (or any regulations thereunder)
8
of the United States or any political subdivision or taxing authority
thereof or therein or (b) any amendment to, or change in, an
interpretation or application of such laws or regulations, there is
more than an insubstantial risk that (i) the Trust would be subject to
United States federal income tax with respect to income accrued or
received on the Notes; (ii) interest payable on the Notes would not be
deductible, in whole or in part, by the Company for United States
federal income tax purposes; or (iii) the Trust would be subject to
more than a de minimis amount of other taxes, duties or other
governmental charges, which change or amendment becomes effective on or
after the date of issuance by the Trust of the Preferred Securities.
(h) inapplicable;
(i) the Notes shall be issued in denominations of $1,000 and
any integral multiple thereof;
(j) inapplicable;
(k) inapplicable;
(l) inapplicable;
(m) inapplicable;
(n) inapplicable;
(o) inapplicable;
(p) inapplicable;
(q) inapplicable;
(r) inapplicable;
(s) (i) the Notes are to be initially registered in the
name of Union Bank of California, N.A., as Institutional Trustee of the Trust.
The Notes shall not be transferable, nor shall any purported transfer be
registered, except (A) to a nominee of such Institutional Trustee, to such
Institutional Trustee by such nominee, by such Institutional Trustee to another
nominee, by any such nominee to a successor nominee or by such Institutional
Trustee or any nominee thereof to a successor Institutional Trustee or a nominee
thereof or (B) to the holders of Trust Securities in the event of the
dissolution of the Trust in accordance with the provisions of the Declaration;
(ii) no service charge shall be made for the
registration of transfer or exchange of the Notes; PROVIDED, HOWEVER, that,
after the distribution of the Notes contemplated in clause (i)(B) above, the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with the exchange and transfer;
9
(t) reference is made to clause (e)(ii) above; and
(u) the notes are to be issued and sold to the Trust.
PART II
Set forth below in this Part II are additional terms of the
series of Notes established hereby, as contemplated by clause (v) in the second
paragraph of Section 301 of the Indenture.
(a) the Notes shall have such further terms as are set forth
in the form of Note attached hereto; provided, however, that if the Trust is
dissolved and the Notes are distributed to the holders of the Preferred
Securities, the form of Note may, at the election of the Company, be revised to
specifically include the provisions of the determination of the interest rate
thereon, as set forth in this Officer's Certificate;
(b) Article 10 of the Declaration sets forth the Remarketing
Procedures to determine the applicable Fixed Rate from time to time for the
Preferred Securities. If the Trust is dissolved and the Notes are distributed to
the holders of the Preferred Securities, the below described Remarketing
Procedures will be applicable to the Notes;
(i) if the Company elects to conduct a Remarketing,
the Company, not less than 20 nor more than 35 Business Days prior to
the related Election Date, is required to give the written notice of
proposed Remarketing of the Notes to the Clearing Agency, the Trustee,
the Calculation Agent and the Remarketing Agent. If the Notes are not
issued in global, fully registered form, such notice shall be delivered
to the holders of the Notes instead of the Clearing Agency. Such notice
will describe the Remarketing and will indicate the length of the
proposed new Fixed Rate Period, the proposed Remarketing Date and any
redemption provisions that apply during such new Fixed Rate Period. At
any time prior to the Election Date, the Company may elect to terminate
a Remarketing by giving the Clearing Agency (or the Holders as
applicable), the Remarketing Agent, the Trustee and the Calculation
Agent written notice of such termination;
(ii) not later than 4:00 p.m., New York City time, on
an Election Date, each Holder of Notes may give a written notice to the
Trustee of its election ("Notice of Election") (i) to retain and not to
have all or any portion of the Notes owned by it remarketed in the
Remarketing, or (ii) to tender all or any portion of such Notes for
purchase in the Remarketing (such portion, in either case, is required
to be in the Liquidation Amount of $1,000 or any integral multiple
thereof). Any Notice of Election given to the Trustee will be
irrevocable and may not be conditioned upon the level at which the
Fixed Rate is established in the Remarketing. Promptly after 4:30 p.m.,
New York City time, on such Election Date, the Trustee, based on the
Notices of Election received by it through the Clearing Agency prior to
such time, will notify the Company and the Remarketing Agent of the
number of Notes to be retained by holders of Notes and the number of
Notes tendered for purchase in the Remarketing;
10
(iii) if any holder of Notes gives a Notice of
Election to tender Notes as described above, the Notes so subject to
such Notice of Election will be deemed tendered for purchase in the
Remarketing, notwithstanding any failure by such holder to deliver or
properly deliver such Notes to the Remarketing Agent for purchase. If
any holder of Notes fails timely to deliver a Notice of Election, as
described above, such Notes will be deemed tendered for purchase in
such Remarketing, notwithstanding such failure or the failure by such
holder to deliver or properly deliver such Notes to the Remarketing
Agent for purchase;
(iv) the right of each holder of Notes to have Notes
tendered for purchase in the Remarketing shall be limited to the extent
that (i) the Remarketing Agent conducts a Remarketing pursuant to the
terms of the Remarketing Agreement; (ii) the Notes tendered have not
been called for redemption; (iii) the Remarketing Agent is able to find
a purchaser or purchasers for tendered Notes at a Fixed Rate; and (iv)
such purchaser or purchasers deliver the purchase price therefor to the
Remarketing Agent;
(v) any holder of Notes that desires to continue to
retain a number of Notes, but only if the Fixed Rate is not less than a
specified rate per annum, shall submit a Notice of Election pursuant to
this clause (b) to tender such Notes and separately notify the
Remarketing Agent of its interest at the telephone number set forth in
the notice of Remarketing. If such holder so notifies the Remarketing
Agent, the Remarketing Agent will give priority to such holder's
purchase of such number of Notes in the Remarketing, providing that the
Fixed Rate is not less than such specified rate;
(vi) if holders submit Notices of Election to retain
all of the Notes then outstanding, the Fixed Rate will be the rate
determined by the Remarketing Agent, in its sole discretion, as the
rate that would have been established had a Remarketing been held on
the related Remarketing Date;
(vii) on any Remarketing Date on which the
Remarketing is to be conducted, the Remarketing Agent will use
commercially reasonable efforts to remarket, at a price equal to 100%
of the Liquidation Amount thereof, Notes tendered or deemed tendered
for purchase. Except as provided in the previous paragraph of this
clause (b), if, as a result of such efforts, on any Remarketing Date,
the Remarketing Agent has determined that it will be able to remarket
all Notes tendered or deemed tendered for purchase in the Remarketing
at a Fixed Rate and at a price of $1,000 per Note, prior to 4:00 p.m.,
New York City time, on such Remarketing Date, the Remarketing Agent
will determine the Fixed Rate, which will be the rate per annum
(rounded to the nearest one-thousandth (0.001) of one percent per
annum) which the Remarketing Agent determines, in its sole judgment, to
be the lowest Fixed Rate per annum that will enable it to remarket all
Notes tendered or deemed tendered for Remarketing at a price of $1,000
per Note;
(viii) if the Remarketing Agent is unable to remarket
by 4:00 p.m., New York City time on the third Business Day prior to the
Remarketing Settlement Date, all Notes tendered or deemed tendered for
a purchase at a price of $1,000 per Note, the Interest Rate for the
next Interest Period shall be the Floating Rate and the new Interest
Period shall be a Floating Rate Period. In such case, no Notes will be
sold in the
11
Remarketing and each holder will continue to hold its Notes at the
Floating Rate during such Floating Rate Period;
(ix) all Notes tendered or deemed tendered in the
Remarketing will be automatically delivered to the account of the
Remarketing Agent through the facilities of the Clearing Agency against
payment of the purchase price therefor on the Remarketing Settlement
Date. The Remarketing Agent will make payment to the Clearing Agency
Participant of each tendering holder of Notes in the Remarketing
through the facilities of the Clearing Agency by the close of business
on the Remarketing Settlement Date;
(x) in accordance with the Clearing Agency's normal
procedures, on the Remarketing Settlement Date, the transaction
described above with respect to each Note tendered for purchase and
sold in the Remarketing, will be executed through the Clearing Agency
Participants, will be debited and credited and such Notes delivered by
book entry as necessary to effect purchases and sales of such Notes.
The Clearing Agency is expected to make payment in accordance with its
normal procedures;
(xi) if any holder selling Notes in the Remarketing
fails to deliver such Notes, the Clearing Agency Participant of such
selling holder and of any other person that was to have purchased Notes
in the Remarketing may deliver to any such other person a number of
Notes that is less than the number of Notes that otherwise was to be
purchased by such person. In such event, the number of Notes to be so
delivered will be determined by such Clearing Agency Participant and
delivery of such lesser number of Notes will constitute good delivery;
(xii) the Remarketing Agent is not obligated to
purchase any Notes that would otherwise remain unsold in a Remarketing.
Neither the Trustee, the Company nor the Remarketing Agent shall be
obligated in any case to provide funds to make payment upon tender of
Notes for Remarketing;
(xiii) prior to the issuance of the Notes, the
Company and the Trust will enter into the Remarketing Agreement with
the Remarketing Agent, providing, among other things, that the
Remarketing Agent will follow the Remarketing Procedures for the
purposes of determining the applicable Fixed Rate. The Company will pay
the Remarketing Agent compensation for its services under the
Remarketing Agreement;
(c) if the Company shall make any deposit of money and/or
Government Obligations with respect to any Notes, or any portion of the
principal amount thereof, as contemplated by Section 601 of the Indenture, the
Company shall not deliver an Officer's Certificate described in clause (z) in
the first paragraph of said Section 601 unless the Company shall also deliver to
the Trustee, together with such Officer's Certificate, either:
(i) an instrument wherein the Company,
notwithstanding the satisfaction and discharge of its indebtedness in
respect of the Notes, shall assume the obligation (which shall be
absolute and unconditional) to irrevocably deposit with the Trustee or
Paying Agent such additional sums of money, if any, or additional
Government Obligations (meeting the requirements of Section 601), if
any, or any
12
combination thereof, at such time or times, as shall be necessary,
together with the money and/or Government Obligations theretofore so
deposited, to pay when due the principal of and premium, if any, and
interest due and to become due on such Notes or portions thereof, all
in accordance with and subject to the provisions of said Section 601;
PROVIDED, HOWEVER, that such instrument may state that the obligation
of the Company to make additional deposits as aforesaid shall be
subject to the delivery to the Company by the Trustee of a notice
asserting the deficiency accompanied by an opinion of an independent
public accountant of nationally recognized standing showing the
calculation thereof (which opinion shall be obtained at the expense of
the Company); or
(ii) an Opinion of Counsel to the effect that the
Holders of such Notes, or portions of the principal amount thereof,
will not recognize income, gain or loss for United States federal
income tax purposes as a result of the satisfaction and discharge of
the Company's indebtedness in respect thereof and will be subject to
United States federal income tax on the same amounts, at the same times
and in the same manner as if such satisfaction and discharge had not
been effected;
(d) if the Company engages in a conveyance or transfer of
property as contemplated in Section 1005 of the Indenture, the Company will not
be released and discharged from all obligations under the Indenture and the
Notes unless the Company shall deliver to the Trustee an Opinion of Counsel to
the effect that the Holders of such Notes, or portions of the principal amount
thereof, will not recognize income, gain or loss for United States federal
income tax purposes as a result of conveyance or transfer and will be subject to
United States federal income tax on the same amounts, at the same times and in
the same manner as if such conveyance or transfer had not been effected;
(e) for so long as the Notes are outstanding, the Company
shall not consolidate with or merge into any other Person, or convey or
otherwise transfer, or lease, all of its properties, as or substantially as an
entirety, as contemplated by Section 1001 of the Indenture, to any Person if
such person is organized and existing under the laws of Canada or any Province
thereof.
(f) if at any time the Notes are to be held by a securities
depository, the Company may at such time establish the matters contemplated in
clause (q) in the second paragraph of Section 301 of the Indenture in an
Officer's Certificate supplemental to this Officer's Certificate; and
(g) For all purposes of this Officer's Certificate, except as
otherwise expressly provided or unless the context otherwise requires:
"Calculation Agent" means Union Bank of California,
N.A., or its successor appointed by the Company and, if applicable, the
Regular Trustees, acting as calculation agent.
"Clearing Agency" means an organization registered as
a "clearing agency" pursuant to Section 17A of the Securities Exchange
Act of 1934, as amended.
13
"Clearing Agency Participant" means a broker, dealer,
bank, other financial institution or other Person for whom from time to
time a Clearing Agency effects book-entry transfers and pledges of
securities deposited with the Clearing Agency.
"Declaration" means the AVA Capital Trust III Amended
and Restated Declaration of Trust dated as of _____, 2004 among the
Company, the trustees named therein, and the holders of undivided
beneficial interests in the assets of the Trust.
"Declaration Event of Default" means an "Event of
Default" under the Declaration.
"Deferred Interest" means each installment of
interest not paid during any Extension Period, and interest thereon.
Deferred installments of interest shall bear interest at the rate of
the prevailing Interest Rate per annum from the applicable Interest
Payment Date to the date of payment, compounded on each Interest
Payment Date.
"Definitive Preferred Securities Certificates" means
Preferred Securities Certificates issued in certificated, fully
registered form as provided in the Declaration.
"Distribution Payment Date" means each day on which
Distributions are payable on the Preferred Securities determined based
on the prevailing Distribution Rate.
"Distribution Period" means each semiannual period in
a Fixed Rate Period and each quarterly period in a Floating Rate Period
for which Distributions are payable on the Trust Securities.
"Distribution Rate" means the rate at which
Distributions will accrue on the Trust Securities.
"Distributions" means amounts payable in respect of
the Preferred Securities pursuant to Section 4.01 of the Declaration.
"Election Date" means a date that is no later than
the fifth Business Day prior to the proposed Remarketing Date.
"Extension Period" means any period during which the
Company has elected to defer payments of interest on the Notes, which
deferral may be for a period of up to five years.
"Fixed Rate" means the Distribution Rate (or Interest
Rate with respect to the Notes) during a Fixed Rate Period.
"Fixed Rate Period" means the Initial Fixed Rate
Period and each period set by the Company and, if applicable, the
Regular Trustees during a Remarketing for which the Fixed Rate
determined in such Remarketing will apply; provided, however, that a
Fixed Rate Period must be for a duration of at least six months, may
not extend beyond the Maturity of the Notes and may not end on a day
other than a day immediately
14
preceding a Distribution Payment Date (or Interest Payment Date with
respect to the Notes).
"Floating Rate" has the meaning set forth in Part I,
clause (e).
"Floating Rate Determination Date" means the second
London Business Day immediately preceding the first day of the relevant
Distribution Period (or Interest Period with respect to the Notes) in
the Floating Rate Period.
"Floating Rate Period" means any period during which
a Floating Rate is in effect.
"Initial Distribution Rate" means ___% per annum.
"Initial Fixed Rate Period" means the period from the
date of original issuance through _____, 2009.
"Initial Interest Rate" means ___% per annum.
"Institutional Trustee" means the commercial bank or
trust company identified as the "Institutional Trustee" in the
Declaration solely in its capacity as Institutional Trustee of the
Trust.
"Interest Payment Dates" means the dates on which
interest on the Notes is payable.
"Interest Period" means the period for which interest
on the Notes is payable.
"Interest Rate" means the rate, in effect from time
to time, at which interest shall accrue on the Notes.
"Liquidation Amount" means the stated amount of
$1,000 per Trust Security or the principal amount of the Notes.
"Liquidation Distribution" has the meaning specified
in Section 9.05 of the Declaration.
"London Business Day" means a day that is a Business
Day and a day on which dealings in deposits in U.S. dollars are
transacted, or with respect to any future date are expected to be
transacted, in the London interbank market.
"Preferred Security" means an undivided beneficial
ownership interest in the assets of the Trust having a Liquidation
Amount of $1,000 and having rights provided therefor in the
Declaration, including the right to receive Distributions and a
Liquidation Distribution as provided herein.
15
"Preferred Securities Certificate" means a
certificate evidencing ownership of a Preferred Security or Securities,
substantially in the form attached as Exhibit A to the Declaration.
"Regular Trustee" means each of the individuals
identified as a "Regular Trustee" in the Declaration.
"Remarketing" means the conduct by which a Fixed Rate
shall be determined in accordance with the Remarketing Procedures.
"Remarketing Agent" means Lehman Brothers Inc., its
successors or assigns, or such other remarketing agent appointed to
such capacity by the Company and, if applicable, the Administrative
Trustees.
"Remarketing Agreement" means the agreement among the
Company, the Trust and Lehman Brothers Inc., as remarketing agent,
dated as of _____, 2004.
"Remarketing Date" means any Business Day no later
than the third Business Day prior to any Remarketing Settlement Date.
"Remarketing Procedures" means those procedures set
forth in Article 10 of the Declaration and Part II, clause (b) of this
Officer's Certificate.
"Remarketing Settlement Date" means, to the extent
applicable, (i) the first Business Day of the next Distribution Period
(or Interest Period with respect to the Notes) following the expiration
of the Initial Fixed Rate Period and any subsequent Fixed Rate Period,
(ii) any Distribution Payment Date (or Interest Payment Date with
respect to the Notes) during a Floating Rate Period or (iii) any
Distribution Payment Date (or Interest Payment Date with respect to the
Notes) during a time in which Preferred Securities or Notes are
redeemable in a Fixed Rate Period subsequent to the Initial Fixed Rate
Period.
"Trust" means AVA Capital Trust III, a statutory
trust formed by the Company under Delaware law to issue Trust
Securities, the proceeds of which will be used to purchase the Notes.
"Trust Indenture Act" means the Trust Indenture Act
of 1939 as in force at the date as of which this instrument was
executed; provided, however, that in the event the Trust Indenture Act
of 1939 is amended after such date, "Trust Indenture Act" means, to the
extent required by any such amendment, the Trust Indenture Act of 1939
as so amended.
"Trust Security" means any one of the Common
Securities (as defined in the Declaration) or the Preferred Securities.
16
IN WITNESS WHEREOF, I have executed this Officer's Certificate
this ___ day of __________, 2004.
------------------------------------
Name:
Title:
17
FORM OF NOTE
(See legend at the end of this Security for
restrictions on transfer and change of form)
AVISTA CORPORATION
_______________, Series _____
[ORIGINAL INTEREST ACCRUAL DATE: REDEEMABLE: YES____ NO____
STATED MATURITY: INITIAL REDEMPTION DATE:
INTEREST RATE: DETERMINED BY PROCEDURES SET FORTH IN INITIAL REDEMPTION PRICE:
THE INDENTURE
INTEREST PAYMENT DATES: DETERMINED BY PROCEDURES SET REDUCTION PERCENTAGE:
FORTH IN THE INDENTURE
REGULAR RECORD DATES: THE OPENING OF BUSINESS ON THE REDEMPTION LIMITATION DATE:
BUSINESS DAY IMMEDIATELY PRECEDING THE RELEVANT
INTEREST PAYMENT DATE
OTHER PROVISIONS:]
OID: YES __ NO __
TOTAL AMOUNT OF OID (%):
YIELD TO MATURITY (%):
INITIAL ACCRUAL
PERIOD OID (%):
(CONSTANT - YIELD METHOD)
------------------------------------------
This Security is not a Discount Security
within the meaning of the within-mentioned Indenture.
------------------------------------------
Principal Amount Registered No.
$ CUSIP
AVISTA CORPORATION, a corporation organized and existing under the laws of the
State of Washington (herein called the "Company", which term includes any
successor corporation under the Indenture referred to below), for value
received, hereby promises to pay to
or registered assigns, the principal sum of
DOLLARS
on the Stated Maturity specified above (or upon earlier redemption), and to pay
interest thereon from the Original Interest Accrual Date specified above or from
the most recent Interest Payment Date to which interest has been paid or duly
provided for, on each Interest Payment Date, commencing with the Interest
Payment Date next succeeding the Original Interest Accrual Date specified above,
and at Maturity (or upon earlier redemption), at the Interest Rate then in
effect, until the principal hereof and any overdue interest is paid or duly
provided for. The interest so payable, and paid or duly provided for, on any
Interest Payment Date shall, as provided in such Indenture, be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date
1
specified above next preceding such Interest Payment Date. Notwithstanding the
foregoing, (a) if the Original Interest Accrual Date of this Security is after a
Regular Record Date and before the corresponding Interest Payment Date, interest
so payable for the period from and including the Original Interest Accrual Date
to but excluding such Interest Payment Date shall be paid on the next succeeding
Interest Payment Date to the Holder hereof on the related Regular Record Date;
and (b) interest payable at Maturity shall be paid to the Person to whom
principal shall be paid. Except as otherwise provided in said Indenture, any
such interest not so paid or duly provided for shall forthwith cease to be
payable to the Holder on such Regular Record Date and may either be paid to the
Person in whose name this Security (or one or more Predecessor Securities) is
registered at the close of business on a Special Record Date for the payment of
such Unpaid Interest to be fixed by the Trustee, notice of which shall be given
to Holders of Securities of this series not less than 15 days prior to such
Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities of this series may be listed, and upon such notice as may be required
by such exchange, all as more fully provided in said Indenture.
So long as no Event of Default shall have occurred and be
continuing, the Company has the right to defer payments of interest on this
Security by extending the interest payment period from time to time on this
Security (an "Extension Period"). If the Company decides to defer interest
payments on this Security, the Extension Period shall not exceed five
consecutive years. An Extension Period shall not extend beyond the Stated
Maturity of this Security. Prior to the termination of any Extension Period, the
Company may further defer payments of interest provided that the Extension
Period, together with all such previous and further extensions thereof, may not
exceed five consecutive years. Upon termination of any Extension Period and the
payments of all amounts then due, the Company may select a new Extension Period,
subject to the above requirements. There could be multiple Extension Periods of
varying lengths throughout the term of this Security. During an Extension
Period, Unpaid Interest (together with interest thereon) will compound on each
Interest Payment Date at the prevailing Interest Rate ("Deferred Interest").
Upon the termination of each Extension Period, which shall be an Interest
Payment Date, the Company shall pay all Deferred Interest on the next succeeding
Interest Payment Date to the Person in whose name this Debenture is registered
at the close of business on the Regular Record Date for such Interest Payment
Date, provided that any Deferred Interest payable at Stated Maturity or on any
Redemption Date will be paid to the Person to whom principal is payable.
The Company shall give the Holder of this Security, the
Trustee, the Remarketing Agent and the Calculation Agent notice of its selection
or extension of an Extension Period at least one Business Day prior to the
earlier of (i) the Regular Record Date relating to the Interest Payment Date on
which the Extension Period is to commence or relating to the Interest Payment
Date on which an Extension Period that is being extended would otherwise
terminate or (ii) the date the Company or Trust is required to give notice to
any applicable self-regulatory organization of the record date or the date
distributions are payable.
Payment of the principal of and premium, if any, on this
Security and interest hereon at Maturity shall be made upon presentation of this
Security at the Corporate Trust Office of Union Bank of California, N.A. in
_____, or at such other office or agency as may be
2
designated for such purpose by the Company from time to time. Payment of
interest on this Security (other than interest at Maturity) shall be made by
check mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register, except that if such Person shall be a Trust or
securities depositary, such payment may be made by such other means in lieu of
check, as shall be agreed upon by the Company, the Trustee and such Person.
Payment of the principal of and premium, if any, and interest on this Security,
as aforesaid, shall be made in such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
This Security is one of a duly authorized issue of securities
of the Company (herein called the "Securities"), issued and issuable in one or
more series under and equally secured by an Indenture, dated as of _____, 2004
(such Indenture as originally executed and delivered and as supplemented or
amended from time to time thereafter, together with any constituent instruments
establishing the terms of particular Securities, being herein called the
"Indenture"), between the Company and _____, trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), to
which Indenture and all indentures supplemental thereto reference is hereby made
for a description of the respective rights, limitations of rights, duties and
immunities of the Company, the Trustee and the Holders of the Securities
thereunder and of the terms and conditions upon which the Securities are, and
are to be, authenticated and delivered and secured. The acceptance of this
Security shall be deemed to constitute the consent and agreement by the Holder
hereof to all terms and provisions of the Indenture. This Security is one of the
series designated above.
The Securities of this series are subject to redemption, in
whole but not in part, without premium or penalty, on the last Interest Payment
Date relating to the Initial Fixed Rate Period, on such dates with respect to
any other Fixed Rate Period as the Company and the Trust may determine prior to
the remarketing establishing such Fixed Rate Period or on any Interest Payment
Date relating to a Floating Rate Period, at a Redemption Price equal to 100% of
the principal amount to be redeemed plus accrued but unpaid interest to the
Redemption Date
The Securities of this series are subject to redemption, in
whole but not in part, at the election of the Company, on any date within 90
days of the occurrence, and during the continuation of, a Special Event (as
defined herein) at a redemption price equal to 100% of the principal amount
thereof plus accrued interest, if any to the date fixed for redemption.
"Special Event" means an "Investment Company Act Event" or
"Tax Event".
"Investment Company Act Event" means the receipt by the
Company and the Regular Trustees of an Opinion of Counsel to the Company
experienced in these matters to the effect that, as a result of the occurrence
of a change in law or regulation or a written change (including any announced
prospective change) in interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory authority, there is
more than an insubstantial risk that the Trust is or will be considered an
"investment company" that is required to be registered under the 1940 Act, which
change or prospective change becomes effective or would become effective, as the
case may be, on or after the date of the issuance by the Trust of the Preferred
Securities.
3
"Tax Event" means receipt by the Company and the Regular
Trustees of an opinion from independent tax counsel experienced in such matters
(which may be counsel to the Company) to the effect that, as a result of (a) any
amendment to, or change (including any announced proposed change) in, the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein or (b) any amendment to, or
change in, an interpretation or application of such laws or regulations, there
is more than an insubstantial risk that (i) the Trust would be subject to United
States federal income tax with respect to income accrued or received on the
Notes; (ii) interest payable on the Notes would not be deductible, in whole or
in part, by the Company for United States federal income tax purposes; or (iii)
the Trust would be subject to more than a de minimis amount of other taxes,
duties or other governmental charges, which change or amendment becomes
effective on or after the date of issuance by the Trust of the Preferred
Securities.
Notice of redemption shall be given by mail to Holders of
Securities, not less than 30 days nor more than 60 days prior the date fixed for
redemption, all as provided in the Indenture. As provided in the Indenture,
notice of redemption at the election of the Company as aforesaid may state that
such redemption shall be conditional upon the receipt by the Trustee of money
sufficient to pay the principal of and premium, if any and interest, if any, on
this Security on or prior the date fixed for such redemption; a notice of
redemption so conditioned shall be of no force or effect if such money is not so
received and, in such event, the Company shall not be required to redeem this
Security.
The Company also shall be obligated to pay when due and
without extension all additional amounts as may be required so that the net
amount received and retained by the Holder of this Security (if the Holder is a
Trust) after paying taxes, duties, assessments or governmental charges of any
nature (other than withholding taxes) imposed by the United States or any other
taxing authority will not be less than the amounts such Holder would have
received had no such taxes, duties, assessments or other governmental charges
been imposed.
If an Event of Default shall occur and be continuing, the
principal of this Security may be declared due and payable in the manner and
with the effect provided in the Indenture.
The indebtedness evidenced by this Security is, to the extent
provided in the Indenture, subordinated and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each Holder of
this Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes. Each Holder hereof, by his acceptance hereof, hereby
waives all notice of the acceptance of the subordination provisions contained
herein and in the Indenture by each holder of Senior Indebtedness, whether now
outstanding or hereafter incurred, and waives reliance by each such Holder upon
said provisions.
Each Holder hereof, by his acceptance hereof, agrees to treat
this Security as indebtedness for all United States tax purposes.
The Indenture permits, with certain exceptions as therein
provided, the Trustee to
4
enter into one or more supplemental indentures for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, the Indenture with the consent of the Holders of not less than a majority in
aggregate principal amount of the Securities of all series then Outstanding
under the Indenture, considered as one class; provided, however, that if there
shall be Securities of more than one series Outstanding under the Indenture and
if a proposed supplemental indenture shall directly affect the rights of the
Holders if Securities of one or more, but less than all, of such series, then
the consent only of the Holders of a majority in aggregate principal amount of
the Outstanding Securities of all series so directly affected, considered as one
class, shall be required; and provided, further, that if the Securities of any
series shall have been issued in more than one Tranche and if the proposed
supplemental indenture shall directly affect the rights of the Holders of
Securities of one or more, but less than all, of such Tranches, then the consent
only of the Holders of a majority in aggregate principal amount of the
Outstanding Securities of all Tranches so directly affected, considered as one
class, shall be required; and provided, further, that the Indenture permits the
Trustee to enter into one or more supplemental indentures for limited purposes
without the consent of any Holders of Securities. The Indenture also contains
provisions permitting the Holders of a majority in principal amount of the
Securities then Outstanding, on behalf of the Holders of all Securities, to
waive compliance by the Company with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange thereof
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security.
As provided in the Indenture and subject to certain
limitations therein set forth, this Security or any portion of the principal
amount hereof will be deemed to have been paid for all purposes of the Indenture
and to be no longer Outstanding thereunder, and, at the election of the Company,
the Company's entire indebtedness in respect thereof will be satisfied and
discharged, if there has been irrevocably deposited with the Trustee or any
Paying Agent (other than the Company), in trust, money in an amount which will
be sufficient and/or Eligible Obligations, the principal of and interest on
which when due, without regard to any reinvestment thereof, will provide moneys
which, together with moneys so deposited, will be sufficient to pay when due the
principal of and interest on this Security when due.
The Indenture contains terms, provisions and conditions
relating to the consolidation or merger of the Company with or into, and the
conveyance or other transfer, or lease, of assets to, another Person, to the
assumption by such other Person, in certain circumstances, of all of the
obligations of the Company under the Indenture and on the Securities and to the
release and discharge of the Company, in certain circumstances, from such
obligation.
As provided in the Indenture and subject to certain
limitations therein set forth, the transfer of this Security is registrable in
the Security Register, upon surrender of this Security for registration of
transfer at the corporate trust office of Union Bank of California, N.A. in
_____, or such other office or agency as may be designated by the Company from
time to time, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities of this series of authorized denominations
and of like tenor and aggregate principal amount, will be issued to the
designated
5
transferee or transferees.
If any Interest Payment Date with respect to a Fixed Rate
Period is not a Business Day, interest will be payable, without additional
interest, on the immediately succeeding Business Day, with the same force and
effect as if payment was made on the date such payment was originally payable
(and without the accrual of any additional amount of interest). If any Interest
Payment Date with respect to a Floating Rate Period is not a Business Day, then
interest will be payable on the immediately succeeding Business Day and interest
shall accrue to the actual payment date (except for an Interest Payment Date
that coincides with Maturity or the Redemption Date).
The Securities of this series are issuable only as registered
Securities, without coupons, and in denominations of $1,000 or any amount in
excess thereof that is an integral multiple of $1,000. As provided in the
Indenture and subject to certain limitations therein set forth, Securities of
this Series are exchangeable for a like aggregate principal amount of Securities
of the same series and Tranche, of any authorized denominations, as requested by
the Holder surrendering the same, and of like tenor upon surrender of the
Security or Securities to be exchanged at the corporate trust office of Union
Bank of California, N.A. in _____, or such other office or agency as may be
designated by the Company from time to time.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due surrender of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the absolute
owner hereof for all purposes (subject to Section 307 of the Indenture), whether
or not this Security be overdue, and neither the Company, the Trustee nor any
such agent shall be affected by notice to the contrary.
The Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York, except to the
extent that the Trust Indenture Act shall be applicable .
As used herein, "Business Day" means any day, other than an
Saturday or Sunday, which is not a day on which banking institutions or trust
companies in the City of New York, New York or other city in which is located
any office or agency maintained for the payment of principal, premium, if any,
or interest on this Security, are authorized or required by law, regulation or
executive order to remain closed. All other terms used in this Security which
are defined in the Indenture shall have the meanings assigned to them in the
Indenture, any supplemental indenture, Officer's Certificate or Board Resolution
hereto.
As provided in the Indenture, no recourse shall be had for the
payment of the principal of or premium, if any, or interest on any Securities,
or any part thereof, or for any claim based thereon or otherwise in respect
thereof, or of the indebtedness represented thereby, or upon any obligation,
covenant or agreement under the Indenture, against, and no personal liability
whatsoever shall attach to, or be incurred by, any incorporator, shareholder,
officer or director, as
6
such, past, present or future of the Company or of any
predecessor or successor corporation (either directly or through the Company or
a predecessor or successor corporation), whether by virtue of any constitutional
provision, statute or rule of law, or by the enforcement of any assessment or
penalty or otherwise; it being expressly agreed and understood that the
Indenture and all the Securities are solely corporate obligations and that any
such personal liability is hereby expressly waived and released as a condition
of, and as part of the consideration for, the execution of the Indenture and the
issuance of the Securities.
Unless the certificate of authentication hereon has been
executed by the Trustee or an Authenticating Agent by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
7
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
AVISTA CORPORATION
By:
------------------------------------------------
[Title]
CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
Dated:
-----------------------------------
----------------------------------- OR ------------------------------
----------------------------------- ------------------------------
as Trustee as Trustee
By: By: [ ],
-----------------------------------
Authorized Officer
AS AUTHENTICATING AGENT
By:
---------------------------
Authorized Officer
8
THIS SECURITY SHALL NOT BE TRANSFERABLE, NOR SHALL ANY
PURPORTED TRANSFER BE REGISTERED, EXCEPT (A) TO A NOMINEE OF _____, AS
INSTITUTIONAL TRUSTEE, TO SUCH INSTITUTIONAL TRUSTEE BY SUCH NOMINEE, BY SUCH
INSTITUTIONAL TRUSTEE TO ANOTHER NOMINEE, BY ANY SUCH NOMINEE TO A SUCCESSOR
NOMINEE OR BY SUCH INSTITUTIONAL TRUSTEE OR ANY NOMINEE THEREOF TO A SUCCESSOR
INSTITUTIONAL TRUSTEE OR A NOMINEE THEREOF OR (B) TO THE HOLDERS OF TRUST
SECURITIES IN THE EVENT OF THE DISSOLUTION OF THE TRUST IN ACCORDANCE WITH THE
PROVISIONS OF THE DECLARATION.
-------------------
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 Security of AVISTA CORPORATION and does hereby irrevocably constitute
and appoint _________________, Attorney, to transfer said Security on the books
of the within-mentioned Company, with 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 Security in every particular without alteration or
enlargement or any change whatsoever.
9
Exhibit 4(e)
GUARANTEE AGREEMENT
BETWEEN
AVISTA CORPORATION
(AS GUARANTOR)
AND
UNION BANK OF CALIFORNIA, N.A.
(AS TRUSTEE)
DATED AS OF
___________, 2004
(AVA CAPITAL TRUST III)
CROSS-REFERENCE TABLE(1)
Section of Trust Indenture Act Section of
of 1939, as amended Guarantee Agreement
- ------------------------------------ -------------------
310(a)..................................................................4.01(a)
310(b)............................................................4.01(c), 2.08
310(c).............................................................Inapplicable
311(a)..................................................................2.02(b)
311(b)..................................................................2.02(b)
311(c).............................................................Inapplicable
312(a)..................................................................2.02(a)
312(b)..................................................................2.02(b)
313........................................................................2.03
314(a).....................................................................2.04
314(b).............................................................Inapplicable
314(c).....................................................................2.05
314(d).............................................................Inapplicable
314(e).........................................................1.01, 2.05, 3.02
314(f)...............................................................2.01, 3.02
315(a)..................................................................3.01(d)
315(b).....................................................................2.07
315(c).....................................................................3.01
315(d)..................................................................3.01(d)
315(e).............................................................Inapplicable
316(a)............................................................5.04(i), 2.06
316(b).....................................................................5.03
316(c).....................................................................2.02
317(a) ............................................................Inapplicable
317(b).............................................................Inapplicable
318(a)..................................................................2.01(b)
318(b).....................................................................2.01
318(c)..................................................................2.01(a)
- ----------
(1) This Cross-Reference Table does not constitute part of the Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
i
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions...................................................1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application..............................3
SECTION 2.02. Lists of Holders of Securities................................4
SECTION 2.03. Reports by the Trustee........................................4
SECTION 2.04. Periodic Reports to Trustee...................................4
SECTION 2.05. Evidence of Compliance with Conditions Precedent..............4
SECTION 2.06. Events of Default; Waiver.....................................4
SECTION 2.07. Event of Default; Notice......................................5
SECTION 2.08. Conflicting Interests.........................................5
ARTICLE III
POWERS, DUTIES AND RIGHTS OF TRUSTEE
SECTION 3.01. Powers and Duties of the Trustee..............................5
SECTION 3.02. Certain Rights of Trustee.....................................6
SECTION 3.03. Compensation; Fees; Indemnity.................................8
ARTICLE IV
TRUSTEE
SECTION 4.01. Trustee; Eligibility..........................................8
SECTION 4.02. Appointment, Removal and Resignation of Trustee...............9
ii
TABLE OF CONTENTS (CONT'D)
PAGE
ARTICLE V
GUARANTEE
SECTION 5.01. Guarantee.....................................................9
SECTION 5.02. Waiver of Notice and Demand..................................10
SECTION 5.03. Obligations Not Affected.....................................10
SECTION 5.04. Rights of Holders............................................10
SECTION 5.05. Guarantee of Payment.........................................11
SECTION 5.06. Subrogation..................................................11
SECTION 5.07. Independent Obligations......................................11
ARTICLE VI
SUBORDINATION
SECTION 6.01. Subordination................................................11
ARTICLE VII
TERMINATION
SECTION 7.01. Termination..................................................12
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Successors and Assigns.......................................12
SECTION 8.02. Amendments...................................................12
SECTION 8.03. Notices......................................................12
SECTION 8.04. Benefit......................................................13
SECTION 8.05. Interpretation...............................................13
SECTION 8.06. Governing Law................................................14
iii
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT ("Guarantee Agreement"), dated as of _____,
2004, between AVISTA CORPORATION, a Washington corporation (the "Guarantor"),
and Union Bank of California, N.A., a California banking corporation, as trustee
(the "Trustee"), for the benefit of the Holders (as defined herein) from time to
time of the Preferred Securities (as defined herein) and the Common Securities
(as defined herein) of AVA CAPITAL TRUST III, a Delaware statutory trust (the
"Trust").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of _____, 2004, among the Trustee, the other Trustees
named therein, Avista Corporation, as Sponsor, and the holders of undivided
beneficial interests in the assets of the Trust, the Trust is issuing as of
_____, 2004, $_____ aggregate liquidation amount of its Flexible Trust Preferred
Securities (the "Preferred Securities") representing preferred undivided
beneficial interests in the assets of the Trust and having the terms set forth
in the Declaration;
WHEREAS, the Preferred Securities will be issued by the Trust and the
proceeds thereof will be used to purchase the Subordinated Debt Securities (as
defined in the Declaration) of the Guarantor, which will be held by the Trust as
trust assets; and
WHEREAS, as incentive for the Holders to purchase the Preferred
Securities, the Guarantor desires to irrevocably and unconditionally agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the payment for Common Securities and
for Preferred Securities by each Holder (as defined herein) thereof, which
payment the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor
executes and delivers this Guarantee Agreement for the benefit of the Holders
from time to time of the Common Securities (as defined herein) and the Preferred
Securities.
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS. As used in this Guarantee Agreement, the terms
set forth below shall, unless the context otherwise requires, have the following
meanings. Capitalized or otherwise defined terms used but not otherwise defined
herein shall have the meanings assigned to such terms in the Declaration as in
effect on the date hereof.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Trust.
"Distributions" means amounts payable in respect of the Trust Securities
as provided in the Declaration.
"Event of Default" means a failure by the Guarantor to perform any of its
payment obligations under this Guarantee Agreement or to perform any other
obligations under this Guarantee Agreement if such default remains unremedied
for 30 days.
"Guarantee Payments" shall mean the following payments or distributions,
without duplication, with respect to the Common Securities and the Preferred
Securities, to the extent not paid or made by or on behalf of the Trust: (i) any
accrued and unpaid distributions that are required to be paid on such Common
Securities and Preferred Securities to the extent the Trust has funds on hand
available therefor to make such payment; (ii) the redemption price, including
all accrued and unpaid distributions to the date of redemption (the "Redemption
Price"), with respect to the Common Securities and Preferred Securities called
for redemption by the Trust to the extent that the Trust has funds on hand
available therefor sufficient to make such payment; and (iii) upon a voluntary
or involuntary dissolution, winding-up or liquidation of the Trust (other than
in connection with the distribution of Subordinated Debt Securities to the
holders of Trust Securities or the redemption of all of the Preferred
Securities), the lesser of (a) the aggregate of the liquidation amount and all
accumulated and unpaid distributions on the Common Securities and the Preferred
Securities to the date of payment, to the extent the Trust has funds on hand
available therefor, and (b) the amount of assets of the Trust remaining
available for distribution to Holders in liquidation of the Trust (in either
case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and records of
the Trust, of any Common Securities and Preferred Securities; provided, however,
that in determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder, "Holder"
shall not include the Guarantor or any Affiliate of the Guarantor.
"Indenture" means the Indenture dated as of _____, 2004, between the
Guarantor, as issuer of the Subordinated Debt Securities, and Union Bank of
California, N.A., as trustee, as the same may be modified, amended or
supplemented in accordance with the applicable provisions thereof.
"Majority in liquidation amount of Preferred Securities" means a vote by
Holder(s) of Preferred Securities, voting separately as a class, of more than
50% of the liquidation amount of all Preferred Securities outstanding at the
time of determination.
"Officers' Certificate" means a certificate signed by the Chairman of the
Board, the President or a Vice President, and by the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary, of the Guarantor, and
delivered to the Trustee. Any Officers' Certificate delivered with respect to
compliance with a condition or covenant provided for in this Guarantee Agreement
shall include:
2
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions
relating thereto;
(b) a brief statement of the nature and scope of the
examination or investigation undertaken by each officer in rendering the
Officers' Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary
to enable such officer to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Responsible Officer" means, with respect to the Trustee, any vice
president, any assistant vice president, the secretary, any assistant secretary,
the treasurer, any assistant treasurer, any senior trust officer, trust officer
or assistant trust officer or any other officer of the Corporate Trust
Department of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and also means, with respect
to a particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Successor Trustee" means a successor Trustee possessing the
qualifications to act as Trustee under Section 4.01.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Trust Security" means any one of the Common Securities or the Preferred
Securities.
"Trustee" means Union Bank of California, N.A. until a Successor Trustee
has been appointed and has accepted such appointment pursuant to the terms of
this Guarantee Agreement and thereafter means each such Successor Trustee.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.01. TRUST INDENTURE ACT; APPLICATION.
(a) This Guarantee Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Guarantee Agreement and
shall, to the extent applicable, be governed by such provisions; and
3
(b) If and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Sections 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.02. LISTS OF HOLDERS OF SECURITIES.
(a) The Guarantor shall furnish or cause to be furnished to the
Trustee (a) semiannually, not later than _____ and _____ in each year, a list,
in such form as the Trustee may reasonably require, of the names and addresses
of the Holders ("List of Holders") as of a date not more than 15 days prior to
the time such list is furnished, and (b) at such other times as the Trustee may
request in writing, within 30 days after the receipt by the Guarantor of any
such request, a List of Holders as of a date not more than 15 days prior to the
time such list is furnished; provided that, the Guarantor shall not be obligated
to provide such List of Holders at any time the List of Holders does not differ
from the most recent List of Holders given to the Trustee by the Guarantor or at
any time the Trustee is the Securities Registrar under the Declaration. The
Trustee may destroy any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Trustee shall comply with its obligations under Sections
311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.03. REPORTS BY THE TRUSTEE. Within 60 days after _____ of each
year commencing _____, 2004, the Trustee shall provide to the Holders of the
Preferred Securities such reports as are required by Section 313(a) of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Trustee shall also comply with the other
requirements of Section 313 of the Trust Indenture Act.
SECTION 2.04. PERIODIC REPORTS TO TRUSTEE. The Guarantor shall provide to
the Trustee such documents, reports and information as required by Section 314
of the Trust Indenture Act (if any) in the form, in the manner and at the times
required by Section 314 of the Trust Indenture Act, and shall provide, within
120 days after the end of each of its fiscal years, the compliance certificate
required by Section 314(a)(4) of the Trust Indenture Act in the form and in the
manner required by such Section. Delivery of such reports, information and
documents to the Trustee is for informational purposes only and the Trustee's
receipt of such reports, information and documents shall not constitute
constructive notice of any information contained therein or determinable from
information contained therein.
SECTION 2.05. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. The
Guarantor shall provide to the Trustee such evidence of compliance with any
conditions precedent, if any, provided for in this Guarantee Agreement,
including an Officers' Certificate and an opinion of counsel that relate to any
of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
SECTION 2.06. EVENTS OF DEFAULT; WAIVER. The Holders of a Majority in
liquidation amount of Preferred Securities may, by vote, on behalf of all of the
Holders, waive any past Event of Default and its consequences. Upon such waiver,
any such Event of Default shall cease
4
to exist, and any Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Guarantee Agreement, but no such waiver
shall extend to any subsequent or other default or Event of Default or impair
any right consequent thereon.
SECTION 2.07. EVENT OF DEFAULT; NOTICE.
(a) The Trustee shall, within 90 days after the occurrence of an Event
of Default, transmit by mail, first class postage prepaid, to the Holders,
notices of all Events of Default actually known to the Trustee, unless such
defaults have been cured before the giving of such notice, provided that the
Trustee shall be protected in withholding such notice if and so long as the
board of directors, the executive committee, or a trust committee of directors
and/or Responsible Officers of the Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders.
(b) The Trustee shall not be deemed to have knowledge of any Event of
Default unless the Trustee shall have received written notice, or a Responsible
Officer charged with the administration of the Declaration shall have obtained
written notice, of such Event of Default.
SECTION 2.08. CONFLICTING INTERESTS. The Declaration shall be deemed to
be specifically described in this Guarantee Agreement for the purposes of clause
(i) of the first proviso contained in Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF TRUSTEE
SECTION 3.01. POWERS AND DUTIES OF THE TRUSTEE.
(a) This Guarantee Agreement shall be held by the Trustee for the
benefit of the Holders, and the Trustee shall not transfer this Guarantee
Agreement to any Person, except the Trustee shall assign rights hereunder to a
Holder to the extent such assignment is necessary to exercise such Holder's
rights pursuant to Section 5.04 or to a Successor Trustee upon acceptance by
such Successor Trustee of its appointment to act as Successor Trustee. The
right, title and interest of the Trustee shall automatically vest in any
Successor Trustee, and such vesting and cessation of title shall be effective
whether or not conveyancing documents have been executed and delivered pursuant
to the appointment of such Successor Trustee.
(b) If an Event of Default has occurred and is continuing, the Trustee
shall enforce this Guarantee Agreement for the benefit of the Holders.
(c) The Trustee, before the occurrence of any Event of Default and
after the curing or waiving of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to Section 2.06), the
Trustee shall exercise such of the rights and powers vested in it by this
Guarantee Agreement, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use under the circumstances in
the conduct of his or her own affairs.
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(d) No provision of this Guarantee Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Guarantee
Agreement, and the Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set
forth in this Guarantee Agreement; and
(B) in the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein,
upon any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Guarantee Agreement; but in
the case of any such certificates or opinions that by any
provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of this
Guarantee Agreement;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a Majority in liquidation amount of the
Preferred Securities relating to the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee under this Guarantee Agreement;
and
(iv) no provision of this Guarantee Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Trustee shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such risk or liability
is not reasonably assured to it.
SECTION 3.02. CERTAIN RIGHTS OF TRUSTEE.
(a) Subject to the provisions of Section 3.01:
(i) the Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and
to have been signed, sent or presented by the proper party or parties;
6
(ii) any direction or act of the Guarantor contemplated by this
Guarantee Agreement shall be sufficiently evidenced by an Officers'
Certificate;
(iii) whenever, in the administration of this Guarantee
Agreement, the Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and rely upon an
Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Guarantor;
(iv) the Trustee may consult with counsel or other experts of
its choice, and the written advice or opinion of such counsel or other
experts shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by it hereunder in good
faith and in accordance with such advice or opinion; such counsel may be
counsel to the Guarantor or any of its Affiliates and may include any of
its employees; the Trustee shall have the right at any time to seek
instructions concerning the administration of this Guarantee Agreement
from any court of competent jurisdiction;
(v) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Guarantee Agreement at the
request or direction of any Holder, unless such Holder shall have
provided to the Trustee such adequate security and indemnity as would
satisfy a reasonable person in the position of the Trustee against the
costs, expenses (including attorneys' fees and expenses) and liabilities
that might be incurred by it in complying with such request or direction,
including such reasonable advances as may be requested by the Trustee;
provided that nothing contained in this Section 3.02(a)(v) shall be taken
to relieve the Trustee, upon the occurrence of an Event of Default, of
its obligation to exercise the rights and powers vested in it by this
Guarantee Agreement;
(vi) the Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document, but the Trustee, in its discretion, may make
such further inquiry or investigation into such facts or matters as it
may see fit;
(vii) the Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, and the Trustee shall not be responsible for
any misconduct or negligence on the part of any agent or attorney
appointed with due care by it hereunder;
(viii) whenever in the administration of this Guarantee Agreement
the Trustee shall deem it desirable to receive instructions with respect
to enforcing any remedy or right or taking any other action hereunder,
the Trustee (i) may request instructions from the Holders, (ii) may
refrain from enforcing such remedy or right or taking such other action
until such instructions are received, and (iii) shall be protected in
acting in accordance with such instructions; and
7
(ix) the rights, privileges, protections, immunities and
benefits given to the Trustee, including , without limitation, its rights
to be indemnified, are extended to, and shall be enforceable by, the
Trustee in each of its respective capacities hereunder, and to each
agent, custodian and other Person employed to act hereunder.
(b) No provision of this Guarantee Agreement shall be deemed to impose
any duty or obligation on the Trustee to perform any act or acts or exercise any
right, power, duty or obligation conferred or imposed on it in any jurisdiction
in which it shall be illegal, or in which the Trustee shall be unqualified or
incompetent in accordance with applicable law, to perform any such act or acts
or to exercise any such right, power, duty or obligation. No permissive power or
authority available to the Trustee shall be construed to be a duty.
SECTION 3.03. COMPENSATION; FEES; INDEMNITY. The Guarantor agrees:
(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by the Trustee hereunder (which compensation shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Guarantee Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(c) to indemnify the Trustee for, and to hold the Trustee harmless
against, any and all loss, damage, claims, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration of this Guarantee Agreement, including the costs
and expenses of defending itself against any claim or liability in connection
with the exercise or performance of any of its powers or duties hereunder.
The provisions of this Section 3.03 shall survive the termination of this
Guarantee Agreement.
ARTICLE IV
TRUSTEE
SECTION 4.01. TRUSTEE; ELIGIBILITY.
(a) There shall at all times be a Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof or
of the District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at least
50 million U.S.
8
dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority
referred to above, then, for the purposes of this Section 4.01(a)(ii),
the combined capital and surplus of such corporation shall be deemed to
be its combined capital and surplus as set forth in its most recent
report of condition so published.
(b) If at any time the Trustee shall cease to be eligible to so act
under Section 4.01(a), the Trustee shall immediately resign in the manner and
with the effect set out in Section 4.02(c).
(c) If the Trustee has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and
Guarantor shall in all respects comply with the provisions of Section 310(b) of
the Trust Indenture Act, subject to the rights of the Trustee under the
penultimate paragraph thereof.
SECTION 4.02. APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEE.
(a) Subject to Section 4.02(b), the Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Trustee shall not be removed until a Successor Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Trustee and delivered to the Guarantor.
(c) The Trustee appointed to office shall hold office until a
Successor Trustee shall have been appointed or until its removal or resignation.
The Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing executed by the Trustee and delivered to
the Guarantor, which resignation shall not take effect until a Successor Trustee
has been appointed and has accepted such appointment by instrument in writing
executed by such Successor Trustee and delivered to the Guarantor and the
resigning Trustee.
(d) If no Successor Trustee shall have been appointed and accepted
appointment as provided in this Section 4.02 within 60 days after delivery to
the Guarantor of an instrument of resignation, the resigning Trustee may
petition any court of competent jurisdiction for appointment of a Successor
Trustee. Such court may thereupon, after prescribing such notice, if any, as it
may deem proper, appoint a Successor Trustee.
ARTICLE V
GUARANTEE
SECTION 5.01. GUARANTEE. The Guarantor irrevocably and unconditionally
agrees to pay in full to the Holders the Guarantee Payments (without duplication
of amounts theretofore paid by or on behalf of the Trust), as and when due,
regardless of any defense, right of set-off or counterclaim which the Guarantor
or the Trust may have or assert against any Person, other than the defense of
payment. The Guarantor's obligation to make a Guarantee Payment may be satisfied
by direct payment of the required amounts by the Guarantor to the Holders or by
causing the Trust to pay such amounts to the Holders.
9
SECTION 5.02. WAIVER OF NOTICE AND DEMAND. The Guarantor hereby waives
notice of acceptance of this Guarantee Agreement and of any liability to which
it applies or may apply, presentment, demand for payment, any right to require a
proceeding first against the Trust or any other Person before proceeding against
the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of
redemption and all other notices and demands.
SECTION 5.03. OBLIGATIONS NOT AFFECTED. The obligation of the Guarantor
to make the Guarantee Payments under this Guarantee Agreement shall in no way be
affected or impaired by reason of the happening from time to time of any of the
following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Preferred Securities to be performed
or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or any
portion of the Distributions, Redemption Price, Liquidation Distribution or any
other sums payable under the terms of the Preferred Securities or the extension
of time for the performance of any other obligation under, arising out of, or in
connection with, the Preferred Securities (other than an extension of time for
payment of Distributions, Redemption Price, Liquidation Distribution or other
sum payable that results from the extension of any interest payment period on
the Subordinated Debt Securities permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or remedy
conferred on the Holders pursuant to the terms of the Preferred Securities, or
any action on the part of the Trust granting indulgence or extension of any
kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the benefit of
creditors, reorganization, arrangement, composition or readjustment of debt of,
or other similar proceedings affecting, the Trust or any of the assets of the
Trust;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the intent of
this Section 5.03 that the obligations of the Guarantor hereunder shall be
absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the foregoing.
SECTION 5.04. RIGHTS OF HOLDERS. The Guarantor expressly acknowledges
that: (i) this Guarantee Agreement will be deposited with the Trustee to be held
for the benefit of the Holders; (ii) the Trustee has the right to enforce this
Guarantee Agreement on behalf of the
10
Holders; (iii) the Holders of a Majority in liquidation amount of the Preferred
Securities have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee in respect of this Guarantee
Agreement or exercising any trust or power conferred upon the Trustee under this
Guarantee Agreement; and (iv) any Holder may institute a legal proceeding
directly against the Guarantor to enforce its rights under this Guarantee
Agreement, without first instituting a legal proceeding against or requesting or
directing that action be taken by the Trustee or any other Person; it being
understood and intended that no one or more of such Holders shall have any right
in any manner whatsoever by virtue of, or by availing of, any provision of this
Guarantee Agreement to affect, disturb or prejudice the rights of any other of
such Holders or to obtain or to seek to obtain priority or preference over any
other of such Holders or to enforce any right under this Guarantee Agreement,
except in the manner herein provided and for the equal and ratable benefit of
all of such Holders.
SECTION 5.05. GUARANTEE OF PAYMENT. This Guarantee Agreement creates a
guarantee of payment and not of collection. This Guarantee Agreement will not be
discharged except by payment of the Guarantee Payments in full (without
duplication) or upon the distribution of Subordinated Debt Securities to the
Holders in exchange for all of the Preferred Securities.
SECTION 5.06. SUBROGATION. The Guarantor shall be subrogated to all (if
any) rights of the Holders against the Trust in respect of any amounts paid to
the Holders by the Guarantor under this Guarantee Agreement; provided, however,
that the Guarantor shall not (except to the extent required by mandatory
provisions of law) be entitled to enforce or exercise any rights which it may
acquire by way of subrogation or any indemnity, reimbursement or other
agreement, in all cases as a result of payment under this Guarantee Agreement,
if, at the time of any such payment, any amounts of Guarantee Payments are due
and unpaid under this Guarantee Agreement. If any amount shall be paid to the
Guarantor in violation of the preceding sentence, the Guarantor agrees to hold
such amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.07. INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that
its obligations hereunder are independent of the obligations of the Trust with
respect to the Preferred Securities and that the Guarantor shall be liable as
principal and as debtor hereunder to make Guarantee Payments pursuant to the
terms of this Guarantee Agreement notwithstanding the occurrence of any event
referred to in subsections (a) through (g), inclusive, of Section 5.03 hereof.
ARTICLE VI
SUBORDINATION
SECTION 6.01. SUBORDINATION. This Guarantee Agreement will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor, including the
Subordinated Debt Securities, except those obligations or liabilities made pari
passu or subordinate by their terms; (ii) pari passu with the most senior
preferred or preference stock now or hereafter issued by the Guarantor and with
any guarantee now or hereafter entered into by the Guarantor in respect of any
preferred or
11
preference securities of any Affiliate of the Guarantor; and (iii) senior to all
common stock of the Guarantor.
ARTICLE VII
TERMINATION
SECTION 7.01. TERMINATION. This Guarantee Agreement shall terminate and
be of no further force and effect upon: (i) full payment of the Redemption Price
of all Preferred Securities; (ii) the distribution of Subordinated Debt
Securities to the Holders in exchange for all of the Preferred Securities; or
(iii) full payment of the amounts payable in accordance with the Declaration
upon liquidation of the Trust. Notwithstanding the foregoing, this Guarantee
Agreement will continue to be effective or will be reinstated, as the case may
be, if at any time any Holder must restore payment of any sums paid with respect
to Preferred Securities or under this Guarantee Agreement.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. SUCCESSORS AND ASSIGNS. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to the
benefit of the Holders of the Preferred Securities then outstanding. Except in
connection with a consolidation, merger, conveyance, transfer, or lease
involving the Guarantor that is permitted under Article Ten of the Indenture,
the Guarantor shall not assign its obligations hereunder.
SECTION 8.02. AMENDMENTS. Except with respect to any changes which do not
materially adversely affect the rights of Holders (in which case no consent of
Holders will be required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of a Majority in liquidation amount of the
Preferred Securities. The provisions of Article VI of the Declaration concerning
meetings of Holders shall apply to the giving of such approval.
SECTION 8.03. NOTICES. Any notice, request or other communication
required or permitted to be given hereunder shall be in writing, duly signed by
the party giving such notice, and delivered, telecopied or mailed by first class
mail as follows:
(a) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Trustee and the
Holders:
Avista Corporation
1411 East Mission Avenue
Spokane, Washington 99202
Facsimile No.: [(509) 482-4879]
Attn: [Treasurer]
12
(b) if given to the Trust, in care of the Trustee, or to the Trustee
at the Trust's (and the Trustee's) address set forth below or such other address
as the Trustee on behalf of the Trust may give notice to the Holders:
AVA Capital Trust III c/o Union Bank of California, N.A.
--------------------
------, -- -----
Facsimile No.: (___) ___-____
Attn: Corporate Trust Administration
(c) if given to any Holder, at the address set forth on the books and
records of the Trust.
All notices hereunder shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 8.04. BENEFIT. This Guarantee Agreement is solely for the benefit
of the Holders and, subject to Section 3.01(a), is not separately transferable
from the Common Securities and the Preferred Securities.
SECTION 8.05. INTERPRETATION. In this Guarantee Agreement, unless the
context otherwise requires:
(a) capitalized terms used in this Guarantee Agreement but not defined
in the preamble hereto have the respective meanings assigned to them in Section
1.01;
(b) a term defined anywhere in this Guarantee Agreement has the same
meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or amended
from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this Guarantee
Agreement or unless the context otherwise requires;
(f) a reference to the singular includes the plural and vice versa;
and
(g) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
13
SECTION 8.06. GOVERNING LAW. THIS GUARANTEE AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK. THE GUARANTOR HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION
OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND
ANY COURT IN THE STATE OF NEW YORK LOCATED IN THE CITY AND COUNTY OF NEW YORK IN
ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND RELATED TO OR IN
CONNECTION WITH THIS GUARANTEE AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
THEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN
ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT
TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER, OR THAT THIS GUARANTEE AGREEMENT OR ANY DOCUMENT OR ANY
INSTRUMENT REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED
IN OR BY SUCH COURTS. THE GUARANTOR AGREES THAT SERVICE OF PROCESS MAY BE MADE
UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE ADDRESS FOR NOTICES SET FORTH IN
THIS GUARANTEE AGREEMENT OR ANY METHOD AUTHORIZED BY THE LAWS OF NEW YORK.
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
14
THIS GUARANTEE AGREEMENT is executed as of the day and year first above
written.
AVISTA CORPORATION
By:
-----------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:
-----------------------------------
Name:
Title:
Exhibit 5(a)
[LETTERHEAD OF HELLER EHRMAN WHITE & McAULIFFE LLP]
March 11, 2004
Avista Corporation
1411 East Mission Avenue
Spokane, WA 99202
RE: AVISTA CORPORATION - REGISTRATION STATEMENT ON FORM S-3
$60,000,000 SUBORDINATED DEBT SECURITIES AND GUARANTEE
Ladies and Gentlemen:
We have acted as counsel to Avista Corporation, a Washington corporation
(the "COMPANY"), in connection with the Company's proposed offering of
subordinated debt securities (the "DEBT SECURITIES") under an Indenture, to be
entered into (the "INDENTURE"), from the Company to Union Bank of California,
N.A. (the "TRUSTEE"), as trustee, to be issued and sold from time to time by the
Company to AVA Capital Trust III, a Delaware statutory trust and with the
Company's proposed issuance of a guarantee (the "GUARANTEE") with respect to
certain trust preferred securities between the Company and the Trustee, as
trustee, for the benefit of holders of the Debt Securities. The Debt Securities
are to be issued in an aggregate principal amount of up to $60,000,000, as
contemplated in a Registration Statement on Form S-3 and Post-Effective
Amendment No. 1 (the "REGISTRATION STATEMENT") of the Company proposed to be
filed with the Securities and Exchange Commission on or about the date hereof
under the Securities Act of 1933, as amended (the "SECURITIES ACT"), relating to
such proposed offering. The Debt Securities and the Guarantee are hereinafter
referred to as the "Securities".
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 form of the Indenture;
(c) the form of the Debt Securities;
(d) the form of the Guarantee;
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
Heller Ehrman Avista Corporation
ATTORNEYS March 11, 2004
Page 2
(e) the Restated Articles of Incorporation, as amended, of the Company
certified by the Washington Secretary of State as of March 3,
2004, 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;
(f) 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;
(g) a Certificate of Existence/Authorization relating to the Company
and issued by the Washington Secretary of State, dated March 4,
2004;
(h) 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;
(i) Decision No. 00-06-064, entered June 22, 2000, of the Public
Utilities Commission of the State of California;
(j) Default Order No. 4535, entered July 2, 1979, in Docket No. 6690
of the Public Service Commission of the State of Montana(1); 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
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 Avista Corporation
ATTORNEYS March 11, 2004
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. Each of the Securities will be duly executed, authenticated and
delivered prior to its 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.
D. The Company will make appropriate filings and applications with
the Washington Utilities and Transportation Commission, the Idaho
Public Utilities Commission and the Public Utilities Commission of
Oregon for authority to issue and sell the Securities, each of
such commissions will enter appropriate orders authorizing the
issuance and sale by the Company of the Securities and the
Securities will be issued and sold in accordance with all
applicable terms, conditions, limitations or restrictions
contained in such orders.
III.
We express no opinion as to:
(a) The applicable choice of law rules that may affect the
interpretation or enforcement of any of the Securities.
(b) Any securities, tax, anti-trust, land use, safety, environmental,
hazardous materials, insurance company or banking laws, rules or
regulations, or any laws, rules or regulations applicable to any
of the Other Parties by virtue of their status as regulated
entities, or whether governmental consents, approvals,
authorizations, registrations, declarations or filings required in
connection with the issuance and sale of each 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.
18
Heller Ehrman Avista Corporation
ATTORNEYS March 11, 2004
Page 4
(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.
(g) The enforceability of any agreement or instrument, 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
note that the Securities, by their express terms, purport to be governed by the
laws of the State of New York. For purposes of this opinion, we have assumed
that the law applicable to the Securities is identical in all respects to the
internal laws of the State of Washington (including judicial interpretations
relating thereto but without reference to conflict of laws statutes or
principles). We disclaim any opinion as to the laws of any other jurisdiction,
including the laws of the State of New York. 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
assumptions, limitations and qualifications expressed herein, it is our opinion
that each of 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 principles 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 each 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
19
Heller Ehrman Avista Corporation
ATTORNEYS March 11, 2004
Page 5
would otherwise work a forfeiture.
B. The enforceability of each of the Securities is subject to the
effects of (i) Section 62A.1-102 of Revised Code of Washington
(the "WA CODE"), which provides that obligations of good faith,
diligence, reasonableness and care prescribed by the WA Code may
not be disclaimed by agreement, although the parties may by
agreement determine the standards by which the performance of such
obligations is to be measured if those standards are not
manifestly unreasonable, (ii) Section 62A.1-203 of the WA Code,
which imposes an obligation of good faith in the performance or
enforcement of a contract and (iii) legal principles under which a
court may refuse to enforce, or may limit the enforcement of, a
contract or any clause of a contract that a court finds as a
matter of law to have been unconscionable at the time it was made.
C. Pursuant to RCW 4.84.330, any provision in the Securities
requiring a party to pay another party's attorneys' fees and costs
in actions to enforce the provisions of the Securities will be
construed to entitle the prevailing party in any action, whether
or not that party is the specified party, to be awarded its
reasonable attorneys' fees, costs and necessary disbursements.
D. Provisions of the Securities requiring that waivers must be in
writing may not be binding or enforceable if a non-executory oral
agreement has been created modifying any such provision or an
implied agreement by trade practice or course of conduct has given
rise to a waiver.
E. The effectiveness of indemnities, rights of contribution,
exculpatory provisions and waivers of the benefits of statutory
provisions may be limited on public policy grounds.
F. The enforceability of the Guarantee may be subject to Washington
case law to the effect that a guarantor may be exonerated if the
beneficiary of the guaranty alters the original obligation of the
principal, fails to inform the guarantor of material information
pertinent to the principal or any collateral, elects remedies that
may impair the subrogation rights of the guarantor against the
principal or that may impair the value of any collateral, fails to
accord the guarantor the protections afforded a debtor under
Article 9A of the WA Code or otherwise takes any action that
materially prejudices the guarantor unless, in any such case, the
guarantor validly waives such rights or the consequences of any
such action. SEE, E.G., WARREN V. WASHINGTON TRUST BANK, 92 Wash.
2d 381, 598 P.2d 701 (1979); FRANCO V. PEOPLES NAT'L BANK OF
WASHINGTON, 39 Wash. App. 381; 693 P.2d 200 (1984); MGIC FINANCIAL
CORP. V. H.A. BRIGGS CO., 24 Wash. App. 1, 600 P.2d 573 (1979).
While express and specific waivers of a guarantor's right to be
exonerated, such as those contained in the Guarantee, are
generally enforceable under Washington law, we express no opinion
as to whether the Guarantee contains an express and specific
waiver of each exoneration defense a guarantor might assert or as
to whether each of the waivers contained in the Guarantee is fully
enforceable.
Heller Ehrman Avista Corporation
ATTORNEYS March 11, 2004
Page 6
G. The enforceability of the subordination provisions of a
subordination agreement may be limited by exoneration defenses
similar to those that may be asserted by a guarantor.
Subordination provisions may become unenforceable if the senior
creditor alters the terms of the senior debt, fails to inform the
subordinated creditor of material information pertinent to the
senior debt or any collateral securing the senior debt, elects
remedies that impair rights against the debtor or rights in any
collateral securing the senior debt that the subordinated creditor
would acquire by becoming subrogated to the claims of the senior
creditor as a result of performance of the subordination
provisions, fails to accord the subordinated creditor the same
protections accorded a debtor under Article 9A of the WA Code (RCW
Chapter 62A.9A) or otherwise takes any action that materially
prejudices the subordinated creditor, unless in any such case the
subordinated creditor validly waives such rights or the
consequences of any such action. While express and specific
waivers of exoneration defenses available to a subordinated
creditor should be generally enforceable, we express no opinion as
to whether the Securities contain an express and specific waiver
of each exoneration defense that a subordinated creditor might
assert or as to whether each of the waivers contained in the
Securities is fully enforceable.
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 or the holders of the Securities for any other purpose or by any other
person for any purpose without our written consent. We disclaim any obligation
to advise you of any change of law that occurs, or any facts of which we become
aware, after the date of this opinion.
Very truly yours,
/S/ Heller Ehrman White & McAuliffe LLP
Exhibit 5(b)
DEWEY BALLANTINE LLP
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019-6092
TEL 212 259-8000 FAX 212 259-6333
March 11, 2004
Avista Corporation
1411 East Mission Avenue
Spokane, Washington 99202
Ladies and Gentlemen:
We are acting as counsel to Avista Corporation, a Washington
corporation (the "Company"), and to AVA Capital Trust III, a Delaware statutory
trust (the "Trust") in connection with the proposed issuance of (i) Preferred
Securities (the "Preferred Securities") of the Trust to be offered in an
underwritten public offering; (ii) Subordinated Debt Securities (the "Debt
Securities") of the Company to be issued pursuant to the terms of an indenture
from the Company to Union Bank of California, N.A., as trustee (the
"Indenture"), to be issued and sold by the Company to the Trust; and (iii)
Guarantees of the Company with respect to the Preferred Securities (the
"Guarantees") pursuant to a guarantee agreement between the Company and Union
Bank of California, N.A., as trustee (the "Guarantee Agreement"). The Preferred
Securities and the Debt Securities are to be issued in a combined aggregate
liquidation amount or principal amount of up to $60,000,000, as contemplated by
the registration statement on Form S-3 proposed to be filed by the Company and
the Trust with the Securities and Exchange Commission on or about the date
hereof for the registration of the Preferred Securities, the Debt Securities and
the Guarantees under the Securities Act of 1933, as amended (the "Act"), said
registration statement, as it may be amended, being hereinafter called the
"Registration Statement".
We have examined and are familiar with originals or copies, certified
or otherwise identified to our satisfaction, of (i) the Registration Statement,
(ii) the form of Indenture, and (iii) the form of Guarantee Agreement. We have
also examined such other documents and satisfied ourselves as to such other
matters as we have deemed necessary in order to render this opinion.
Based upon the foregoing and subject to the qualifications hereinafter
expressed, we are of the opinion that when:
(a) the Washington Utilities and Transportation Commission,
the Idaho Public Utilities Commission and the Public Utility Commission
of Oregon shall have issued, pursuant to applications filed by the
Company with said regulatory authorities, appropriate orders
authorizing the issuance and sale by the Company of the Debt Securities
and the Guarantees (such matters having been addressed in the opinion
of
NEW YORK WASHINGTON, D.C. LOS ANGELES EAST PALO ALTO HOUSTON AUSTIN
LONDON WARSAW BUDAPEST PRAGUE FRANKFURT MILAN ROME
Heller Ehrman White & McAuliffe LLP, which is being filed as Exhibit
5(a) to the Registration Statement); and
(b) the Debt Securities and the Guarantees have been issued,
sold and paid for as contemplated in the aforesaid orders in the
authorizing resolutions of the Company's Board of Directors and in the
Registration Statement.
then the Debt Securities and the Guarantees will be legally issued and will be
binding obligations of the Company, subject to (i) bankruptcy, insolvency,
reorganization, arrangement, moratorium and other law of general applicability
relating to or affecting the rights of creditors (including beneficiaries of
guarantees).
We are further of the opinion that the statements contained in the
preliminary prospectus constituting a part of the Registration Statement under
the caption "Certain United States Federal Income Tax Considerations", subject
to the exceptions and limitations set forth therein, fairly summarize the
material United States federal income tax consequences of the purchase,
ownership and disposition of the Preferred Securities to the holders addressed
therein.
The opinions expressed herein are limited to the laws of the State of
New York and the federal law of the United States (excluding therefrom
principles of conflicts of laws, state securities or blue sky laws). To the
extent that such opinions relate to or are dependent upon matters governed by
the laws of other States, we have assumed the legal conclusions set forth in the
opinion of Heller Ehrman White & McAuliffe LLP, which is being filed as Exhibit
5(a) to the Registration Statement.
This letter is not being delivered for the benefit of, nor may it be
relied upon by, the holders of the Debt Securities, the Guarantees or the
Preferred Securities or any other party to which it is not specifically
addressed or to which reliance is not expressly permitted hereby.
We hereby consent to the filing of this opinion as Exhibits 5(b) and 8
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/ Dewey Ballantine LLP
DEWEY BALLANTINE LLP
2
Exhibit 5(c)
[Letterhead of Richards, Layton & Finger, P.A.]
March 11, 2004
AVA Capital Trust III
c/o Avista Corporation
1411 East Mission Avenue
Spokane, Washington 99202
Re: AVA CAPITAL TRUST III
Ladies and Gentlemen:
We have acted as special Delaware counsel for Avista Corporation,
a Washington corporation (the "Company"), and AVA Capital Trust III, a Delaware
statutory trust (the "Trust"), in connection with the matters set forth herein.
At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated as of November
4, 1996, as filed in the office of the Secretary of State of the State of
Delaware (the "Secretary of State") on November 4, 1996;
(b) The Amended and Restated Certificate of Trust of the Trust,
effective as of March 9, 2004 (the "Certificate"), as filed in the office of the
Secretary of State on March 9, 2004;
(c) The Declaration of Trust of the Trust, dated as of November
4, 1996, among the Company, as successor in interest to The Washington Water
Power Company, as Sponsor, and the trustees of the Trust named therein, as
amended by the Removal and Appointment of Trustees and Amendment of Declaration
of Trust of the Trust, dated as of March 9, 2004, among the Company, as Sponsor,
Malyn K. Malquist and Diane C. Thoren, as Regular Trustees, Union Bank of
California, N.A., as Institutional Trustee, and SunTrust Delaware Trust Company,
as Delaware Trustee;
(d) The Registration Statement (the "Registration Statement")
on Form S-3, including a preliminary prospectus (the "Prospectus") relating to
the Flexible Trust Preferred Securities of the Trust representing preferred
undivided beneficial interests in the assets of the Trust (each, a "Preferred
Security" and collectively, the "Preferred Securities"), as proposed to be
AVA Capital Trust III
March 11, 2004
Page 2
filed by the Company and the Trust as set forth therein with the Securities and
Exchange Commission on or about March 11, 2004;
(e) A form of Amended and Restated Declaration of Trust of the
Trust, to be entered into among the Company, as Sponsor, the trustees of the
Trust named therein, and the holders, from time to time, of undivided beneficial
interests in the assets of the Trust (including Exhibits A, B and C thereto)
(the "Declaration"), attached as an exhibit to the Registration Statement; and
(f) A Certificate of Good Standing for the Trust as of March
9, 2004, obtained from the Secretary of State.
Capitalized terms used herein and not otherwise defined are used
as defined in the Declaration.
For purposes of this opinion, we have not reviewed any documents
other than the documents listed in paragraphs (a) through (f) above. In
particular, we have not reviewed any document (other than the documents listed
in paragraphs (a) through (f) above) that is referred to in or incorporated by
reference into the documents reviewed by us. We have assumed that there exists
no provision in any document that we have not reviewed that is inconsistent with
the opinions stated herein. We have conducted no independent factual
investigation of our own but rather have relied solely upon the foregoing
documents, the statements and information set forth therein and the additional
matters recited or assumed herein, all of which we have assumed to be true,
complete and accurate in all material respects.
With respect to all documents examined by us, we have assumed (i)
the authenticity of all documents submitted to us as authentic originals, (ii)
the conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the
Declaration and the Certificate are in full force and effect and have not been
amended, (ii) except to the extent provided in paragraph 1 below, the due
creation or due organization or due formation, as the case may be, and valid
existence in good standing of each party to the documents examined by us under
the laws of the jurisdiction governing its creation, organization or formation,
(iii) the legal capacity of natural persons who are parties to the documents
examined by us, (iv) that each of the parties to the documents examined by us
has the power and authority to execute and deliver, and to perform its
obligations under, such documents, (v) the due authorization, execution and
delivery by all parties thereto of all documents examined by us, (vi) the
receipt by each Person to whom a Preferred Security is to be issued by the Trust
(collectively, the "Preferred Security Holders") of a Preferred Securities
Certificate for such Preferred Security and the payment for the Preferred
Security acquired by it, in accordance with the Declaration and the Registration
Statement, and (vii) that the Preferred Securities are issued and sold to the
Preferred Security
AVA Capital Trust III
March 11, 2004
Page 3
Holders in accordance with the Declaration and the Registration Statement. We
have not participated in the preparation of the Registration Statement and
assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such
questions of law and statutes of the State of Delaware as we have considered
necessary or appropriate, and subject to the assumptions, qualifications,
limitations and exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in
good standing as a statutory trust under the Delaware Statutory Trust Act.
2. The Preferred Securities will represent valid and, subject
to the qualifications set forth in paragraph 3 below, fully paid and
nonassessable undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the
Trust, will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Declaration.
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition, we
hereby consent to the use of our name under the heading "Legal Opinions" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger, P.A
BJK/MKS/JDS
Exhibit 23(d) INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Registration Statement on Form S-3 of our report dated February 27, 2004, which includes an explanatory paragraph for certain changes in accounting and presentation resulting from the impact of recently adopted accounting standards, appearing in the Annual Report on Form 10-K of Avista Corporation for the year ended December 31, 2003, and to the reference to us under the heading "Experts" in the Prospectus, which is part of this registration statement. /s/ Deloitte & Touche LLP Seattle, Washington March 10, 2004
EXHIBIT 25(a)
================================================================================
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)
-------------------------------------------------------
UNION BANK OF CALIFORNIA, NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
94-0304228
I.R.S. Employer Identification No.
- --------------------------------------------------------------------------------
400 California Street
San Francisco, California 94104
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
- --------------------------------------------------------------------------------
Sonia N. Flores
Union Bank of California, N.A.
475 Sansome Street
Corporate Trust - 12th Floor
San Francisco, CA 94111
(415) 296-6754
(Name, address and telephone number of agent for service)
AVISTA CORPORATION
(Issuer with respect to the Securities)
EXHIBIT 25(b)
================================================================================
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)
-------------------------------------------------------
UNION BANK OF CALIFORNIA, NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
94-0304228
I.R.S. Employer Identification No.
- --------------------------------------------------------------------------------
400 California Street
San Francisco, California 94104
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
- --------------------------------------------------------------------------------
Sonia N. Flores
Union Bank of California, N.A.
475 Sansome Street
Corporate Trust - 12th Floor
San Francisco, CA 94111
(415) 296-6754
(Name, address and telephone number of agent for service)
AVA CAPITAL TRUST III
(Issuer with respect to the Securities)
EXHIBIT 25(c)
================================================================================
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)
-------------------------------------------------------
UNION BANK OF CALIFORNIA, NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)
94-0304228
I.R.S. Employer Identification No.
- --------------------------------------------------------------------------------
400 California Street
San Francisco, California 94104
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
- --------------------------------------------------------------------------------
Sonia N. Flores
Union Bank of California, N.A.
475 Sansome Street
Corporate Trust - 12th Floor
San Francisco, CA 94111
(415) 296-6754
(Name, address and telephone number of agent for service)
AVISTA CORPORATION
(Issuer with respect to the Securities)