20091221Amended, Restated Sales Agency Agreement.pdf

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~~~'V'STA.
Corp.
o
lie Utilities Commission
use
e ID 83720
tention: Jean D. Jewell, Secretar
Case No. A VU-U-05-2
We are submitting the following information in compliance with the Commission's Order
No. 29947 under Case No. A VU-U-05-2 for the issuance and sale of the remaining 1,250,000
shares of the original 2,000,000 shares of common stock authorized on Januar 10, 2006 by the
commission for a perodic offering program.
On December 16,2009, Amended and Restated Sales Agency Agreement with BNY
Mellon Capital Markets, LLC (BNYMCM) to extend the expiration date. Under the terms of the
Amended and Restated Sales Agency Agreement, A vista Corp. may offer and sell up to
1,250,000 shares of its common stock, no par value, from time to time through BNYMCM, as
Avista Corp.'s agent for the offer and sale of the shares. See attached Prospectus Supplement for
more details on the transaction.
Please contact Damien Lysiak at [phone] if you have any questions.
Sincerely,~~
Diane C. Thoren
Treasurer
Enclosure
Avu -0 -05-0 ~
Table of Contents Rt:('C'lJír';,~ !,_ ljJ (,:, ~ '", 1...,j
PROSPECTUS SUPPLEMENT dated December 16, 2009
(To Prospectus dated December 9, 2009) I D l\ 1'10 F t: L: :;
Filed pursuant to Rule 424(b)(5). Registrtion No. 333-163609. A fiing fee of$I,5~~l~rn~ßl~m¡~
with Rule 457(r), ha been trmitted to the SEC in connection with the shaes of common stock offered by means
of ths prospectus supplement and the accompanying prospectus. The proposed mamum aggregate offerig price
ha been calculated as 1,250,000 shaes multiplied by $21.715 per share, the average of the high and low prices of
our common stock as reported in the consolidàted reportg system on December 15,2009. Ths paragraph shall be
deemed to update the "Calculation of Registration Fee" table in the registration statement referred to above.
zon9 DEC 21 M1 9: 17
1,250,000 Shares
A vista Corporation
Common Stock
We may offer and sell up to 1,250,000 shares of our common stock from time to time though BNY Mellon
Capital Markets, LLC ("BNYCM"), as our agent under a sales agency agreement.
These shares will be offered at market prices prevailing at the tie of sale. We will pay BNYCM a
commission equal to 1 % of the sales price of all shaes sold though it as our agent.
Our common stock is listed on the New York Stock Exchage under the symbol "A V A." The reported last
sale price of our common stock on December 15, 2009, as reported in the consolidated reporting system, was $21.77
per shae.
See "Risk Factors" begining on page S-1 for reference to certain factors you should
consider before buyig our common stock.
Neither the Securities and Exchange Commission nor any other regulatory body has approved or
disapproved of these securities or passed upon the accuracy or adequacy of this prospectus supplement or the
accompanying prospectus. Any representation to the contrary is a criminal offense.
BNY Mellon Capital Markets, LLC
The date of ths prospectus supplement is December 16, 2009
Ths prospectu supplement and the accompanying prospectus incorporate by reference importt business
and fincial inormtion about Avista Corporation (someties called "Avista") that is not included in or delivered
with the prospectus. This inormation is available to you as set fort in the accompanying prospectus under "Where
You Can Find More Inormtion."
TABLE OF CONTENTS
Prospectus Supplement
skFactors
fe Harbor For Forward-Lookig Statements
ie Company
m of Distrbution
:gal Matters
:pert
S-L
S-1
S-2
S-2
S-3
S-3
Prospectus)out this Prospectus 1skFactors 2IÌsta Corporation 2
¡e of Proceeds 2~scription of the Bonds 2
~scription of the Notes 10
~scription of Preferred Stock 19~scription of Common Stock 21here You Can Find More Inormtion 24:gal Matters 25Dert 25
We have not authorid anyone to give you any information other than ths prospectus supplement and the
accompanying prospectus. You should assume tht the inormation contained or incorporated in ths prospectus
supplement and the accompanyig prospectus is accurate only as of the respective dates of these documents. We are
not offerig to sell these securties and we are not soliciting offers to buy these securties in any jursdiction in which
offers are not permttd.
Table of Contents
RISK FACTORS
Investig in common stock involves risk. You should review all the inormation contaed or incorprate by
reference in ths prospectu supplement and the accompanying prospectus before deciding to invest. See "Where
You Can Find More Information" in the accompanyig prospectus. In parcular, you should carefully consider the
risks and uncertties discussed in "Risk Factors", "Forward-Lookig Statements" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" in our anual and quaerly report incorporatedherein by reference. /
SAFE HAROR FOR FORWAR-LOOKIG STATEMENTS
From tie to tie, we make forwd-lookig statements such as statements regardig projected or futue
ficial pedormce, capital expenditues, dividends, capita strctue, other financial items, strategic goals and
objectives, and plans for operations. These statements are based upon underlyig assumptions (many of which are
based, in tu, upon fuer assumptions). These statements are made both in our report fied under the Securties
Exchage Act of 1934, as amended, and elsewhere. Forward-lookig statements are all statements except those of
historical fact, including, without litation, those tht are identified by the use of words such as, but not limited to,
''wll,'' "may," "could," "should," "intends," "plan," "seeks," "anticipates," "estiates," "expects," "projects,"
"predicts," and simlar expressions.
Forward-looking statements are subject to a varety of risks and uncertinties and other factors. Most of these
factors are beyond our control and many of them could have a signficant effect on our operations, results of
operations, fmancial condition or cash flows. Ths could cause actul results to differ materially from those
anticipated in our statements. Such risks, uncertinties and other factors include, among others, those listed in
"Management's Discussion and Anlysis of Fincial Condition and Results of Operations" under "Forward-Looking Statements" in our anua and quaerly report incorporated herein by reference, as well as those discussed
in "Risk Factors" in such report incorporated herein by reference.
Ou expectations, beliefs and projections are expressed in good faith. We believe they are reasonable based
on, among other considerations, an examintion of historical operatig trends, data contained in our records and
other data available from thd pares. However, there can be no assurance tht our expectations, beliefs or
projections will be achieved or accomplished.
S-1
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mE COMPAN
A vista is an energy company engaged in the generation, trmission and distrbution of energy and, though
its subsidiares, in other energy-related businesses. Our corporate headquaers are in Spokae, Washigton, center
of the Inand Nortwest geographic region. For more inormation, see the accompanyig prospectus and the
documents incorporated herein by reference.
PLAN OF DISTRIUTION
Avista has enteed into a sales agency agreement (the "Sales Agency Agreement"), dated as of December 16,
2009, with BNY Mellon Capital Markets, LLC ("BNYCM") under which we may issue and sell up to
1,250,000 shaes of Avista Common Stock from time to tie though BNYCM, as our agent for the offer and sale
of the shares. The sales, if any, of the shaes of A vista Common Stock under the Sales Agency Agreement will be
made in "at the maket" offerings as defined in Rule 415 of the Securties Act of 1933, including sales made directly
on the New York Stock Exchage, the pricipal existig tradig market for Avista Common Stock, or though an
electronic communcations network, or if we and BNYCM agree in wrtig, sales made to or though a market
maker or in privately negotiated tranactions.
From time to tie durng the term of the Sales Agency Agreement, and subject to the terms and conditions set
fort therein, we may deliver an issuance notice to BNYCM specifyg:
. the length of the selling period, which may not exceed 20 trading days;
. the number of shares of Avista Common Stock to be sold, which may not exceed 500,000 shares durng any
selling period without BNYCM's prior wrtten consent; and
. the minmum price below which saes may not be made.
Upon receipt of an issuace notice from A vista, and subject to the term and conditions of the sales agency
agreement, BNYCM ha agreed to use its commercially reasonable effort consistent with its normal trading and
sales practices to sell such shares on such term. We or BNYCM may suspend the offering of shares A vista
Common Stock at any tie upon proper notice to the other, and the selling period will imediately termate. The
settlement between us and the purchaer of sales of A vista Common Stock will occur on the thd tradig day
followig the date on which the sales were made. The obligation ofBNYCM under the Sales Agency Agreement
to sell shaes pursuant to any issuance notice is subject to a number of conditions, which BNYCM reserves the
right to waive in its sole discretion.
We will pay BNYCM a commssion equal to 1.0% of the sales price of all shares sold though it as agent
under the Sales Agency Agreement. We have also agreed to reimburse BNYCM for its reasonable documented
out-of-pocket expenses, including fees and expenses of counel, in connection with entering into the Sales Agency
Agreement and performg its obligations thereunder.
In connection with the sale of Avista Common Stock as contemplated herein, BNYCM may be deemed to
be an "underwter" with the meanng of the Securties Act of 1933, and the compenation paid to BNYCM may
be deemed to be underwtig commssions or discounts. We have agred to indemnfy BNYCM against certain
civil liabilties, includig liabilities under the Securties Act of 1933.
Sales of Avista Common Stock as contemplated herein will be settled though the facilties of The Depository
Trust Company or by such other means as the Company and BNYCM may agree upon.
The offerig of Avista Common Stock puruat to the Sales Agency Agreement will termnate upon the
earliest of (1) the sale of all shaes of common stock subject to the Sales Agency Agreement, (2) the thd
anversar of the date of the Sales Agency Agreement, and (3) any time upon 10 days' notice. BNYCM may
termte the Sales Agency Agreement upon one trading day's notice in certain circumstaces, including banptcy
events relatig to us or any material subsidiar, our faiure to mainta the listing of Avista Common Stock on the
New York Stock Exchange or the occurence of a material adverse chage in A vista.
We have agreed not to directly or indirectly sell, offer to sell, contract to sell, grant any option to sell or
otherwse dispose of, shares of Avista Common Stock or securties convertible into or exchangeable for shares of
S-2
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Avita Common Stock, warts or any rights to purchae or acque Avista Common Stock for a period beginng
on the fit trading day prior to the delivery of any issuance notice to BNYCM and ending on the first trading day
imediately following the last settlement date for Avista Common Stock sold puruant to the applicable issuace
notice, without the prior wrtten consent ofBNYCM. BNYCM may give ths consent at any time without public
notice. The restrction described in ths paragraph does not apply to sales of:
. shares we offer or sell puruat to the Sales Agency Agreement;
. shares we issue in connection with acquisitions;
. shares we issue upon conversion of convertble securties, or the exercise of warants, options or other
rights; or
. shares and options to purchase shares we issue, in either case, pursuat to any employee or director stock
option or benefit plan, any stock purchase or ownership plan or our dividend reinvestment and direct stock
purchase plan.
BNYCM and its affliates have provided investment bang, commercial banng, corporate trst services
and other servces for us from tie to tie for which they have received customa fees and reimburement of
expenses and may in the futue provide additional servces.
(An affiliate ofBNYCM is the Admstrative Agent and issuing ban under our commtted line of credit.
The proceeds of ths offering may be used to repay loans outstading from time to time under the committed line of
credit. See "Use of Proceeds" in the accompanyig prospectus. Because more th ten percent of the net proceeds of
ths offerig will be paid to members or affliates of members of the Nationa Association of Securties Dealers, Inc.
paricipatig in ths offerig, ths offering will be conducted in accordace with NASD Conduct Rule 271O(h)).
LEGAL MATTERS
The validity of the shaes offered hereby and certin other mattrs will be passed upon for Avista by Dewey &
LeBoeufLLP, counsel to Avista, and Maran M. Duki, Esq., Senior Vice President, General Counsel and Chief
Compliance Offcer of Avista. In givig its opinon, Dewey & LeBoeuf LLP may rely as to matters of Washigton,
Idaho, Monta and Oregon law upon the opinion of Maran M. Duki, Esq.
EXPERTS
The consolidated ficial statements incorporated in ths prospectus supplement and the accompanyig
prospectu by reference from the Company's Anual Report on Form 10-K and the effectiveness of Avista
Corporation and subsidiares' internl control over ficial reportg have been audited by Deloitte & Touche LLP,
an independent registered public accountig finn as stated in their report (which report (1) express an unqualified
opinon on the consolidated fincial statements and include an explantory paragraph referrg to changes in
accountig and presentation resulting from the impacts of recently adopted accounting stadards and (2) express an
unqualified opinon on the effectiveness of internal control over fiancial reportg) which are herein incorporated
by reference. Such financial statements have been so incorporated in reliance upon the report of such fi given
upon their authority as expert in accounting and auditig.
With respect to the unudited interi consolidated ficial inormation, which is incorporated herein by
reference, Deloitt & Touche LLP, an independent registered public accounting fin, have applied limted
procedures in accordance with the standards of the Public Company Accounting Oversight Board (United States) for
a review of such information. However, as stated in their report included in the Company's Quarly Report on
Form 10-Q and incorporated by reference herein, they did not audit and they do not express an opinon on that
interi finacial information. Accordigly, the degree of reliance on their report on such information should be
restrcted in light of the limited natue of the review procedures applied. Deloitte & Touche LLP are not subject to
the liability provisions of Section 11 of the Securties Act of 1933 for their report on the unaudited inte finacial
inormation because those report are not "report" or a "par" of the registration statement prepared or certfied by
an accountat with the meang of Sections 7 and 11 of the Act.
S-3
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PROSPECTUS
AVISTA CORPORATION
Debt Securities
Preferred Stock
(no par value)
Common Stock
(no par value)
Avista Corporation may offer these securties from time to tie on terms and at prices to be determed at the
time of sale. The supplement to ths prospectus relatig to each offerig wil describe the specifc terms of the
securties being offered, as well as the term of the offerig and sale includig the offering price.
A vista Corporation may sell these securties to or though underwters, dealers or agents or directly to one or
more purchasers.
Outstading shares of Avista Corporation's common stock are listed on the New York Stock Exchage under
the symbol "A V A". New shaes of common stock will also be listed on the NYSE.
See "Risk Factors" on page 2 for reference to certain factors you should consider
before investig in the securities.
Neither the Securities and Exchange Commission nor any state securities commission has approved or
disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense.
The date of ths Prospectus is December 9, 2009.
This prospectus incorporates by reference important business and financial information about Avista
Corporation that is not included in or delivered with this prospectus. See "Where You Can Find More
Information". You may obtain copies of documents containing such information from us, without charge, by
either callng or writing to us at:
Avista Corporation
Post Offce Box 3727
Spokane, Washington 99220
Attention: Treasurer
Telephone: [phone]
TABLE OF CONTENTS)out ths Prospectus 1skFactors 2IÌsta Corporation 2
¡e of Proceeds 2~scription of the Bonds 2~scription of the Notes 10
~scription of Preferred Stock 19~scription of Common Stock 21here You Can Find More Informtion 24:gal Matters 25:oort 25
We have not authorized anyone to give you any inormation other than ths prospectu, the accompanying
prospectus supplement relating to an offerig of specific securties and any wrtten communcation from us or any
underwters or agents specifying the final terms of such securties. You should assume that the inormation
contained or incorporated by reference in ths prospectus, the accompanyig prospectus supplement and any such
wrttn communcation is accurate only as of the respective dates of these documents. We ar not offerig to sell any
securties and we are not solicitig offers to buy any securties in any jursdiction in which offers are not permttd.
Table of Contents
ABOUT TmS PROSPECTUS
Ths prospectus is par of a registration statement tht A vista Corporation fied with the Securties and
Exchange Commission (the "SEC"), using the "shelf' registration process. Under ths shelf registration process, we
may, from time to tie, sell the securties described in ths prospectu in one or more offerigs. This prospectus
provides a general description of the securties we may offer. Each tie we sell securties, we will provide a
prospectus supplement that will conta specific inormation about the terms of that offerig. That prospectus
supplement may include or incorporate by reference a detailed and curent discussion of any risk factors and wil
discuss any special considerations applicable to those securties, includig the plan of distrbution. The prospectu
supplement may also add, update or chage informtion contaed in ths prospectus. You should read both ths
prospectu and any prospectu supplement together with additional inormation described under "Where You Can
Find More Inormtion". If there is any inconsistency between the information in ths prospectus and any prospectus
supplement, you should rely on the inormation contained in tht prospectu supplement.
References in the prospectu to the term "we", "us" or "Avista" or other simlar term mean Avista
Corporation, uness we state otherwse or the context indicates otherwse.
We may use ths prospectu to offer from time to tie:
. Secured bonds issued under a Mortgage and Deed of Trut, dated as of June 1, 1939 (the "Original
Mortgage") between Avista and Citiban N.A, as trstee (the "Mortgage Trutee"), the Original Mortgage,
as amended and supplemented from time to time, being hereinafer called the "Mortgage". The secured bonds
offered by this prospectu are hereinftr called "Bonds".
. Unsecured notes, debentues or other debt securties issued under an Indentue, dated as of April 1, 1998 (the
"Origina Indentue") between Avista and The Ban of New York Mellon, as successor trstee (the
"Indentue Trustee"), the Original Indentue, as amended and supplemented from time to time, being
hereinaftr called the "Indenture". The unecurd notes, debentues and other debt securties offered by ths
prospectu are hereinafter called "Notes" and, together with the Bonds, are hereinafter called "Debt
Securties" .
. Shares of preferred stock, no par value (the "Preferred Stock~'). The Preferred Stock offered by ths
prospectu is hereinafter called the ''New Preferred Stock". The terms of the Preferred Stock include those
stated in Avista's Restated Aricles of Incorporation, as amended (the "Aricles"), and its Bylaws (the
"Bylaws") and those made applicable thereto by the Washigton Business Corporation Act (the "Washigton
BCA").
. Shares of common stock, no par value (the "Common Stock"). The term of the Common Stock include those
stated in the Aricles and the Bylaws and those made applicable thereto by the Washington BCA.
The shares of Common Stock offered by ths prospectus, together with the Debt Securties and the New
Preferred Stock, are hereafter called "Securties".
For more detailed information about the Securties, you can read the exhbits to the registration statement.
Those exhbits have been either fied with the registrtion statement or incorporated by reference to earlier SEC
filings listed in the registration statement. See "Where You Can Find More Inormation".
Table of Contents
RISK FACTORS
Investig in the Securties involves risk. You should review all the information contaed or incorporated by
reference in ths prospectu before deciding to invest. See "Where You Can Find More Inormtion" herein. In
paricular, you should carefully consider the risks and uncertinties discussed in "Risk Factors", "Forward-Lookig
Statements" and "Mangement's Discussion and Analysis of Financial Condition and Results of Operations" in our
anual and quaerly report incorporated herein by reference.
In addition, you should carefully consider the risks and uncertinties discussed in the applicable prospectus
supplement which relate to the specific Securties offered thereby.
A VISTA CORPORATION
Avista Corporation, which was incorporated in the Terrtory of Washigton in 1889 (sometimes called
"Avista"), is an energy company engaged in the generation, transmission and distrbution of energy and, though its
subsidiares, in other energy-related businesses. Ou corporate headquaers are in Spokae, Washigton, center of
the Inland Nortwest geographic region. Agricultue, mig and lumber were the pri industres in the Inand
Nortwest for may year; today health care, education, finance, electronic and other manufactung, toursm and
servce sectors are growing in importce.
A vista has two reportble business segments, as follows:
. Avista Utilties - an operatig division of Avista Corporation that comprises our regulated utility operations.
A vista Utiities generates, transmits and distrbutes electrc energy and distrbutes natual gas. It also engages
in wholesale purchases and sales of electrc and natual gas.
. Advantage IQ - an indirect, majority-owned subsidiar of Avista Corporation that provides sustainable
utiity expense management solutions, parerig with multi-site companes across Nort America to assess
and maage utility costs and usage. Advantage IQ's priar product lines include processing, payment and
auditing of energy, telecom, waste, water/sewer and lease bils as well as strategic maagement services.
Avista Corporation has other businesses, including sheet metal fabrication, ventue fud investments and real
estate investments. These activities do not represent a reportble business segment.
Advantage IQ and all the other companies in non-utility businesses are subsidiares of A vista Capita, Inc.,
which is a direct wholly-owned subsidiar of A vista Corporation.
USE OF PROCEEDS
Unless we indicate differently in a supplement to ths prospectu, A vista intends to use the net proceeds from
the issuace and sale of the Securties offered by ths prospectu for any or all of the following puroses: ( a) to
fud Avista Utilties' constrction, facility improvement and matenace programs, (b) to refiance matung long-
term debt, (c) to contiue to fund retirements (though redemption, purchase or acquisition) oflonger-term debt,
(d) to repay short-term debt, (e) to accomplish other general corporate puroses permttd by law and (f) to
reimburse Avista's treasur for fuds previously expended for any of these purses.
DESCRITION OF THE BONDS
A vista may issue the Bonds in one or more series, or in one or more tranches withn a series. The terms of the
Bonds will include those stated in the Mortgage and those made par of the Mortgage by the Trust Indentue Act of
1939, as amended (the "Trust Indentue Act"). The followig sumar is not complete and is subject in all respects
to the provisions of, and is qualified in its entiety by reference to, the Mortgage and the Trut Indentue Act. The
Bonds, together with all other debt securties outstadig under the Mortgage, ar hereinafter called, collectively, the
"Mortgage Securties". A vista ha fied the Mortgage, as well as a form of supplemental indentue to the Mortgage
to establish a series of Bonds, as exhibits to the registrtion statement of which ths prospectus is a par. Capitaized
terms used under ths heading which are not otherwse defied in ths prospectus have the meanings set
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fort in the Mortgage. Wherever parcular provisions of the Mortgage or terms defmed in the Mortgage are referred
to, those provisions or defitions are incorporated by reference as par of the statements made in ths prospectus and
those statements are quaifed in their entiety by tht reference. Sections 125 though i 50 of the Mortgage appear in
the first supplemental indentue to the Original Mortgage. References to aricle and section numbers, uness
otherwse indicated, are references to arcle and section numbers of the Mortgage.
The applicable prospectus supplement will describe the following terms of the Bonds of each series:
. the title of the Bonds;
. any limit upon the aggregate pricipal amount of the Bonds;
. the date or dates on which the pricipal of the Bonds is payable or the method of determnation thereof and
the right, if any, to extend such date or dates;
. (a) the rate or rates at which the Bonds will bear interest, if any, or the method by which such rate or rates, if
any, will be determined, (b) the date or dates from which any such interest will accrue, (c) the interest
payment dates on which any such interest will be payable, (d) the right, if any, of A vista to defer or extend an
interest payment date, (e) the regular record date for any interest payable on any interest payment date and
(f) the person or persons to whom the interest on the Bonds will be payable on any interest payment date, if
other than the person or persons in whose naes the Bonds are registered at the close of business on the
regular record date for such interest;
. any period or periods with which, or date or dates on which, the price or prices at which and the terms and
conditioI1 upon which the Bonds may be redeemed, in whole or in par, at the option of A vista;
· (a) the obligation or obligations, ifany, of Avista to redeem or purchase any of the Bonds pursuant to any
sing fud or other mandatory redemption provisions or at the option of the Holder (as defied below),
(b) the period or periods with which, or date or dates on which, the price or prices at which and the terms
and conditions upon which the Bonds will be redeemed or purchased, in whole or in par, pursuat to such
obligation, and (c) applicable exceptions to the requiements of a notice of redemption in the case of'
mandatory redemption or redemption at the option of the Holder;
. the terms, if any, upon which the Bonds may be converted into other securties of Avista;
· the denomintions in which any of the Bonds will be issuable if other than denominations of $ 1 ,000 and any
integral multiple of $ 1 ,000;
. if the Bonds are to be issued in global form the identity of the deposita; and
. any other term of the Bonds.
Payment and Paying Agents
Except as may be provided in the applicable prospectu supplement, A vista will pay interest, if any, on each
Bond on each interest payment date to the person in whose name such Bond is registered (for puroses of ths
section of the prospectus, the registered holder of any Mortgage Securty is herein referred to as a "Holdet') as of
the close of business on the regular record date relatig to such interest payment date; provided, however, that
Avista will pay interest at matuty (whether at stated matuty, upon redemption or otherwse, "Matuty") to the
person to whom pricipal is paid.
Unless otherwse specified in the applicable prospectus supplement, A vista will pay the principal of and
premium, if any, and interest, if any, on the Bonds at Matuty upon presentation of the Bonds at the corporate trt
offce of Citibank N.A. in New York, New York, as paying agent for Avista. Avista may change the place of
payment of the Bonds, may appoint one or more additional payig agents (including A vista) and may remove any
payig agent, all at its discretion.
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Registration; Registration of Transfer
Unless otherwse specified in the applicable prospectu supplement, the Bonds wil be issued only in fully
registered form. The registered holder of a Bond will be treated as the owner of the Bond for all puroses under the
Mortgage. Only registered holders will have rights under the Mortgage. (Mortgage, Sec. 83)
The trfer of Bonds may be registered, and Bonds may be exchanged for other Bonds, upon surender
thereof at the pricipal offce of Citiban N.A., as Avista's offce or agency for such puroses. Avista may chage
such offce or agency, and may designate an additional office or agency, in its discretion.
Except as otherwse provided in the applicable prospectus supplement, no servce charge wil be made for any
registration of transfer or exchange of Bonds, but A vista may requie payment of a sum suffcient to cover any ta or
other governenta chage incident thereto. Avista will not be required to mae any trfer or exchage of any
Bonds for a period of 10 days next preceding any selection of Bonds for redemption, nor wil it be requird to make
transfers or exchanges of any Bonds which have been selected for redemption in whole or in par or as to which
Avista shall have received a notice for the redemption thereof in whole or in par at the option of the Holder.
Redemption
The applicable prospectu supplement will indicate the extent, if any, to which the Bonds will be subject to
(a) general redemption at the option of Avista or (b) special redemption by the application (either at the option of
A vista or pursuant to the requirements of the Mortgage) of (x) cash deposited with the Mortgage Trutee as
described under "Special Provisions for Retirement of Bonds" below or (y) cash deposited with the Mortgage
Trutee in connection with the release of propert from the lien of the Mortgage.
Notice of redemption wil be given by mail not less than 30 days prior to the date fixed for redemption.
(Mortgage, Sec. 52)
If less th all the Bonds of a series are to be redeemed, the parcular Bonds to be redeemed will be selected
by the Mortgage Trutee by lot, according to such method as it shll deem proper in its discretion. (Mortgage, Sec.
52)
Any notice of redemption at the option of A vista may state that such redemption will be conditional upon
receipt by the Mortgage Trutee, on or before the date fied for such redemption, of money suffcient to pay the
pricipal of and premium, if any, and interest, if any, on such Bonds and that if such money has not been so
received, such notice will be of no force or effect and A vista will not be required to redeem such Bonds. (Mortgage,
Sec. 52)
Issuance of Additional Mortgage Securities
In addition to the Bonds, other debt securties may be issued under the Mortgage. The present pricipal
amount of debt securties which may be outstanding under the Mortgage is $10,000,000,000. However, Avista has
reserved the right to amend the Mortgage (without any consent of or other action of Holders of any Mortgage
Securties now or hereafter outstading) to remove ths limtation.
Mortgage Securties of any series may be issued from time to time on the basis of:
. 70% of cost or fair value to Avista (whichever is less) of propert additions which have not previously been
made the basis of any application under the Mortgage and therefore do not constitute fuded propert after
adjustments to offset propert retiements;
. an equal pricipal amount of Mortgage Securties which have been or are to be paid, redeemed or otherwse
retied and have not previously been made the basis of any application under the Mortgage; or
. deposit of cash.
Propert additions generally include electrc, natual gas, steam or water propert acquired after May 31,
1939, but may not include propert used pricipally for the production or gatherig of natual gas. Any such
propert additions may be used if their ownership and operation is withn the corporate puroses of A vista
regardless of whether or not A vista has al the necessar permssion it may need at any tie from governental
authorities to operate such propert additions.
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The Mortgage provides that no reduction in the book value of the propert recorded in the plant account of
A vista shall constitute a propert retiement, otherwse th in connection with physical retiements of propert
abandoned, destroyed or disposed of, and otherwse th in connection with the removal of such propert in its
entiety from the plant accoÚDt.
No Mortgage Securties may be issued on the basis of propert additions subject to prior liens, uness the prior
lien bonds secured thereby have been quaified by being deducted from the Mortgage Securties otherwse issuable
and do not exceed 70% of such propert additions, and uness the Mortgage Securties then to be outstading which
have been issued againt propert subject to contiuig prior liens and certn other items would not exceed 15% of
the Mortgage Securties outstadig.
The amount of prior liens on mortgaged propert acquied after the date of delivery of the Mortgage may be
increased subsequent to the acquisition of such propert provided that, if any propert subject to such prior lien shall
have been made the basis of any application under the Mortgage, all the additional obligations are deposited with the
Mortgage Trutee or other holder of a prior lien.
(Mortgage, Secs. 4 though 8, 20 though 30 and 46; Firt Supplemental, Sec. 2; Eleventh Supplemental,
Sec. 5; Twelft Supplemental, Sec. 1; Foureenth Supplementa, Sec. 4; Seventeenth Supplemental, Sec. 3;
Eighteenth Supplementa, Secs. 1, 2 and 6; Twenty-sixth Supplementa, Sec. 2; Twenty-ninth Supplemental, Ar. II)
Net Earnings Test
In general, A vista may not issue Mortgage Securties on the basis of propert additions or cash uness net
eargs for 12 consecutive month out of the preceding 18 calenda month (before income taes, depreciation and
amortation of propert, propert losses and interest on any indebtedness and amortization of debt discount and
expense) are at least twce the anua interest requirements on all Mortgage Securties at the time outstading,
including the additional issue, and on all indebtedness of prior ran
Avista is not required to satisfy the net eargs requiement prior to the issuance of Mortgage Securties on
the basis of retired Mortgage Securties unless:
. the anual interest requiements on the retied Mortgage Securties on the basis of which the new Mortgage
Securties are to be issued have been excluded from a net eargs certificate delivered to the Mortgage
Truste since the retiement of such Mortgage Securties; or
. the retired Mortgage Securties on the basis of which the new Mortgage Securties are to be issued matue by
their terms at a date more th two years after the date for authentication and delivery of the new Mortgage
Securties and the new Mortgage Securties bear interest at a higher rate th such retied Mortgage
Securties.
In general, the Mortgage permits the inclusion of the followig items in net eargs:
. revenues collected or accrued subject to possible refud;
. any porton of the allowance for fuds used durg constrction; and
. any porton of the allowance for fuds used to conserve energy (or any analogous amount), which is not
included in "other income" (or any analogous item) in Avista's books of account.
The Mortgage also provides that, in calculatig net eargs, no deduction from revenues or other income
shall be made for:
. expenses or provisions for any non-recurg chage to income of whatever kid or natue (including, without
limitation, the recogntion of expense due to the non-recoverability of investment); or
. provisions for any refud of revenues previously collected or accrued subject to possible refud.
In general, the interest requiment on a new series of Mortgage Securties bearg interest at a varable
interest rate or rates is determned by reference to the rate or rates to be in effect at the time of the initial issuance.
However, if any outstading Mortgage Securties or prior rang indebtedness bears interest at a varable rate or
rates, the
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anual interest requirements thereon are determed by reference to the rate or rates in effect on the date next
preceding the date of issue of the new series of Mortgage Securties.
Security; Structural Subordination
The Bonds, together with all other Mortgage Securties now or hereafter issued under the Mortgage, will be
secured by the Mortgage, which constitutes a first mortgage lien on Avista's facilties for the generation,
transmission and distrbution of electrc energy and the storage and distrbution of natual gas and substatially all of
Avista's assets (except as stated below), subject to:
. leases of mior portons of Avista' s proper to others for uses that do not inteere with A vista's business;
. leases of cert propert of A vista not used in its utilty business;
. excepted encumbraces, as defined in the Mortgage; and
. encumbrances, defects and iregularties deemed immaterial by Avita in the operation of Avista's business.
There are excepted from the lien all cash and securties (including, without limitation, securties issued by
Avista's subsidiares); merchadise, equipment, materials or supplies held for sale or consumption in Avista's
operations; receivables, contracts, leases and operating agreements; electrc energy, and other material or products
(including gas) generated, manufactued, produced or purchaed by Avista, for sale, distrbution or use in the
ordinar course of its business. (Mortgage, Granting Clauses)
The Mortgage contains provisions for subjecting to the lien thereof all propert (other than propert of the
kids excepted from such lien) acquired by Avista aftr the execution and delivery thereof, subject to purchase
money liens and liens existing thereon at the time of acquisition and, subject to limitations in the case of
consolidation, merger or sale of substatially all of Avista's assets. (Mortgage, Grantig Clauses and Ar. XV
The Mortgage provides tht the lien of the Mortgage shall not automatically attch to the properties of another
corporation which shall have consolidated or merged with Avita in a transaction in which Avista shall be the
surving or resulting corporation. (Mortgage, Sec. 87)
The Mortgage provides tht the Mortgage Trustee shall have a lien upon the mortgaged propert, prior to the
Mortgage Securties, for the payment of its reasonable compensation and expenses and for indemnity. (Mortgage,
Secs. 92 and 97; First Supplementa, Ar. XX
Although its utility operations are conducted directly by A vista, all of the other operations of A vista are
conducted though its subsidiares. The lien of the Mortgage does not cover the assets of the subsidiares or the
securties of the subsidiares held by A vista. Any right of Avista, as a shareholder, to receive assets of any of its
direct or indirect subsidiares upon such subsidiar's liquidation or reorganization (and the right of the Holders of
the Bonds and other creditors of A vista to paricipate in those assets) is junor to the claims against such assets of
that subsidiar's creditors. As a result, the obligations of A vista to the holders of the Bonds and other creditors are
effectively subordinated in right of payment to all indebtedness and other liabilities and commitments (including
trade payables and lease obligations) of Avista's diect and indiect subsidiares.
Maintenance
The Mortgage provides that A vista will cause (or, with respect to propert owned in common with others,
make reasonable effort to cause) the mortgaged propert to be maitaed and kept in good repair, workig order
and condition, and will cause (or, with respect to propert owned in common with others, make reasonable effort to
cause) to be made such repairs, renewals and replacements of the mortgaged propert as, in Avista's sole judgment,
may be necessar to operate the mortgaged propert in accordance with common industr practice. Avista may
discontiue, or cause or consent to the discontiuace of, the operation and maintenance of any of its propertes if
such discontinuace is, in the sole judgment of A vista, desirable in the conduct of its business. (Mortgage, Sec. 38)
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Special Provisions for Retirement of Bonds
If, durg any 12-month period, any of the mortgaged propert is taen by eminent domain and/or sold to any
goverenta authority and/or sold pursuat to an order of a governenta authority, with the result that A vista
receives $15,000,000 or more in cash or in pricipal amount of purchae money obligations, Avista is required to
apply such cash and the proceeds of such obligations (subject to cert conditions and deductions, and to the extent
not otherwse applied) to the redemption of Mortgage Securties which are, by their, terms, redeemable before
matuty by the application of such cash and proceeds. (Mortgage, Sec. 64; Tenth Supplemental, Sec. 4)
Release and Substitution of Property
Unless Avista is in default in the payment of the interest on any Mortgage Securties then outstading under
the Mortgage, or a Completed Default shall have occured and is continuing, A vista may obtain the release from the
lien of the Mortgage of any mortgaged propert upon the deposit of cash equal to the amount, if any, that the fair
value of the propert to be released exceeds the aggregate of:
(1) the pricipal amount of any obligations secured by purchase money mortgage upon the propert released
and delivered to the Mortgage Trustee;
(2) the cost or fair value (whichever is less) of propert additions which do not constitute fuded propert,
aftr certin deductions and additions;
(3) an amount equal to lO/7th of the pricipal amount of Mortgage Securties that Avista would be entitled to
issue on the basis of retired securties (with such entitlement being waived by operation of such release); and
(4) the pricipal amount of obligations secured by purchase money mortgage upon the propert released,
and/or an amount in cash delivered to the trtee or other holder of a lien prior to the lien of the Mortgage.
The use of obligations secured by purchase money mortgage as a credit in connection with the release of
propert, as described in clauses (1) and (4) above, is subject to the followig litations:
(1) the aggegate credit which may be used as described in clauses (1) and (4) above in respect of any propert
being released may not exceed 70% of the fai value of such propert; and
(2) the aggregate pricipal amount of such obligations described in (1) and (4) above and all other obligations
secured by purchase money mortgage delivered to the Mortgage Trustee pursuant to said clauses (1) and (4) and
then held as par of the mortgaged propert by the Mortgage Trutee or the trstee or other holder of a prior lien
shall not exceed 40% of the aggregate pricipal amount of outstading Mortgage Securties.
To the extent that propert so released does not constitute funded proper, the propert additions used to
effect the release will not, in certain cases, be deemed to constitute fuded proper, and the waiver of the right to
issue Mortgage Securties to effect the release will, in certin cases, cease to be effective as such a waiver, all upon
the satisfaction of certin conditions specified in the Mortgage. The Mortgage contains similar provisions as to cash
proceeds of such propert. The Mortgage also contain special provisions with respect to prior lien bonds pledged
and disposition of moneys received on pledged bonds secured by a prior lien. (Mortgage, Secs. 5; 31,32,46 though
50,59,60,61, 118 and 134)
Modifcation
Modifcations Without Consent
A vista and the Mortgage Trustee may enter into one or more supplemental indentues without the consent of
any Holders for any of the following puroses:
. to evidence the succession of another corporation to A vista and the assumption by such successor of the
covenants of A vista in the Mortgage and the Mortgage Securties;
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. to add additiona covenats of A vista and additional defaults, which may be applicable only to the Mortgage
Securties of specified series;
. to correct the description of propert subject to the lien of the Mortgage or to subject additional propert to
such lien;
. to change or eliminate any provision of the Mortgage or to add any new provision to the Mortgage; provided,
tht no such change, elition or addition shall adversely afect the interests of the Holders in any material
respect;
. to establish the form or term of Mortgage Securties of any series;
. to provide for procedures to utiize a non-certficated system of registration for all or any series of Mortgage
Securties;
. to change any place or places for payment, registration of tranfer or exchange, or notices to and demands
upon Avista, with respect to all or any series of Mortgage Securties;
. to increase or decreas the maximum pricipal amount of Mortgage Securties issuable under the Mortgage;
. to mae any other changes which do not adversely affect interests of the Holders in any material respect; or
. to evidence any chage required or permtted under the Trust Indentue Act.
(Mortgage, Sec. 120; Twenty-sixth Supplemental Indentue, Sec. 2; Twenty-nith Supplemental Indentue,
Arcle II)
Modifcation With Consent
In genera, the Mortgage, the rights and obligations of A vista and the rights of the Holders may be modified
with the consent of 60% in pricipal amount of the Mortgage Securties outstading, and, if less thn all series of
Mortgage Securties are affected, the consent also of 60% in pricipal amount of the Mortgage Securties of each
seres affected. However, no modification of the term of payment of pricipal or interest, and no modification
affectig the lien or reducing the percentage requied for modification, is effective against any Holder without its
consent. (Mortgage, Ar XV, Sec. 149; First Supplemental, Sec. 10)
Satisfaction and Discharge
Mortgage Securties will be deemed to have been paid for puroses of satisfaction of the lien of the Mortgage
if there shal have been irevocably deposited with the Mortgage Trustee for the payment or redemption of such
Mortgage Securties:
. money in an amount which will be suffcient,
. Governent Obligations, none of which shal contain provisions permtting the redemption thereof at the
option of the issuer thereof, the pricipal of and the interest on which when due, and without regard to
reinvestment thereof, will provide moneys which will be suffcient, or
. a combintion of money and Governent Obligations which will be suffcient,
to pay when due the pricipal of, premium, if any, and interest due and to become due on all outstading Mortgage
Securties on the matuty date or redemption date of such Mortgage Securties. For this purpose, "Governent
Obligations" include direct obligations of the governent of the United States or obligations guaranteed by the
governent of the United States. (Mortgage, Sec. 106)
The Mortgage Trustee may, and upon request of A vista shall, cancel and discharge the lien of the Mortgage
and reconvey the Mortgaged Propert to Avista whenever all indebtedess secured thereby ha been paid.
The right of A vista to cause its entie indebtedness in respect of the Mortgage Securties of any series to be
deemed to be satisfied and discharged as described above will be subject to the satisfaction of conditions specified in
the instrent creating such series.
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Completed Defaults
Any of the following events wil constitute a "Completed Default" under the Mortgage:
. failure to pay pricipal of, or premium, if any, on any Mortgage Securty when due;
. failure to pay interest on any Mortgage Securty with sixty (60) days after the same becomes due;
. failure to pay interest on, or pricipal of, any qualified prior lien bonds beyond any grace period specified in
the prior lien securg such prior lien bond;
. failure to pedorm, or breach of, any other covenants of A vista for a period of 90 days afer notice to us from
the Mortgage Trutee; and
. certin events relating to banptcy, inolvency or reorganzation of Avista. (Mortgage, Secs. 44 and 65;
Fort-second Supplemental Indentue, Arcle II
The Mortgage Trutee may withold notice of default (except in payment of pricipal, interest or fuds for
retirement of Mortgage Securties) if it determes that it is in the interest of the Holders. (Mortgage, Sec. 135)
Remedies
Acceleration of Maturity
If a Completed Default occurs and is contiuing, the Mortgage Trustee may, and upon wrtten request of the
Holders of a majority in pricipal amount of Mortgage Securties then outstanding shall, declare the pricipal of, and
accrued interest on, all outstadig Mortgage Securties imediately due and payable; provided, however, that the
Holders of a majority in pricipal amount of outstading Mortgage Securties may anul such declaration ifbefore
any sale of the mortgaged propert:
. all agreements with respect to which default shal have been made shall be fully pedormed or otherwse
cured; and
. all overdue interest and all reasonable expenses of the Mortgage Trutee, its agents and attorneys shall have
been paid by A vista, except for the pricipal of any Mortgage Securties tht would not have been due except
for such acceleration. (Mortgage, Sec. 65; Firt Supplemental Indentue, Arcle XXV
Possession of Mortgaged Propert
Under certin circumstaces and to the extent permtted by law, if a Completed Default occurs and is
continuig, the Mortgage Trutee has the power to tae possession of, and to hold, operate and manage, the
mortgaged propert, or with or without entr, sell the mortgaged propert. If the mortgaged propert is sold,
whether by the Mortgage Trustee or puruant to judicial proceedings, the pricipal of the outstanding Mortgage
Securties, if not previously due, will become imediately due. (Mortgage, Secs. 66,67 and 71)
Right to Direct Proceedings
If a Completed Default occurs and is contiuing, the Holders of a majority in pricipal amount of the
Mortgage Securties then outstadig will have the right to direct the time, method and place of conducting any
proceedings to be taen for any sale of the mortgaged propert, the foreclosure of the Mortgage, or for the
appointment of a receiver or any other proceeding under the Mortgage, provided that such direction does not confict
with any rule oflaw or with the Mortgage. (Mortgage, Sec. 69)
No Impairment of Right to Receive Payment
Notwthstadig any other provision of the Mortgage, the right of any Holder to receive payment of the
pricipal of and interest on such Mortgage Securty, or to intitute suit for the enforcement of any such payment,
shall not be impaied or afected without the consent of such Holder. (Mortgage, Sec. 148)
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Notie of Default
No Holder may enforce the lien of the Mortgage uness such Holder shall have given the Mortgage Trustee
wrtten notice of a Completed Default and uness the Holders of 25% in pricipal amount of the Mortgage Securties
have requested the Mortgage Trutee in wrtig to act and have offered the Mortgage Trutee adequate securty and
indemnty and a reasonable opportty to act. (Mortgage, Sec. 79)
Remedies Limited by State Law
The laws of the varous states in which the propert subject to the lien of the Mortgage is located may limit or
deny the abilty of the Mortgage Trutee and/or the Holders to enforce certin rights and remedies provided in the
Mortgage in accordace with their terms.
Concernng the Mortgage Trustee
The Mortgage Trutee ha, and is subject to, all the duties and responsibilties specified with respect to an
indentue trstee under the Trut Indentue Act. Subject to such provisions, the Mortgage Trustee is not under any
obligation to tae any action in respect of any default or otherwse, or toward the execution or enforcement of any of
the trsts created by the Mortgage, or to intitute, appear in or defend any suit or other proceeding in connection
therewith, uness requested in wrtig so to do by the Holders of a majority in pricipal amount of the Mortgage
Securties then outstading. Anytng in the Mortgage to the contrar notwthtading, the Mortgage Trutee is
under no obligation or duty to pedorm any act thereunder (other th the delivery of notices) or to institute or
defend any suit in respect hereof, uness properly indemnified to its satisfaction. (Mortgage, Sec. 92)
The Mortgage Trustee may at any time resign and be dischaged of the trsts created by the Mortgage by
giving wrtten notice to A vista and thereafer publishing notice thereof, specifyg a date when such resignation
shall tae effect, as provided in the Mortgage, and such resigntion shall tae effect upon the day specified in such
notice unless a successor trstee shall have previously been appointed by the Holders or A vista and in such event
such resignation shal tae effect imediately upon the appointment of such successor trstee. The Mortgage
Trustee may be removed at any time by the Holders of a majority in pricipal amount of the Mortgage Securties
then outstading. (Mortgage, Secs. 100 and 10 I)
If A vista appoints a successor trtee and such successor trstee has accepted the appointment, the Mortgage
Trustee will be deemed to have resigned as of the date of such successor trstee's acceptance. (Mortgage, Sec. 102)
Evidence of Compliance with Mortgage Provisions
Compliance with provisions of the Mortgage is evidenced by wrtten statements of Avista's offcers or
persons selected or paid by A vista. In certin matters, statements must be made by an independent accountat or
engineer. Varous certficates and other papers are requied to be filed anually and upon the happening of certin
events, including an anual certficate with reference to compliance with the terms of the Mortgage and absence of
Completed Defaults.
DESCRITION OF THE NOTES
Avista may issue the Notes in one or more series, or in one or more tranches withn a series. The term of the
Notes will include those stated in the Indentue and those made par of the Indentue by the Trust Indenture Act. The
followig sumar is not complete and is subject in all respects to the provisions of, and is qualified in its entiety
by reference to, the Indentue and the Trut Indentue Act. The Notes, together with all other debt securties
outstandig under the Indentue, ar hereinafter called, collectively, the "Indentue Securties". Avista has fied the
Indentue, as well as a form of offcer's certficate to establish a series of Notes, as exhibits to the registration
statement of which ths prospectus is a par. Capitalized term used under ths heading which are not otherwse
defied in ths prospectus have the meangs set fort in the Indentue. Wherever parcular provisions of the
Indentue or term defied in the Indentue are referred to, those provisions or defitions are incorporate by
reference as par of the statements made in ths prospectus and those statements are qualified in their entiety by tht
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reference. References to aricle and section numbers, uness otherwse indicated, are references to aricle and section
numbers of the Indentue.
The applicable prospectus supplement or prospectu supplements will describe the following terms of the
Notes of each series or tranche:
· the title of the Notes;
. any limt upon the aggregate pricipal amount of the Notes;
· the date or dates on which the pricipal of the Notes is payable or the method of determnation thereof and
the right, if any, to extend such date or dates;
. (a) the rate or rates at which the Notes will bear interest, if any, or the method by which such rate or rates, if
any, wil be determed, (b) the date or dates from which any such interest will accrue, (c) the interest
payment dates on which any such interest will be payable, (d) the right, ifany, of Avista to defer or extend an
interest payment date, (e) the regular record date for any interest payable on any interest payment date and
(f) the person or persons to whom interest on the Notes will be payable on any interest payment date, if other
than the person or persons in whose names the Notes ar registered at the close of business on the regular
record date for such interest;
. any period or periods with which, or date or dates on which, the price or prices at which and the terms and
conditions upon which the Notes may be redeemed, in whole or in par, at the option of A vista;
. (a) the obligation or obligations, ifany, of Avista to redeem or purchae any of the Notes puruant to any
sinng fud or other mandatory redemption provisions or at the option of the Holder, (b) the period or
periods with which, or date or dates on which, the price or prices at which and the terms and conditions
upon which the Notes will be redeemed or purchaed, in whole or in par, pursuant to such obligation, and
(c) applicable exceptions to the requiements of a notice of redemption in the case of mandatory redemption
or redemption at the option of the Holder;
. the denomiations in which any of the Notes will be issuable if other th denominations of $1 ,000 and any
integral multiple of$I,OOO;
. if the Notes are to be issued in global form, the identity of the deposita;
. the terms, if any, upon which the Notes may be converd into other securties of Avista; and
. any other term of the Notes.
Payment and Paying Agents
Except as may be provided in the applicable prospectu supplement, Avista will pay interest, if any, on each
Note on each interest payment date to the person in whose name such Note is registered (for the puroses of ths
section of the prospectu, the registered holder of any Indentue Securty 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, tht
Avita wil pay interest at matuty (whether at stated matuty, upon redemption or otherwse, "Matuty) to the
person to whom pricipal is paid. However, if there has been a default in the payment of interest on any Note, such
defaulte interest may be payable to the Holder of such Note as of the close of business on a date selected by the
Indentue Trustee which is not more th 30 days and not less than 10 days before the date proposed by Avista for
payment of such defaulted interest or in any other lawf maner not inconsistent with the requirements of any
securties exchange on which such Note may be listed, if the Indentue Trustee deems such maner of payment
practicable. (Indentue, Sec. 307)
Unless otherwse specified in the applicable prospectu supplement, A vista will pay the principal of and
premum, if any, and interest, if any, on the Notes at Matuty upon presentation of the Notes at the corporate trst
offce of The Ban of New York in New York, New York, as payig agent for Avista. Avista may change the place
of payment of the Notes, may appoint one or more additional paying agents (including Avista) and may remove any
paying agent, all at its discretion. (Indentue, Sec. 502)
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Registration; Registration of Transfer
The Notes will be issued only in fully registered form. The registered Holder of a Note will be treated as the
owner of the Note for all puroses under the Indentue. Only registered Holders will have rights under the Indentue.
(Indentue, Sec. 308)
Unless otherwse specified in the applicable prospectu supplement, Holders may register the tranfer of
Notes, and may exchange Notes for other Notes of the same series and tranche, of authoried denomitions and
having the same terms and aggregate pricipal amount, at the corporate trst offce of The Ban of New York in
New York, New York, as securty registrar for the Notes. Avista may chage the place for registration of transfer
and exchage of the Notes, may appoint one or more additiona securty registrs (including A vista) and may
remove any securty registrar, all at its discretion. (Indentue, Sec. 502)
Except as otherwse provided in the applicable prospectu supplement, no servce chage wil be made for any
transfer or exchage of the Notes, but A vista may require payment of a sum suffcient to cover any ta or other
governenta chage that may be imposed in connection with any registration of tranfer or exchage of the Notes.
Avista wil not be required to execute or to provide for the registration of transfer or the exchange of (a) any Note
durg a period of 15 days before givig any notice of redemption or (b) any Note selected for redemption in whole
or in par except the unedeemed porton of any Note being redeemed in par. (Indentue, Sec. 305)
Redemption
The applicable prospectus supplement will set fort any terms for the optional or mandatory redemption of
Notes. Except as otherwse provided in the applicable prospectus supplement with respect to Notes redeemable at
the option of the Holder, Notes will be redeemable by A vista only upon notice by mail not less than 30 nor more
than 60 days before the date fixed for redemption. If less than all the Notes of a series, or any tranche thereof, are to
be redeemed by Avista, the parcular Notes to be redeemed will be selected by such method as shall be provided for
such series or tranche, or in the absence of any such proviion, by such method of random selection as the Securty
Registrar deems fair and appropriate. (Identue, Secs. 403 and 404)
Any notice of redemption at the option of A vista may state tht such redemption will be conditional upon
receipt by the payig agent or agents, on or before the date fixed for such redemption, of money suffcient to pay the
pricipal of and premium, if any, and interest, if any, on such Notes and tht if such money has not been so received,
such notice will be of no force or effect and Avista will not be required to redeem such Notes. (Indentue, Sec. 404)
Unsecured Obligations; Structural Subordiation
The Indentue is not a mortgage or other lien on assets of A vista or its subsidiares. In addition to the Notes,
other debt securties may be issued under the Indentue, without any limit on the aggregate pricipal amount. Each
series of Indentue Securties will be unsecured and will ran par passu with all other series of Indentue Securties,
except as otherwse provided in the Indentue, and with all other unecured and unsubordinted indebtedness of
Avista. Except as otherwse described in the applicable prospectus supplement, the Indentue does not limit the
incurence or issuce by A vista of other secured or unecured debt, whether under the Indentue, under any other
indentue tht A vista may enter into in the futue or otherwse.
Although its utility operations are conducted diectly by A vista, all of the other operations of A vista are
conducted though its subsidiares. Any right of A vista, as a shaeholder, to receive assets of any of its direct or
indirect subsidiares upon the subsidiar's liquidation or reorganation (and the right of the Holders and other
creditors of A vista to paricipate in those assets) is junor to the claims againt such assets of that subsidiar's
creditors. As a result, the obligations of Avista to the Holders and other creditors are effectively subordinated in
right of payment to all indebtedness and other liabilties and commitments (including trade payables and lease
obligations) of Avista's direct and indirect subsidiares.
Satisfaction and Discharge
Any Indentue Securties, or any porton of the pricipal amount thereof, wil be deemed to have been paid for
puroses of the Indentue and, at Avista's election, the entie indebtedness of Avista in respect thereof will be
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deemed to have been satisfied and dischaged, if there shall have been irevocably deposited in trt with the
Indentue Trutee or any payig agent (other than Avista):
. money in an amount which will be sufcient, or
. in the case of a deposit made before the matuty of such Indentue Securties, Eligible Obligations, which do
not contain provisions permtting the redemption or other preayment thereof at the option of the issuer
thereof, the pricipal of and the interest on which when due, without any regard to reinvestment thereof, will
provide moneys which, together with the money, if any, deposited with or held by the Indentue Trustee or
such Payig Agent, will be suffcient, or
. a combination of money and Eligible Obligations which will be suffcient,
to pay when due the pricipal of and premium, if any, and interest, if any, due and to become due on such Indentue
Securties. For ths purose, "Eligible Obligations" include direct obligations of, or obligations unconditionally
guaranteed by, the United States, entitled to the benefit of the ful faith and credit thereof and certficates, deposita
receipts or other intrents which evidence a direct ownership interest in such obligations or in any specific
interest or pricipal payments due in respect thereof and such other obligations or intrents as shall be specified
in an accompanyig prospectus supplement. (Indentue, Sec. 601)
The right of A vista to cause its entire indebtedness in respect of the Indentue Securties of any series to be
deemed to be satisfied and dischaged as described above will be subject to the satisfaction of conditions specified in
the instrent creating such series.
The Indentue will be deemed to have been satisfied and dischaged when no Indentue Securties remain
outstading thereunder and Avista has paid or caused to be paid all other sums payable by Avista under the
Indentue. (Identue, Sec. 602)
Events of Default
Anyone or more of the followig events with respect to a series of Indentue Securties that has occured and
is continuing will constitute an "Event of Default" with respect to such series of Indentue Securties:
. failure to pay interest on any Indentue Securty of such series with 60 days aftr the same becomes due and
payable; provided, however, that no such failure shall constitute an Event of Default if Avista has made a
valid extension of the interest payment period with respect to the Indentue Securties of such series if so
provided with respect to such series;
. failure to pay the pricipal of or premium, if any, on any Indentue Securty of such series withn 3 business
days aftr its Matuty; provided, however, that no such failure will constitute an Event of Default if Avista
has made a valid extension of the Matuty of the Indentue Securties of such series, if so provided with
respect to such series;
. failure to pedorm, or breach of, any covenat or warty of A vista contaed in the Indentue for 90 days
aftr written notice to Avista from the Indentue Trustee or to Avista and the Indentue Trutee by the
Holders of at least 25% in pricipal amount of the outstading Indentue Securties of such series as provided
in the Indentue unless the Indentue Trutee, or the Indentue Trustee and the Holders of a pricipal amount
of Indentue Securties of such series not less than the pricipal amount of Indentue Securties the Holders of
which gave such notice, as the case may be, agree in wrtig to an extension of such period before its
expiration; provided, however, that the Indentue Trutee, or the Indentue Trustee and the Holders of such
pricipal amount of Indentue Securties of such series, as the case may be, wil be deemed to have agreed to
an extension of such period if corrective action is initiated by A vista withi such period and is being
dilgently pursued;
. default under any bond, debentue, note or other evidence of indebtedness of A vista for borrowed money
(including Indentue Securties of other series) or under any mortgage, indentue, or other intrent to
evidence any indebtedness of Avista for borrowed money, which default (1) constitutes a failure to make any
payment in excess of$5,000,000 of the pricipal of, or interest on, such indebtedness or (2) has resulted in
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such indebtedess in an amount in excess of $10,000,000 becomig or being declared due and payable prior
to the date it would otherwse have become due and payable, without such payment having been made, such
indebtedness having been discharged, or such acceleration havig been rescinded or anulled, with a period
of90 days after wrtten notice to Avista by the Indentue Trutee or to Avista and the Indentue Trutee by
the Holders of at least 25% in pricipal amount of the outstading Securties of such series as provided in the
Indentue; or
. certin events in banptcy, inolvency or reorganzation of Avita (Indentue, Sec. 701).
Remedies
Acceleration of Maturity
If an Event of Default applicable to the Indentue Securties of any series occurs and is contiuig, then either
the Indentue Trustee or the Holders of not less than 33% in aggegate pricipal amount of the outstading Indentue
Securties of such series may declar the pricipal amount (or, if any of the outstadig Indentue Securties of such
series are Discount Securties, such porton of the pricipal amount thereof as may be specified in the terms thereof)
of all of the outstading Indentue Securties of such series to be due and payable immediately by wrtten notice to
Avista (and to the Indentue Trustee if given by the Holders); provided, however, tht if an Event of Default occurs
and is continuing with respect to more th one series of Indentue Securties, the Indentue Trustee or the Holders
of not less than 33% in aggregate pricipal amount of the outstading Indentue Securties of all such series,
considered as one class, may make such declaration of acceleration and not the Holders of anyone such series.
At any time after such a declaration of acceleration with respect to the Indentue Securties of any series ha
been made, but before a judgment or decree for payment of the money due has been obtained, such declaration and
its consequences will, without fuer act, be deemed to have been rescinded and anulled, if:
. A vista has paid or deposited with the Indentue Trutee a sum suffcient to pay
. all overdue interest, if any, on al Indentue Securties of such series;
. the pricipal of and premium, if any, on any Indentue Securties of such series which have become due
otherwse th by such declaration of acceleration and interest, if any, thereon at the rate or rates prescribed
therefor in such Indentu Securties;
. interest, if any, upon overdue interest, if any, at the rate or rates prescribed therefor in such Indentue
Securties, to the extent that payment of such interst is lawfl; and
. all amounts due to the Indenture Trustee under the Indentue in respect of compensation and reimbursement
of expenses; and
. all Events of Default with respect to Indentue Securties of such series, other than the non-payment of the
pricipal of the Indentue Securties of such series which has become due solely by such declaration of
acceleration, have been cured or waived as provided in the Indentue. (Indentue, Sec. 702)
Right to Direct Proceedings
If an Event of Default with respect to the Indentue Securties of any series occurs and is contiuing, the
Holders of a majority in pricipal amount of the outstading Indenture Securties of such series will have the right to
direct the time, method and place of conductig any proceedings for any remedy available to the Indentue Trutee
in exercising any trt or power conferred on the Indentue Trutee; provided, however, that if an Event of Default
occur and is continuing with respect to more th one seres of Indentue Securties, the Holders of a majority in
aggregate pricipal amount of the outstading Indentue Securties of all such series, considered as one class, will
have the right to make such direction, and not the Holders of anyone of such series; and provided, fuer, tht
(a) such diection does not confict with any rue of law or with the Indentue, and could not involve the Indentue
Trustee in personal liability in circumtaces where indemnty would not, in the Indentue Trustee's sole discretion,
be adequate and (b) the Indentue Trustee may tae any other action deemed proper by the Indentue Trutee which
is not inconsistent with such direction. (Identue, Sec. 712)
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Limitation on Right to Instite Proceedings
No Holder will have any right to intitute any proceeding, judicial or otherwse, with respect to the Indentue
or for the appointment of a receiver or for any other remedy thereunder uness:
. such Holder has previously given to the Indentue Trustee wrttn notice of a contiuing Event of Default
with respect to the Indentue Securties of anyone or more series;
· the Holders of a majority in aggregate pricipal amount of the outstading Indentue Securties of all series in
respect of which such Event of Default ha occured, considered as one class, have made wrtten request to
the Indentue Trustee to intitute proceedings in respet of such Event of Default and have offered the
Indentue Trustee reasonable indemnty against costs and liabilties to be incured in complyig with such
request; and
. for 60 days after receipt of such notice, the Indentue Trutee has failed to institute any such proceeding and
no direction inconsistent with such request has been given to the Indentue Trustee durg such 60 day period
by the Holders of a majority in aggregate pricipal amount of Indentue Securties then outstading.
Furermore, no Holder of any series of Indentue Securties will be entitled to intitute any such action if and
to the extent that such action would distub or prejudice the rights of other Holders of such series. (Indentue,
Sec. 707)
No Impairment of Right to Receive Payment
Notwithstading tht the right of a Holder to intitute a proceeding with respect to the Indentue is subject to
certin conditions precedent, each Holder will have the right, which is absolute and unconditional, to receive
payment of the pricipal of and premium, if any, and interest, if any, on such Indentue Securty when due and to
intitute suit for the enforcement of any such payment. Such rights may not be impaired or affected without the
consent of such Holder. (Identue, Sec. 708)
Notice of Default
The Indentue Trustee is requied to give the Holders notice of any default under the Indentue to the extent
required by the Trust Indentue Act, uness such default shall have been cured or waived, except that no such notice
to Holders of a default of the chacte described in the thd bulleted paragraph under "- Events of Default" may
be given until at least 75 days aftr the occurence thereof. For puroses of the preceding sentence, the ter
"default" mean any event which is, or aftr notice or lapse of tie, or both, would become, an Event of Default.
The Trut Indentue Act curently permts the Indentue Trutee to withold notices of default (except for cert
payment defaults) if the Indentue Trutee in good faith determes the witholding of such notice to be in the
interests of the Holders. (Indentue, Sec. 802)
Consolidation, Merger, Sale of Assets and Other Transactions
Avista may not consolidate with or merge into any other Person, or conveyor otherwse transfer, or lease, all
of its propertes, as or substatially as an entiety, to any Person, unless:
. the Person formed by such consolidation or into which Avista is merged or the Person which acquires by
conveyance or other tranfer, or which leases (for a term extendig beyond the last Stated Matuty of the
Indentue Securties then outstading), all of the properties of Avista, as or substantially as an entiety, shall
be a Person organzed and existig under the laws of the Unite States, any State or Terrtory thereof or the
Distrct of Columbia or under the laws of Canda or any Provice thereof; and
. such Person shall expressly assume the due and punctul payment of the pricipal of and premium, if any,
and interest, if any, on all the Indentue Securties then outstadig and the pedormce and observance of
every covenat and condition of the Indentue to be pedormed or observed by Avista.
In the case of the conveyance or other tranfer of all of the propertes of A vista, as or substatially as aD
entiety, to any person as contemplated above, Avista would be released and dischaged from all obligations under
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the Indentue and on all Indentue Securties then outstading uness A vista elects to waive such release and
discharge. Upon any such consolidation or merger or any such conveyance or other tranfer of properes of A vista,
the successor, tranferee or lessee would succeed to, and be substituted for, and would be entitled to exercise every
power and right of, Avista under the Indentue. (Indentue, Secs. 1001,1002 and 1003)
For puroses of the Indentue, the conveyance, tranfer or lease by Avista of all of its facilties (a) for the
generation of electrc energy, (b) for the tranmission of electrc energy, (c) for the distrbution of electrc energy
and/or natual gas, in each case considered alone, (d) all of its facilties described in clauses (a) and (b), considered
together, or (e) all of its facilities described in clauses (b) and (c), considered together, will in no event be deemed to
constitute a conveyance or other tranfer of all the propertes of A vista, as or substatially as an entiety, uness,
imediately followig such conveyance, tranfer or lease, A vista OWDno uneased properties in the other such
categories of propert not so conveyed or otherwse tranferred or leased.
The Indentue will not prevent or restrct:
. any consolidation or merger afer the consumation of which A vista would be the surving or resutig
entity; or
. any conveyance or other transfer, or lease, of any par of the propertes of A vista which does not constitute
the entirety, or substantially the entiety, thereof. (Indentue, Sec. 1004)
If A vista conveys or otherwise tranfers any par of its propertes which does not constitute the entiety, or
substantially the entiety, thereof to another Person meeting the requirements set fort in the fist paragraph under
ths headig, and if:
. such transferee expressly assumes the due and punctul payment of the pricipal of and premium, if any, and
interest, if any, on all Indentue Securties then outstadig and the performce and observance of every
covenant and condition of the Indentue to be performed or observed by A vista; .and
. there is delivered to the Indentue Trustee an independent expert's certficate (i) describing the propert so
conveyed or transferred and identifyg the same as facilties for the generation, transmission or distrbution
of electrc energy or for the storage, tranporttion or distrbution of natual gas and (ii) statig that the
aggregate pricipal amount of the Indentue Securties then outstanding does not exceed 70% of the fair value
of such propert,
then A vista would be released and dischared from all obligations and covenants under the Indentue and on all
Indentue Securties then outstading uness A vista elects to waive such release and discharge. In such event, the
tranferee would succeed to, and be substituted for, and would be entitled to exercise every right and power of,
Avista under the Indentue. (Indentue, Sec. 1005)
Modifcation of Indenture
Modifcations Without Consent
A vista and the Indentue Trustee may enter into one or more supplemental indentues, without the consent of
any Holders, for any of the followig puroses:
. to evidence the succession of another Person to A vista and the assumption by any such successor of the
covents of A vista in the Indentue and in the Indentue Securties;
. to add one or more covenants of Avista 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 outstading, Indentue Securties of one or
more specified series, or one or more tranches thereof, or to suender any right or power confered upon
A vista by the Indentu;
. to change or elimate any provisions of the Indentue or to add any new provisions to the Indentue,
provided tht if such chage, elimnation or addition adversely affects the inteests of the Holders of the
Indentue Securties of any series or tranche in any material respect, such chage, elimination or addition
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will become effective with respect to such series or tranche only when no Indentue Securty of such series or
tranche remai outstading;
. to provide collateral securty for the Indentue Securties or any series thereof;
. to establish the form or term of the Indentue Securties of any series or tranche as permtted by the
Indentue;
. to provide for the authentication and delivery of bearer securties and coupons appertinng thereto
representig 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;
. to evidence and provide for the acceptace of appointment by a successor trstee with respect to the
Indentue Securties of one or more series;
. to provide for the procedures required to permt the utilization of a non-certficated system of registration for
all, or any series or tranche of, the Indentue Securties; or
. to chage any place or places where (a) the pricipal of and premium, if any, and interest, if any, on all or any
series of Indentue Securties, or any tranche thereof, will be payable, (b) all or any series of Indentue
Securties, or any trche thereof, may be surendered for registrtion of transfer, (c) all or any series of
Indentue Securties, or any tranche thereof, may be surendered for exchage and (d) notices and demands to
or upon A vista in respect of all or any series of Indentue Securties, or any tranche thereof, and the Indentue
may be served; or
. to cure any ambiguty, to corrct or supplement any provision therein which may be defective or inconsistent
with any other provision therein, to make any other chages to the provisions thereof or to add any other
provisions with respect to matters and questions arsing under the Indentue, so long as such other chages or
additions do not adversely affect the interests of the Holders of any series or tranche in any material respect.
Without limiting the generality of the foregoing, if the Trust Indentue Act is amended after the date of the
Original Indentue in such a way as to require changes to the Indentue or the incorporation therein of additional
provisions or so as to permit changes to, or the elimintion of, provisions which, at the date of the Orginal Indentue
or at any tie thereafter, were requied by the Trut Indentu Act to be contaed in the Indentue, the Indentue
will be deemed to have been amended so as to conform to such amendment or to effect such changes or elimnation,
and A vista and the Indentue Trustee may, without the consent of any Holders, enter into one or more supplemental
indentues to evidence or effect such amendment. (Indentue, Sec. 1101)
Modifcations Requiring Consent
Except as provided above, the consent of the Holders of a majority in aggregate pricipal amount of the
Indentue Securties of all series then outstading, considered as one class is required for the purose of addig any
provisions to, or changing in any maner, or elimnating any of the provisions of, the Indentue pursuant to one or
more supplemental indentues; provided, however, that ifless th all of the series ofIndentue Securties
outstading are directly affected by a proposed supplemental indentue, then the consent only of the Holders of a
majority in aggregate pricipal amount of outstadig Indentue Securties of all series so diectly affected,
considered as one class, will be required; and provided, fuer, tht if the Indentue Securties of any series have
been issued in more th one tranche and if the proposed supplemental indentue diectly affects the rights of the
Holders of one or more, but less than all, of such tranches, then the consent only of the Holders of a majority in
aggregate pricipal amount of the outstadig Indentue Securties of all tranches so directly afected, considered as
one class, wil be required; and provided, fuer, tht no such amendment or modification may:
. chage the Stated Matuty of the pricipal of, or any intallment of pricipal of or interest on, any Indentue
Securty other than pursuant to the term thereof, or reduce the pricipal amount thereof or the rate of interest
thereon (or the amount of any intalment of interest thereon) or chage the method of calculatig such rate or
reduce any premium payable upon the redemption thereof, or reduce the amount of the pricipal of any
Discount Securty that would be due and payable upon a declartion of acceleration of Matuty or change
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the coin or curency (or other propert) in which any Indentue Security or any premium or the interest
thereon is payable, or impai the right to intitute suit for the enforcement of any such payment on or aftr the
Stated Matuty of any Indentue Securty (or, in the case of redemption, on or after the redemption date)
without, in any such case, the consent of the Holder of such Indentue Securty;
. reduce the percentage in pricipal amount of the outstading Indentue Securties of any series, or any
tranche thereof, the consent of the Holders of which is requied for any such supplemental indentue, or the
consent of the Holders of which is required for any waiver of compliance with any provision of the Indentue
or of any default thereunder and its consequences;
. reduce the requirements for quoru or votig, without, in any such case, the consent of the Holder of each
outstadig Indentue Securty of such series or tranche; or
. modify certin of the provisions of the Indentue relating to supplemental indentues, waivers of certin
covenants and waivers of past defaults with respect to the Indentue Securties of any series, or any tranche
thereof, without the consent of the Holder of each outstading Indentue Securty of such series or tranche.
A supplemental indentue which changes or elimtes any covenat or other provision of the Indentue which
ha 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 outstading, Indentue Securties of one or more specified series, or one or more tranches thereof, or
modifies the rights of the Holders of such series or tranche with respect to such covenant or other provision, will be
deemed not to afect the rights under the Indentue of the Holders of any other series or tranche.
If the supplementa indentue or other document establishing any series or tranche of Indentue Securties so
provides, and as specifed in the applicable prospectu supplement and/or pricing supplement, the Holders of such
Indentu Securties will be deemed to have consented, by virte of their purchase of such Indentue Securties, to a
supplementa indentue containig the additions, changes or elinations to or from the Indentue which are
specified in such supplemental indentue or other document. No Act of such Holders will be required to evidence
such consent and such consent may be counted in the determintion of whether the Holders of the requested
pricipal amount ofIndentue Securties have consented to such supplemental indentue. (Indentue, Sec. 1 102)
Dutis of the Indenture Trustee; Resignation; Removal
The Indentue Trustee has, and is subject to, all the duties and responsibilties specified with respect to an
indentue trstee under the Trut Indentue Act. Subject to such provisions, the Indentue Trutee will be under no
obligation to exercise any of the powers vested in it by the Indentue at the request of any Holder, uness such
Holder offers it reasonable indemnty against the costs, expenses and liabilities which might be incured thereby.
The Indentue Trutee will not be requied to expend or risk its own fuds or otherwise incur persona financial
liabilty in the performance of its duties if the Indentue Trutee reasonably believes that repayment or adequate
indemnty is not reasonably assured to it. (Indentue, Secs. 801 and 803)
The Indentue Trustee may resign at any time with respect to the Indentue Securties of one or more series by
givig wrtten notice thereof to Avista or may be removed at any time with respect to the Indentue Securties of one
or more series by Act of the Holders of a majority in pricipal amount of the outstading Indentue Securties of
such series delivered to the Indenture Trustee and Avista. No resignation or removal of the Indentue Trutee and no
appointment of a successor trstee will become effective until the acceptace of appointment by a successor trstee
in accordace with the requirements of the Indentue. So long as no Event of Default or event which, aftr notice or
lapse of time, or both would become an Event of Default has occured and is continuig, if Avista has delivered to
the Indentue Trustee with respect to one or more series a resolution of its Board of Directors appointing a successor
trtee with respect to that or those series and such successor has accepted such appointment in accordace with the
term of the Indentue, the Indentue Trustee with respect to tht or those series will be deemed to have resigned and
the successor wil be deemed to have been appointed as trstee in accordace with the Indentue. (Indentue,
Sec. 810)
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Evidence of Compliance
Compliance with the Indentue provisions is evidenced by wrttn statements of A vista offcers or persons
selected or paid by A vista. In certin cases, A vista must fush opinons of counel and certfications of an
engineer, appraiser or other expert (who in some cases must be independent). In addition, the Indentue requies that
Avista give the Indentue Trustee, not less th anually, a brief statement as to Avista's compliance with the
conditions and covenants under the Indentue.
Governg Law
The Indentue and the Indentue Securties are governed by and constred in accordance with the laws of the
State of New York, except to the extent tht the Trust Indentue Act is applicable.
DESCRITION OF PREFERRD STOCK
General
The authoried capita stock of Avista Corporation, as set fort in the Aricles, consists of 10,000,000 shares
of Preferred Stock, cumulative, without nomi or par value, which is issuable in series, and 200,000,000 shares of
Common Stock, without nomina or par value. Followig is a brief description of certin of the rights and privileges
of the Preferred Stock.
Avista may issue shaes of New Preferred Stock in one or more additional series. The terms of the New
Prefered Stock will include those stated in the Aricles aId the Bylaws and those made applicable thereto by the
Washington BCA. The followig sumar is not complete and is subject in all respects to the provisions of, and is
qualified in its entiety by reference to, the Arcles, the Bylaws and the Washington BCA. Avista has fied the
Aricles, as well as a form of amendment thereto to establish a series of New Preferred Stock, and the Bylaws as
exhbits to the registration statement of which this prospectu is a par. Whenever parcular provisions of the
Arcles or the Bylaws are referred to, those provisions are incorporated by reference as par of the statements made
in ths prospectus and those statements are qualified in their entiety by that reference.
The Aricles provide tht the Preferred Stock may be divided into and issued from tie to time in one or more
series. All shaes of Preferred Stock constitute one and the same class of stock, are of equal ran and will otherwse
be identical except as to the designation thereof, the date or dates from which dividends on shaes thereof will be
cumulative, and except that each series may var as to, and the applicable prospectus supplement wil describe:
· the rate or rates of dividends, if any, which may be expressed in term of a formula or other method by which
such rate or rates will be calculated from tie to time, and the date or dates on which dividends may be
payable,
. whether shares may be redeemed and, if so, the redemption price and term and conditions of redemption,
. the amount payable on volunta and involunta liquidation,
. sing fud provisions, if any, for the redemption or purchase of shares, and
. the term and conditions, if any, on which shaes may be converted.
When Preferred Stock is initially issued, the number of shaes constituting such series, its distinguishing serial
designation and its paricular chaacteristics (inofar as there may be varations between series) may be fied by
resolution of the Board of Directors.
Dividend Rights
The New Preferred Stock of each series will be entitled, on a party with each other series of Preferred Stock
and in preference to the Common Stock, to receive, but only when and as declared by the Board of Directors,
dividends at the rate determed for such series and set fort in the applicable prospectus supplement. Such
dividends will be cuulative from the date of issuace of the New Preferred Stock and will be payable on the
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fifteenth day of March, June, September and December in each year, except as otherse provided in the applicable
prospectus supplement.
Liquidation Rights
The New Preferred Stock of each series will be entitled, upon dissolution or liquidation, on a party with each
other series of Preferred Stock and in preference to the Common Stock, to a liquidation preference per shae
determed for such series plus an amount equivalent to accrued and unpaid dividends thereon, if any, to the date of
such event. The liquidation preference of each series of New Preferred Stock will be set fort in the applicable
prospectus supplement.
Votig Rights
Except for those puroses for which the right to vote is expressly conferred by the Aricles or the Washigton
BCA, the holders of Preferred Stock have no power to vote.
Under the Arcles, whenever and as often as, at any date, dividends payable on any shares of Preferred Stock
(including any New Preferred Stock) shall be in arears in an amount equal to the aggregate amount of dividends
accumulated on such shaes over the eighteen (18) month period ended on such date, the holders of the Preferred
Stock, votig separately and as a single class, are entitled to elect a majority of the Board of Directors, and the
holders of the Common Stock, votig separtely and as a single class, shall be entitled to elect the remaining
directors. Such votig rights of the holders of the Preferred Stock cease when all defaults in the payment of
dividends on the Preferred Stock of any and all series have been cured. See "Description of Common Stock-
Votig Rights" for additional inormation with respect to the election of directors.
In addition, under the Aricles the afirative vote of the holders of at least a majority of the shares of the
Preferred Stock is required:
(a) for the adoption of any amendment of the Aricles which would: (i) create or authorize any new class of
stock rang prior to or on a party with the Preferred Stock as to dividends or upon dissolution, liquidation or
winding up; (ii) increase the authorized number of shaes of the Preferred Stock; or (iii) change any of the rights or
preferences of the Preferred Stock at the tie outstading, provided that if any such change would affect the holders
of less than the Preferred Stock of all series then outstading, only the affirative vote of the holders of at least a
majority of the shaes of all series so afected is required; and
(b) for the issuance of Preferred Stock, or of any other class of stock ranng prior to or on a party with such
Preferred Stock as to dividends or upon dissolution, liquidation or widing up, unless the net income of Avista
available for the payment of dividends for a period of 12 consecutive calenda months with the 15 calenda
month imediately preceding the issuance of such shares is at least equal to one and one-half times the annua
dividend requirements on shares of Preferred Stock and on all shares of all other classes of stock rang prior to or
on a party with the Preferred Stock as to dividends or upon dissolution, liquidation or widing up, which will be
outstading imediately aftr the issuance of such shaes, including the shares proposed to be issued; provided,
however, that if the shares of Prefered Stock or any such prior or party stock shall have a varable dividend rate,
the anual dividend requirement of such shares shal be determed by reference to the weighted average dividend
rate on such shaes durg the 12-month period for which the net income of Avista available for the payment of
dividends shall have been determed; and provided, fuer, that if the shares of the series to be issued are to have a
varable dividend rate, the anual dividend requirement on such shares shall be determined by reference to the initial
dividend rate upon the issuace of such shaes.
Under the Washigton BCA, the approval of the holders of a majority of the outstandig shares of Preferred
Stock is required in connection with certin changes in the capita strctue of Avista or in certin rights and
preferences of the Preferred Stock, including cert of the changes described in (a) above. In addition, the
Washigtn BCA requies the approval of certin mergers, share exchages and other major corporate tranactions
by the holders of two-thds of the outstading Preferred Stock.
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Pre-emptive Rights
No holder of Preferred Stock has any pre-emptive rights.
Miscellaneous
The Arcles contain no restrction on the redemption or repurchase by A vista of shares of Preferred Stock
while there is any arearage in the payment of dividends on, or sing fud payments in respect of, the Preferred
Stock.
Upon issuance as contemplated by ths prospectus and the applicable prospectus supplement, the New
Preferred Stock will be fully paid and nonassessable. The holders of the New Preferred Stock will not be subject to
liability for fuer calls or assessment by, or for liabilties of, Avista.
DESCRITION OF COMMON STOCK
General
The authoried capita stock of Avista, as set fort in the Arcles, consists of 10,000,000 shares of Preferred
Stock, cumulative, without nominal or par value, which is issuable in series, and 200,000,000 shares of Common
Stock without nomil or par value. Following is a brief description of certin of the rights and privileges of the
Common Stock.
Avista may issue additional shares of its Common Stock from time to time. The terms of the Common Stock
include those stated in the Aricles and the Bylaws and those made applicable thereto by the Washington BCA. The
followig sumar is not complete and is subject in all respects to the provisions of, and is qualified in its entirety
by reference to, the Arcles, the Bylaws and the Washington BCA. Avista has fied the Aricles and the Bylaws as
exhbits to the registration statement of which ths prospectus forms a par. Whenever parcular provisions of the
Arcles or the Bylaws are referred to, those provisions ar incorporated as par of the statements made in ths
prospectus and those statements are qualified in their entirety by that reference.
Dividend Rights
Afr full provision for all Preferred Stock dividends declared or in arears, the holders of Common Stock are
entitled to receive such dividends as may be lawflly declared from time to time by Avista's Board of Dirctors.
Votig Rights
The holders of the Common Stock have sole voting power, except as indicated below or as otherwse provided
by law. Each holder of Common Stock is entitled to one vote per share.
In an uncontested election of directors, each vote may be cast "fot' or "against" one or more candidates, or a
shaeholder may "abstan" with respect to one or more candidates. A candidate is elected to the Board of Directors
only if the number of votes "fot' such candidate exceeds the number of votes "agait" such candidate; and
"abstentions" are not counted as votes "for" or "againt". If an incumbent director does not receive a majority of
votes cast, he or she would continue to serve a term that would termate on the date that is the earliest of (a) thedate of the commencement of the term of a new director selected by the Board to fill the office held by such director,
(b) the effective date of the resigntion of such director and (c) the date of the next Anual Meeting of Shareholders.
In a contested election - that is, an election in which the numer of candidates exceeds the total number of
directors to be elected - shareholders would be allowed to vote "for" one or more candidates (not to exceed the
number of diectors to be elected) or "withold" votes with respect to one or more candidates. The candidates
electe would be those receivig the largest number of votes (up to the number of directors to be elected).
Shareholders are not allowed to cumulate their votes in any election of diectors (whether or not contested).
Under the Arcles, whenever and as oftn as, at any date, dividends payable on any shares of Preferred Stock
(including any New Preferred Stock) shall be in arear in an amount equal to the aggregate amount of dividends
accuulated on such shaes of Preferred Stock over the eighteen (18) month period ended on such date, the holders
of the Preferred Stock, votig separately and as a single class, ar entitled to elect a majority of the Board of
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Directors, and the holders of the Common Stock, votig separately and as a single class, will be entitled to elect the
remaing diectors. Such voting rights of the holders of the Preferred Stock cease when all defaults in the payment
of dividends on the Preferred Stock have been cured.
In addition, the consent of varous proportons of the Preferred Stock at the tie outstading is required to
adopt any amendment to the Aricles which would authorie any new class of stock rang prior to or on a party
with the Preferred Stock as to cert mattrs, to increase the authoried number of shaes of the Preferred Stock, to
chage any of the rights or preferences of outstadig Preferred Stock or to issue additional shaes of Preferred
Stock uness an eargs test is satisfied.
Under the Washigton BCA, the approval of the holders of a majority of the outstading shares of Preferred
Stock is required in connection with certin chages in the capita strctue of Avista or in certin rights and
preferences of the Preferred Stock, including certin of the chages referred to in the preceding paragraph. In
addition, the Washigton BCA requires approval of certin mergers, share exchanges and other major corporate
tractions by the holders of two-thds of the outstading Preferred Stock.
Classified Board of Directors
Both the Aricles and the Bylaws provide for a Board of Directors divided into thee classes. Each director of
a class will generally serve for a term of thee year, with only one class of directors being elected in each year. The
classification of the Board of Directors reduces the impact of cumulative votig rights.
The Arcles and Bylaws also generally provide tht directors may be removed only for cause and only by the
affirmative vote of the holders of at least a majority of the outstading shaes of Common Stock. The Arcles and
Bylaws fuer requie an affative vote of the holders of at least 80% of the outstading shares of Common Stock
to alter, amend or repeal the provisions relatig to the classification of the Board of Directors and the removal of
members from, and the filling of vacancies on, the Board of Directors.
"Fair Price" Provision
The Arcles contain a "fai price" provision which requires the affative vote of the holders of at least 80%
of the outstading shaes of Common Stock for the consation of cert business combinations, includig
mergers, consolidations, recapitalizations, certin dispositions of assets, cert issuaces of securties, liquidations
and dissolutions involvig Avista and a person or entity who is or, under cert circumtaces, was, a beneficial
owner of 10% or more of the outstadig shars of Common Stock (an "Interested Shaeholdet') uness
. such business combination has been approved by a majority of the directors unffliated with the Interested
Shareholder, or
. cert minum price and procedural requirements are met. The Aricles provide tht the "fair price"
provision may be altered, amended or repealed only by the affative vote of the holders of at least 80% of
the outstadig shares of Common Stock.
Statutory Limitation on "Signifcant Business Transactions"
General
The Washigton BCA conta provisions tht limit our abilty to engage in "significant business
tranactions" with an "acquig person", each as defmed below. We have no right to waive the applicabilty of
these proviions.
Signifcant Business Transactions Within Five Years of Share Acquisiton Time
Subject to certin exceptions, for five years after an "acquirg person's" "share acquisition time", Avista may
not engage in any "signficant business tranaction" with such "acquirg person" uness
. before such "shae acquisition time", a majority of the Board of Directors approves either:
. such "significant business transaction"; or
. the purchase of shaes made by such "acquirg person"; or
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. at or subsequent to such "share acquisition time", such "signcant business tranaction" ha been approved
by
. a majority of the Board of Directors and
. the holders ofil3 of the outstading shaes of Common Stock (except shares beneficially owned by or
under the votig control of the "acquirg person").
Signifcant Business Transactions More Than Five Years After Share Acquisition Time
Avista may not engage in cert "significant business tranactions" (including mergers, shae exchages and
consolidations) with any "acquirg person" uness:
. the transaction complies with certin "fai price" proviions specified in the statute; or
. no earlier than five years after the "acquirg person's" "shae acquisition time", the "significant business
tranaction" is approved at an anua or special meeting of shaeholders (in which the "acquirg person's"
shaes may not be counted in determg whether the "signficant business tranaction" has been approved).
Definitons
As used in ths section:
"Signifcant business transaction" means any of varous specified transactions involving an "acquirng
person" ,includig:
. a merger, share exchange, or consolidation of A vista or any of its subsidiares with an "acquirg person" or
its affiate;
. a sale, lease, transfer or other disposition to an "acquirg person" or its affliate of assets of Avista or any of
its subsidiares havig an aggregate maket value equal to 5% or more of all of the assets determed on a
consolidated basis, or al the outstading shares of A vista, or representig 5% or more of its earg power or
net income determed on a consolidated basis;
. termtion, at any time over the five-year penod followig the "share acquisition tie", of 5% or more of
the employees of Avista as a result of the "acquirg person's" acquisition of 10% or more of the shaes of
Avita; and
. the issuace or redemption by A vista or any of its subsidiares of shares (or of options, warants, or rights to
acquire shaes) of A vista or any of its subsidiares to or beneficially owned by an "acquirng person" or its
affliate except puruant to an offer, dividend distrbution or redemption paid or made pro rata to all
shareholders (or holders of options, warants or rights).
"Acquiring person" mean, with cert exceptions, a person (or group of persons) other than A vista or its
subsidiares who beneficially own 10% or more of the outstadig Common Stock of Avista.
"Share acquisition time" mean the tie at which a person fist becomes an "acquirg person" of A vista.
Anti-Takeover Effect
The provisions of the Aricles and the Bylaws described above under "Classified Board of Directors" and
"Fai Price Provision", together with the provisions of the Washigton BCA described above under "Statutory
Limitations on 'Significant Business Tranactions''', considered either individually or in the aggegate, may have an
"anti-taeovet' effect. These provisions could discourage a futue taeover attempt which is not approved by
Avita's Board of Directors but which individua shaeholders might deem to be in their best interests or in which
shareholders would receive a premium for their shares over curent market prices. As a result, shareholders who
might desire to parcipate in such a transaction might not have an opportty to do so.
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The provisions described above under "Classified Board of Directors" could also cause the removal of the
incumbent Board of Directors or management to require more tie or render such removal more diffcult,
procedurally or otherwse.
Liquidation Rights
In the event of any liquidation or dissolution of A vista, aftr satisfaction of the preferential liquidation rights
of the Preferred Stock, the holders of Common Stock would be entitled to shae ratably in all assets of A vista
available for distrbution to shareholders.
Pre-Emptive Rights
No holder of Common Stock ha any pre-emptive rights.
Miscellaneous
The presently outstading shaes of Common Stock are fully paid and non-assessable. Upon issuance as
contemplated by ths prospectus and the applicable prospectu supplement, additional shares of Common Stock will
be fully paid and nonassessable. The holders of shaes of Common Stock are not and will not be subject to liabilty
for fuer calls or assessment by, or for liabilties of, Avista.
The outstading shares of Common Stock are listed on the New York Stock Exchange. Any new shares of
Common Stock will also be listed on that Exchange subject to offcial notice of issuace.
The Tranfer Agent and Registrar for the Common Stock is The Ban of New York, 101 Barclay Street,
11th Floor, New York, New York 10286.
WHERE YOU CAN FIN MORE INFORMATION
General
Avista is subject to the informational reportg requiements of the Securties Exchange Act of 1934, as
amended (the "Exchange Act"). Avista fies anual, quaerly and special report, proxy statements and other
documents with the SEC (File No. 1-3701). These documents contain importt business and fincial information.
You may read and copy any materials Avista files with the SEC at the SEC's public reference room at 100 F Street,
N.E., Washigton, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for fuer inormation on the public
reference room. Avista's SEC filings are also available to the public from the SEC's website at http://w.sec.gov.
Other th those documents or portons of documents incorporated by reference into ths prospectus, inormation on
ths website does not constitute a par of ths prospectus.
Incorporation of Documents by Reference
The SEC allows us to incorporate by reference the inormation that we fie with the SEC. Ths allows us to
disclose importt inormation to you by referrg you to those documents rather than repeatig them in fu in ths
prospectus. Weare incorporatig into ths prospectu by reference:
. Avista's most recent Anua Report on Form 10-K fied with the SEC pursuant to the Exchange Act;
. all other documents filed by Avista with the SEC puruant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act since the end of the fiscal year covered by Avista's most recent Anual Report and prior to the
termtion of the offerig made by this prospectus,
and all of those documents are deemed to be a par of ths prospectus from the date of fiing such documents; it
being understood that documents which are "fushed" but not "filed", in accordance with SEC rules, will not be
deemed to be incorporated by reference. We refer to the documents incorporated into ths prospectus by reference as
the "Incorporated Documents". Any statement contaied in an Incorporated Document may be modified or
superseded by a statement in ths prospectus (if such Incorporated Document was filed prior to the date of ths
prospectu) in
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any prospectus supplement or in any subsequently fied Incorporated Document. The Incorporated Documents as of
the date of ths prospectus are:
· Anual Report on Form 10-K for the year ended December 31, 2008;
. Quarerly Report on Form 10-Q for the quarrs ended March 31,2009, June 30, 2009 and September 30,
2009; and
. Cuent Report on Form 8-K fied on Janua 23, Februar 13, March 13, April 1, May 8, June 16,
August 14, September 4, September 15 and November 25,2009.
You may request any of these filings, at no cost, by contacting us at the address or telephone number provided
on page 2 of ths prospectus. Avista mantain an Internet site at http://w.avistacorp.com which contans
inormation concerng Avista and its afliates. The informtion contaed at Avista's Internet site is not
incorporated in ths prospectus by references and you should not consider it a par of ths prospectu.
LEGAL MATTERS
The validity of the Securties and cerin other matters will be passed upon for A vista by Maran M.
Durkin, Esq., Senior Vice President, General Counel and Chief Compliance Offcer of Avita, and Dewey &
LeBoeuf LLP, counsel to A vista. The validity of the Securties and certin other matters wil be passed upon for any
underwters or agents by counsel to the extent identified in the applicable prospectus supplement. In givig their
opinons, Dewey & LeBoeufLLP and counsel for any underwters or agents may rely as to matters of Washington,
Idaho, Montaa and Oregon law upon the opinon of Maran M. Dukin, Esq.
EXPERTS
The consolidated fiancial statements incorporated in ths prospectu by reference from the Company's
Anual Report on Form 10-K and the effectiveness of Avista Corporation and subsidiares' internl control over
fincial reportg have been audited by Deloitte & Touche LLP, an independent registered public accounting firm,
as stated in their report (which report (1) express an unqualified opinon on the consolidated fiancial statements
and include an explanatory paragraph referrg to chages in accounting and presentation resultig from the impacts
of recently adopted accounting stadards and (2) express an unquafied opinon on the effectiveness of internl
control over fmancial reportg), which are incorporated herein by reference. Such fiancial statements have been so
incorporated in reliance upon the report of such fi given upon their authority as expert in accountig and
auditig.
With respect to the unaudited interi ficial informtion which is incorporated herein by reference,
Deloitte & Touche LLP, an independent registered public accounting fi, have applied limted procedures in
accordace with the stadads of the Public Company Accounting Oversight Board (United States) for a review of
such inormtion. However, as stated in their report included in the Company's Quarerly Report on Form 10-Q and
incorporated by reference herein, they did not audit and they do not express an opinon on tht interim fincial
inormation. Accordingly, the degree of reliance on their report on such information should be restrcted in light of
the limited natue of the review procedures applied. Deloitt & Touche LLP are not subject to the liabilty provisions
of Section i 1 of the Securties Act of 1933 for their report on the unaudited interim fiancial inormation because
those report are not "report" or a "par" of the registration statement prepared or certifed by an accountat within
the meang of Sections 7 and 11 of the Act.
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