Filed pursuant to Rule 424(b)(5)
File No. 333-82165
PROSPECTUS SUPPLEMENT
(To Prospectus dated August 17, 1999)
$400,000,000
Avista Corporation
MEDIUM-TERM NOTES, SERIES D
_______________
Avista Corporation may offer from time to time its unsecured
Medium Term Notes, Series D. The specific terms of any Notes
offered will be included in a pricing supplement. Unless the
pricing supplement provides otherwise:
. The Notes will mature . The Notes may be subject
between 9 months and 40 to redemption at the
years from the issue option of Avista Corp. or
date. to redemption or purchase
at the option of the
holder.
. The Notes will bear . The Notes will be
interest at either a denominated in U.S.
fixed or a floating rate. dollars and have minimum
Floating rate interest denominations of $1,000
would be based on: and any larger amount in
integral multiples of
$1,000.
. CD Rate . The Notes will be held in
. CMT Rate global form by The
. Commercial Paper Depository Trust Company
Rate except under the
. Federal Funds Rate circumstances described
. LIBOR in this prospectus
. Prime Rate supplement.
. Treasury Rate
. Any other rate or
index specified in . The Notes will be a new
the applicable issue of securities with
pricing supplement. no established trading
market
. Interest payment dates . The Notes will not be
for each fixed rate Note listed on any securities
will be January 1 and exchange.
July 1 of each year.
---------------
PRICE TO AGENTS' PROCEEDS TO
PUBLIC COMMISSIONS COMPANY
--------- ----------- ----------
Per Note . . . 100% .125% - .875% 99.875% -
99.125%
Total . . . . . $400,000,000 $500,000 - $399,500,000 -
$3,500,000 $396,500,000
The Securities and Exchange Commission and state securities
regulators have not approved or disapproved of these securities,
or determined if this prospectus supplement or the accompanying
prospectus is truthful or complete. Any representation to the
contrary is a criminal offense.
Morgan Stanley & Co. Incorporated, Merrill Lynch & Co., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith
Barney Inc., have agreed to use reasonable best efforts on
Avista Corp.'s behalf to solicit purchases of the Notes. Avista
Corp. may also sell Notes to an Agent acting as principal for its
own account. In addition, Avista Corp. may sell, solicit and
accept offers to purchase Notes on its own behalf.
-----------------
MORGAN STANLEY DEAN WITTER
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
August 19, 1999
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THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS
INCORPORATE BY REFERENCE IMPORTANT BUSINESS AND FINANCIAL
INFORMATION ABOUT AVISTA CORP. THAT IS NOT INCLUDED IN OR
DELIVERED WITH THE PROSPECTUS. THIS INFORMATION IS AVAILABLE TO
YOU AS SET FORTH IN THE ACCOMPANYING PROSPECTUS.
--------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
PAGE
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USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . S-3
DESCRIPTION OF THE NOTES . . . . . . . . . . . . . . . . . . S-3
CERTAIN UNITED STATES TAX CONSIDERATIONS . . . . . . . . . S-22
SUPPLEMENTAL PLAN OF DISTRIBUTION . . . . . . . . . . . . . S-29
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . S-30
PROSPECTUS
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . 3
AVISTA CORPORATION . . . . . . . . . . . . . . . . . . . . . . 4
USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . 4
DESCRIPTION OF THE DEBT SECURITIES . . . . . . . . . . . . . . 5
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . 15
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 16
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION
OTHER THAN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED
OR INCORPORATED IN THIS PROSPECTUS SUPPLEMENT AND THE
ACCOMPANYING PROSPECTUS IS ACCURATE AS OF ANY DATE AFTER AUGUST
19, 1999, WHICH IS THE DATE OF THIS PROSPECTUS SUPPLEMENT. WE
ARE NOT OFFERING TO SELL THE NOTES AND WE ARE NOT SOLICITING
OFFERS TO BUY THE NOTES IN ANY JURISDICTION IN WHICH OFFERS ARE
NOT PERMITTED.
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USE OF PROCEEDS
Avista Corp. intends to use the net proceeds from the
issuance and sale of its Medium Term Notes, Series D (the
"Notes") for any or all of the following purposes: (a) to fund a
portion of Avista Corp.'s construction, facility improvement and
maintenance programs (estimated to require $290 million over the
period 1999-2001), (b) to retire or exchange one or more
outstanding series of its preferred stock, bonds or long-term
notes (estimated to require $114 million over such period), (c)
to reduce or eliminate short-term debt issued for any of these
purposes ($151 million at August 13, 1999), (d) to reimburse
Avista Corp.'s treasury for funds previously expended for any of
these purposes and (e) for other corporate purposes. The pricing
supplement relating to each Note will indicate the expected use
of the proceeds of such Note.
DESCRIPTION OF THE NOTES
The following description of the particular terms of the
Notes supplements and supersedes (to the extent inconsistent) the
description of the general terms and provisions of the Debt
Securities set forth under "DESCRIPTION OF THE DEBT SECURITIES"
in the accompanying prospectus, to which description reference is
hereby made. Certain capitalized terms used and not defined in
this prospectus supplement are defined under "DESCRIPTION OF THE
DEBT SECURITIES" in the accompanying prospectus. The particular
terms and conditions of the Notes sold pursuant to any pricing
supplement to this prospectus supplement will be described
therein. The terms and conditions set forth in this "DESCRIPTION
OF NOTES" will apply to each Note unless otherwise specified in
the pricing supplement and in such Note.
GENERAL
The Notes will be issued as a series of debt securities
under the Indenture. The aggregate principal amount of the Notes
which may be authenticated and delivered under the Indenture will
not be limited.
The Notes will be issued in fully registered form only,
without coupons. Each Note will be issued initially as either a
Book-Entry Note or a Certificated Note. Except as set forth
herein under "-Book-Entry Only Issuance The Depository Trust
Company" or in any pricing supplement relating to specific Notes,
the Notes will not be issuable as Certificated Notes. The
authorized denominations of the Notes will be $1,000 and any
larger amount that is an integral multiple of $1,000.
Each Note will mature from nine months to forty years from
its date of issue, as selected by the purchaser and agreed to by
Avista Corp.. Each Note may also be subject to redemption at the
option of Avista Corp. or to redemption or purchase by Avista
Corp. at the option of the Holder before its Stated Maturity (as
defined below). Each Floating Rate Note will mature on an
Interest Payment Date (as defined below) for such Note.
The pricing supplement relating to each Note will describe
the following terms:
(a) the date or dates on which the principal of such
Note is payable or the method of determination thereof and
the right, if any, to extend such date or dates;
(b) whether the Note is a Fixed Rate Note or a Floating
Rate Note;
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(c) if the Note is a Fixed Rate Note, the rate per
annum at which the Note will bear interest;
(d) if the Note is a Floating Rate Note, the Base Rate,
the Initial Interest Rate, the Interest Reset Period, the
Interest Reset Dates, the Index Maturity, the Maximum
Interest Rate, if any, the Minimum Interest Rate, if any,
the Spread or Spread Multiplier, if any (all as defined
below), and any other terms relating to the particular
method of calculating the interest rate on the Note;
(e) the date or dates from which such interest will
accrue on the Note, the Interest Payment Dates on which such
interest shall be payable, the right, if any, of Avista
Corp. to defer or extend an Interest Payment Date, and the
Regular Record Date for any interest payable on any Interest
Payment Date and the person or persons to whom interest on
the Notes shall be payable on any Interest Payment Date, if
other than the person in whose name the Note is registered
at the close of business on the Regular Record Date for such
interest;
(f) the place or places where, subject to the terms of
the Indenture as described in the accompanying Prospectus
under "DESCRIPTION OF THE DEBT SECURITIES -Payment and
Paying Agents," the principal of and premium, if any, and
interest, if any, on the Note will be payable and where,
subject to the terms of the Indenture as described in the
accompanying Prospectus under "DESCRIPTION OF THE DEBT
SECURITIES -Registration and Transfer," the Note may be
presented for registration of transfer or exchange and the
place or places where notices and demands to or upon Avista
Corp. in respect of the Note and the Indenture may be
served; the Security Registrar and Paying Agents for the
Note; and, if such is the case, that the principal of the
Note shall be payable without presentation or surrender
thereof;
(g) any period or periods within which, or date or
dates on which, the price or prices at which and the terms
and conditions upon which the Note may be redeemed, in whole
or in part, at the option of Avista Corp.;
(h) the obligation or obligations, if any, of Avista
Corp. to redeem or purchase the Note or any portion thereof
pursuant to any sinking fund or other mandatory redemption
provisions or at the option of the holder thereof, and the
period or periods within which, or date or dates on which,
the price or prices at which, and the terms and conditions
upon which the Note shall be redeemed or purchased, in whole
or in part, pursuant to such obligation, and applicable
exceptions to the requirements of a notice of redemption in
the case of mandatory redemption or redemption at the option
of the holder;
(i) the denominations in which the Note shall be
issuable if other than denominations of $1,000 and any
larger amount that is an integral multiple of $1,000; and
(j) any other terms of the Note.
"Business Day" with respect to any Note means any day, other
than Saturday or Sunday, which is (a) not a day on which banking
institutions or trust companies in The City of New York, New York
or other city in which is located any office or agency maintained
for the payment of principal of or premium, if any, or interest
on such Note, are authorized or required by law, regulation or
executive order to remain closed and (b) if such Note is a LIBOR
Note (as defined below), a London Banking Day. "London Banking
Day" with respect to any Note means any day on which dealings in
deposits in U.S. dollars are transacted in the London Interbank
market.
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PAYMENT OF PRINCIPAL AND INTEREST
The interest payable on the Notes on any Interest Payment
Date (other than interest payable at Maturity) will be paid to
the Holders in whose names the Notes are registered as of the
Regular Record Date immediately preceding such Interest Payment
Date, such payment to be made by check mailed to the addresses
appearing in the Note register. Notwithstanding the foregoing,
(a) if the Original Interest Accrual Date of a Note is
after a Regular Record Date and before the corresponding
Interest Payment Date, interest so payable for the period
from and including the Original Interest Accrual Date to but
excluding such Interest Payment Date will be paid on the
next succeeding Interest Payment Date to the Holder of such
Note on the related Regular Record Date;
(b) interest payable at Maturity will be paid to the
Person to whom principal is paid;
(c) defaulted interest will be payable as described
under "DESCRIPTION OF THE DEBT SECURITIES Payment and Paying
Agents" in the accompanying Prospectus;
(d) if such Holder is a securities depositary, payment
may be made by such other means in lieu of check, as shall
be agreed upon by Avista Corp., the Trustee and such Holder;
and
(e) upon the written request of a Holder of not less
than $10 million in aggregate principal amount of Notes of
the same tranche delivered to Avista Corp. and the Paying
Agent at least 10 days before any Interest Payment Date,
payment of interest on such Notes to such Holder on such
Interest Payment Date will be made by wire transfer of
immediately available funds to an account maintained within
the continental United States specified by the Holder or, if
the Holder maintains an account with the entity acting as
Paying Agent, by deposit into such account.
The principal of and premium, if any, and interest on the
Notes at Maturity will be made upon presentation at the corporate
trust office of the Paying Agent.
The "Regular Record Date" with respect to any Interest
Payment Date for a Fixed Rate Note will be the December 15 or
June 15 (whether or not a Business Day) immediately preceding
such Interest Payment Date; and the "Record Date" with respect to
any Interest Payment Date for a Floating Rate Note will be the
date (whether or not a Business Day) fifteen calendar days
immediately preceding such Interest Payment Date.
Interest rates offered by Avista Corp. with respect to the
Notes may differ depending upon, among other things, the
aggregate principal amount of Notes purchased in any transaction.
Notes with similar variable terms but different interest rates
may be offered concurrently at any time. Avista Corp. may also
concurrently offer Notes having different variable terms (as are
described herein or in the pricing supplement and Note).
FIXED RATE NOTES
Each Fixed Rate Note will bear interest from its Original
Interest Accrual Date at the rate per annum stated on its face
until the principal amount of the Note is paid or duly provided
for. Unless otherwise set forth in the pricing supplement,
interest on each Fixed Rate Note will be payable semi-annually in
arrears on each Interest Payment Date and at Maturity. Each
payment of interest in respect of an Interest Payment Date will
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include interest accrued through the day before such Interest
Payment Date. Interest on Fixed Rate Notes will be computed on
the basis of a 360-day year of twelve 30-day months.
If, with respect to any Fixed Rate Note, any Interest
Payment Date, any redemption date or the Stated Maturity is not a
Business Day, payment of the amounts due on the Note on such date
may be made on the next Business Day; and, if such payment is
made or duly provided for on such Business Day, no interest will
accrue on such amounts for the period from and after such
Interest Payment Date, redemption date or Stated Maturity, as the
case may be, to such Business Day.
FLOATING RATE NOTES
General
Each Floating Rate Note will bear interest from its Original
Interest Accrual Date to the first Interest Reset Date for the
Note at the Initial Interest Rate set forth on the face of the
Note and in the pricing supplement. Thereafter, the interest
rate on the Note for each Interest Reset Period will be
determined by reference to an interest rate basis (the "Base
Rate"), plus or minus the Spread, if any, and/or multiplied by
the Spread Multiplier, if any. The "Spread" is the number of
basis points (one basis point being equal to one one-hundredth of
a percentage point) that may be specified in the pricing
supplement as being applicable to the Note, and the "Spread
Multiplier" is the percentage that may be specified in the
pricing supplement as being applicable to the Note. The pricing
supplement will designate one of the following Base Rates as
applicable to a Floating Rate Note:
(a) the CD Rate (a "CD Rate Note");
(b) the Constant-Maturity Treasury Rate (a "CMT Rate
Note");
(c) the Commercial Paper Rate (a "Commercial Paper Rate
Note");
(d) the Federal Funds Rate (a "Federal Funds Rate
Note"),
(e) LIBOR (a "LIBOR Note");
(f) the Prime Rate (a "Prime Rate Note");
(g) the Treasury Rate (a "Treasury Rate Note"), or
(h) such other Base Rate as is set forth in the pricing
supplement and in the Note.
As used herein, "H.15(519)" means the publication entitled
"Statistical Release H.15(519)," Selected Interest Rates, or any
successor publication, published by the Board of Governors of the
Federal Reserve System; "H.15 Daily Update" means the daily
update of H.15(519), so published; and "Calculation Date," with
respect to an interest determination date for any Note, means the
earlier of (x) the tenth calendar day after such interest
determination date, or, if such day is not a Business Day, the
next succeeding Business Day and (y) the Business Day immediately
preceding the related Interest Payment Date or the Maturity of
that Note, as the case may be. H.15(519) and H.15 Daily Update
are available through the Internet site maintained by the Board
of Governors of the Federal Reserve System at
http://www.bog.frb.fed.us/releases/H15/.
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Maximum Rate; Minimum Rate
As specified in the pricing supplement, a Floating Rate Note
may also have either or both of the following (in each case
expressed as a rate per annum on a simple interest basis):
(a) a maximum limitation, or ceiling, on the rate at
which interest may accrue during any interest period
("Maximum Interest Rate") and
(b) a minimum limitation, or floor, on the rate at
which interest may accrue during any interest period
("Minimum Interest Rate").
In addition to any Maximum Interest Rate that may be applicable
to any Floating Rate Note, the interest rate on a Floating Rate
Note will in no event be higher than the maximum rate permitted
by New York law, as the same may be modified by U.S. law of
general application. Under New York law currently in effect, a
business corporation may not use usury or the taking of more than
the lawful interest rate as a defense to any proceeding to
recover damages on, or enforce payment of, any obligation
executed or effected by such corporation.
Calculation Agent
Avista Corp. will appoint, and enter into an agreement with,
an agent (the "Calculation Agent") to calculate interest rates on
Floating Rate Notes. Unless otherwise specified in the pricing
supplement, The Chase Manhattan Bank will be the Calculation
Agent. All determinations of interest rates by the Calculation
Agent will, in the absence of manifest error, be conclusive for
all purposes and binding on the Holders of the Floating Rate
Notes.
Interest Rate Reset
The interest rate on each Floating Rate Note will be reset
daily, weekly, monthly, quarterly, semi-annually or annually
(such period being the "Interest Reset Period" for the Note, and
the first day of each Interest Reset Period being an "Interest
Reset Date"), as specified in the pricing supplement; and such
interest rate, as so reset, will be effective as of and for the
related Interest Reset Date and for the balance of the Interest
Reset Period to, but excluding, the next succeeding Interest
Reset Date. Unless otherwise specified in the pricing
supplement, the Interest Reset Dates will be:
. in the case of Floating Rate Notes that reset daily,
each Business Day;
. in the case of Floating Rate Notes (other than Treasury
Rate Notes) that reset weekly, Wednesday of each week;
. in the case of Treasury Rate Notes that reset weekly,
Tuesday of each week (except as provided below under
"Treasury Rate Notes");
. in the case of Floating Rate Notes that reset monthly,
the third Wednesday of each month;
. in the case of Floating Rate Notes that reset
quarterly, the third Wednesday of March, June,
September and December of each year;
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. in the case of Floating Rate Notes that reset semi-
annually, the third Wednesday of the two months of each
year specified in the pricing supplement; and
. in the case of Floating Rate Notes that reset annually,
the third Wednesday of the month of each year specified
in the pricing supplement;
provided, however, that the interest rate in effect for the ten
days immediately before Maturity will be that rate in effect on
the tenth day preceding Maturity. If an Interest Reset Date for
any Floating Rate Note would otherwise be a day that is not a
Business Day, such Interest Reset Date will be postponed to the
next succeeding Business Day, except that, in the case of a LIBOR
Note, if such Business Day is in the next succeeding calendar
month, the Interest Reset Date shall be the immediately preceding
Business Day.
Accrual of Interest
Unless otherwise specified in the pricing supplement,
interest payments on Floating Rate Notes will be the amount of
interest accrued from and including the last date to which
interest has been paid or duly provided for, or, if no interest
has been paid or duly provided for, from and including the
Original Interest Accrual Date, to but excluding the next
succeeding Interest Payment Date; provided, however, that in the
case of a Floating Rate Note that resets daily or weekly,
interest payments will be the amount of interest accrued from and
including the most recent date to which interest has been paid or
duly provided for, or if no interest has been paid, from the
Original Interest Accrual Date, to, but excluding, the Regular
Record Date immediately preceding such Interest Payment Date,
except that, at Maturity, interest payable will include interest
accrued to but excluding the date of Maturity.
Accrued interest for each Floating Rate Note will be
calculated by multiplying the principal amount of the Note by an
accrued interest factor. Such accrued interest factor will be
computed by adding the interest factors calculated for each day
in the Interest Payment Period for which accrued interest is
being calculated. The interest factor (expressed as a decimal
calculated to seven decimal places without rounding) for each
such day is computed by dividing the interest rate applicable to
such day by 360, in the case of CD Rate Notes, Commercial Paper
Rate Notes, Federal Fund Rate Notes, LIBOR Notes and Prime Rate
Notes or by the actual number of days in the year, in the case of
CMT Rate Notes and Treasury Rate Notes. For purposes of making
the foregoing calculation, the interest rate in effect on any
Interest Reset Date will be the applicable rate as reset on such
date. Unless otherwise specified in the pricing supplement, all
percentages resulting from any calculation of the rate of
interest on a Floating Rate Note will be rounded, if necessary,
to the nearest 1/100,000 of 1% (.0000001), with five one-
millionths of a percentage point rounded upward, and all dollar
amounts used in or resulting from such calculation will be
rounded to the nearest one-hundredth of a cent (with .005 of a
cent being rounded upward).
Interest Payment Dates
Unless otherwise indicated in the pricing supplement and
except as provided below, interest will be payable, in the case
of Floating Rate Notes that reset daily, weekly or monthly, on
the third Wednesday of each month or on the third Wednesday of
March, June, September and December of each year, as specified in
the pricing supplement; in the case of Floating Rate Notes that
reset quarterly, on the third Wednesday of March, June, September
and December of each year; in the case of Floating Rate Notes
that reset semi-annually, on the third Wednesday of the two
months of each year specified in the pricing supplement; and in
the case of Floating Rate Notes that reset annually, on the third
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Wednesday of the month of each year specified in the pricing
supplement (each such day being an "Interest Payment Date").
If, with respect to any Floating Rate Note, any Interest
Payment Date other than a redemption date or the Stated Maturity
is not a Business Day, such Interest Payment Date will be
postponed to the next Business Day, except that, if such Note is
a LIBOR Note and such next Business Day is in the next calendar
month, such Interest Payment Date will be the immediately
preceding Business Day. If a redemption date or the Stated
Maturity is not a Business Day, payment of the amounts due on the
Note on such date in respect of principal, premium, if any,
and/or interest, if any, may be made on the next Business Day;
and if payment is made or duly provided for on such Business Day,
no interest shall accrue on such amounts for the period from and
after such redemption date or Stated Maturity, as the case may
be, to such Business Day.
CD Rate Notes
Each CD Rate Note will bear interest for each Interest Reset
Period at an interest rate calculated with reference to the CD
Rate and the Spread or Spread Multiplier, if any, and subject to
the Maximum Interest Rate, if any, and the Minimum Interest Rate,
if any, specified in the CD Rate Note and the pricing supplement.
Unless otherwise specified in the pricing supplement, the
"CD Rate" for each Interest Reset Period in respect of each CD
Rate Note will be determined by the Calculation Agent on the
Calculation Date and will be
(a) the rate (expressed as a percentage per annum) as
of the second Business Day before the related Interest Reset
Date (a "CD Rate Determination Date") for negotiable
certificates of deposit having the Index Maturity specified
in the CD Rate Note and the pricing supplement as published
in H.15(519) under the heading "CDs (Secondary Market)", or
(b) that such rate is not so published by 9:00 A.M.,
New York City time, on the Calculation Date, the rate as of
the CD Rate Determination Date for negotiable certificates
of deposit of such Index Maturity as published in H.15 Daily
Update under the heading "CDs (Secondary Market)", or
(c) if neither of such rates is published by 3:00 P.M.,
New York City time, on the Calculation Date, the arithmetic
mean of the secondary market offered rates as of 10:00 A.M.,
New York City time, on the CD Rate Determination Date for
certificates of deposit in an amount that is representative
of a single transaction at that time with a remaining
maturity closest to such Index Maturity of three leading
nonbank dealers in negotiable U.S. dollar certificates of
deposit in The City of New York selected by the Calculation
Agent, in its discretion (after consultation with Avista
Corp.); provided, however, that if the dealers selected as
aforesaid by the Calculation Agent are not quoting as
described above, the CD Rate for such Interest Reset Period
will be the same as the CD Rate for the immediately
preceding Interest Reset Period (or, if there was no
previous Interest Reset Period in respect of the CD Rate
Note, the rate of interest on the Note for such Interest
Reset Period shall be the Initial Interest Rate).
CMT Rate Notes
Each CMT Rate Note will bear interest for each Interest
Reset Period at a rate calculated with reference to the CMT Rate
and the Spread or Spread Multiplier, if any, and subject to the
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Maximum Interest Rate, if any, and the Minimum Interest Rate, if
any, specified in the CMT Rate Note and the pricing supplement.
Unless otherwise specified in the pricing supplement, the
"CMT Rate" for each Interest Reset Period in respect of each CMT
Rate Note will be determined by the Calculation Agent on the
Calculation Date and will be the rate (expressed as a percentage
per annum) displayed on the Designated CMT Telerate Page (as
defined below) under the caption "...Treasury Constant
Maturities... Federal Reserve Board Release H.15...Mondays
Approximately 3:45 p.m." under the column for the Designated CMT
Maturity Index (as defined below) for
(a)(1) if the Designated CMT Telerate Page is 7051, the
second Business Day before the related Interest Reset Date
(a "CMT Rate Determination Date") or (2) if the Designated
CMT Telerate Page is 7052, the week or the month, as
applicable, ended immediately preceding the week in which
such CMT Rate Determination Date occurs, or
(b) if that rate is no longer displayed on the relevant
page, or if not displayed by 3:00 P.M., New York City time
on the Calculation Date, the Treasury Constant Maturity rate
for the Designated CMT Maturity Index as published in
H.15(519), or
(c) if that rate is no longer published or, if not
published by 3:00 P.M., New York City time, on the
Calculation Date, the Treasury Constant Maturity rate for
the Designated CMT Maturity Index (or other United States
Treasury rate for the Designated CMT Maturity Index) for the
CMT Rate Determination Date as may then be published by
either the Board of Governors of the Federal Reserve System
or the United States Department of the Treasury that the
Calculation Agent determines to be comparable to the rate
formerly displayed on the Designated CMT Telerate Page and
published in H.15(519), or
(d) if that information is not provided by 3:00 P.M.,
New York City time, on the Calculation Date, then the CMT
Rate for the CMT Rate Determination Date shall be a yield to
maturity, based on the arithmetic mean of the secondary
market closing offer side prices as of approximately 3:30
P.M., New York City time, on the CMT Rate Determination Date
reported, according to their written records, by three
leading primary United States government securities dealers
(each, a "Reference Dealer") in The City of New York
selected by the Calculation Agent (from five such Reference
Dealers selected by the Calculation Agent, in its discretion
(after consultation with Avista Corp.), and eliminating the
highest quotation (or, in the event of equality, one of the
highest) and the lowest quotation (or, in the event of
equality, one of the lowest)), for the most recently issued
direct noncallable fixed rate obligations of the United
States ("Treasury notes") with an original maturity of
approximately the Designated CMT Maturity Index and a
remaining term to maturity of not less than such Designated
CMT Maturity Index minus one year, or
(e) if the Calculation Agent cannot obtain three such
Treasury notes quotations, a yield to maturity based on the
arithmetic mean of the secondary market offer side prices as
of approximately 3:30 P.M., New York City time, on the CMT
Rate Determination Date of three Reference Dealers in The
City of New York (from five such Reference Dealers selected
by the Calculation Agent, in its discretion (after
consultation with Avista Corp.), and eliminating the highest
quotation (or, in the event of equality, one of the highest)
and the lowest quotation (or, in the event of equality, one
of the lowest)), for Treasury notes with an original
maturity of the number of years that is the next highest to
the Designated CMT Maturity Index and a remaining term to
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maturity closest to the Designated CMT Maturity Index and in
an amount of at least $100 million, or
(f) if three or four (and not five) of such Reference
dealers are quoting as described in clause (e) above, the
arithmetic mean of the offer prices obtained without the
elimination of either the highest or the lowest of such
quotes; provided, however, that if fewer than three
Reference Dealers selected by the Calculation Agent are
quoting as described in this clause (f), the CMT Rate for
such Interest Reset Period will be the same as the CMT Rate
for the immediately preceding Interest Reset Period (or, if
there was no such previous Interest Reset Period in respect
of such CMT Rate Note, the rate of interest on such Note for
such Interest Reset Period shall be the Initial Interest
Rate).
For purposes of clause (e) above, if two Treasury notes have
remaining terms to maturity equally close to the Designated CMT
Maturity Index, the quotes for the Treasury note with the shorter
remaining term to maturity shall be used.
"Designated CMT Maturity Index", with respect to any CMT
Rate Note, will be the original period to maturity of the U.S.
Treasury securities (either 1, 2, 3, 5, 7, 10, 20 or 30 years)
specified in such CMT Rate Note and the pricing supplement with
respect to which the CMT Rate will be calculated. If no such
maturity is so specified, the Designated CMT Maturity Index will
be 2 years.
"Designated CMT Telerate Page", with respect to any CMT Rate
Note, means the display on Bridge Telerate, Inc. on the page
specified in the CMT Rate Note and the pricing supplement, for
the purpose of displaying Treasury Constant Maturities as
reported in H.15(519) (or any other page that may replace such
page on that service, or any successor service, for the purpose
of displaying Treasury Constant Maturities as reported in
H.15(519)). If no such page is so specified, the page shall be
7052, for the most recent week.
Commercial Paper Rate Notes
Each Commercial Paper Rate Note will bear interest for each
Interest Reset Period at a rate calculated with reference to the
Commercial Paper Rate and the Spread or Spread Multiplier, if
any, and subject to the Maximum Interest Rate, if any, and the
Minimum Interest Rate, if any, specified in the Commercial Paper
Rate Note and the pricing supplement.
Unless otherwise specified in the pricing supplement, the
"Commercial Paper Rate" for each Interest Reset Period in respect
of each Commercial Paper Rate Note will be determined by the
Calculation Agent on the Calculation Date and will be
(a) the Money Market Yield (as hereinafter defined) as
of the second Business Day before the related Interest Reset
Date (a "Commercial Paper Rate Determination Date") of the
rate (expressed as a percentage per annum) for commercial
paper having the Index Maturity specified in such Commercial
Paper Rate Note and the pricing supplement, as such rate
shall be published in H.15(519) (as hereinafter defined)
under the heading "Commercial Paper Nonfinancial", or
(b) if that rate is not so published before 9:00 A.M.,
New York City time, on the Calculation Date, the Money
Market Yield as of the Commercial Paper Rate Determination
Date of the rate for commercial paper of the Index Maturity
specified in the Commercial Paper Rate Note and in the
pricing supplement, as published in H.15 Daily Update under
the heading "Commercial Paper-Nonfinancial", or
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(c) if none of those rates is published by 3:00 P.M.,
New York City time, on the Calculation Date, the Money
Market Yield of the arithmetic mean of the offered rates, as
of 11:00 A.M., New York City time, on such Commercial Paper
Rate Determination Date, of three leading dealers in
commercial paper in The City of New York selected by the
Calculation Agent, in its discretion (after consultation
with Avista Corp.), for commercial paper of the Index
Maturity specified in the Commercial Paper Rate Note and in
the pricing supplement placed for a an industrial issuer
whose bond rating is "AA," or the equivalent, from a
nationally recognized statistical rating organization;
provided, however, that if the dealers selected are not
quoting offered rates as described above, the Commercial
Paper Rate for the Interest Reset Period will be deemed to
be the same as the Commercial Paper Rate for the preceding
Interest Reset Period (or, if there was no such previous
Interest Reset Period in respect of such Commercial Paper
Rate Note, the rate of interest on the Note for such
Interest Reset Period shall be the Initial Interest Rate).
"Money Market Yield" is a yield calculated in accordance
with the following formula and expressed as a percentage:
Money Market Yield = D x 360 x 100
--------------
360 - (D x M)
where "D" refers to the applicable per annum rate for commercial
paper quoted on a bank discount basis and expressed as a decimal,
and "M" refers to the actual number of days in the Index Maturity
specified in the Commercial Paper Rate Note and the pricing
supplement.
Federal Funds Rate Notes
Each Federal Funds Rate Note will bear interest for each
Interest Reset Period at a rate calculated with reference to the
Federal Funds Rate and the Spread or Spread Multiplier, if any,
and subject to the Maximum Interest Rate, if any, and the Minimum
Interest Rate, if any, specified in the Federal Funds Rate Note
and the pricing supplement.
Unless otherwise specified in the pricing supplement, the
"Federal Funds Rate" for each Interest Reset Period in respect of
each Federal Funds Rate Note will be determined by the
Calculation Agent on the Calculation Date and will be
(a) the rate (expressed as a percentage per annum) as
of the second Business Day before the related Interest Reset
Date (a "Federal Funds Rate Determination Date") for Federal
funds as published in H.15(519) under the heading "Federal
Funds (Effective)", or
(b) if that rate is not so published by 9:00 A.M., New
York City time, on the Calculation Date, the rate on the
Federal Funds Rate Determination Date as published in H.15
Daily Update under the heading "Federal Funds (Effective)",
or
(c) if neither of those rates is published by 3:00
P.M., New York City time, on the Calculation Date, the
arithmetic mean of the rates for the last transaction in
overnight Federal funds as of 9:00 A.M., New York City time,
on such Federal Funds Rate Determination Date arranged by
three leading brokers in Federal Funds transactions in The
City of New York selected by the Calculation Agent, in its
discretion (after consultation with Avista Corp.); provided,
however, that if the brokers selected by the Calculation
Agent are not quoting as described above, the Federal Funds
Rate for the Interest Reset Period will be the same as the
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Federal Funds Rate for the immediately preceding Interest
Reset Period (or, if there was no such previous Interest
Reset Period in respect of such Federal Funds Rate Note, the
rate of interest on the Note for such Interest Reset Period
will be the Initial Interest Rate).
LIBOR Notes
Each LIBOR Note will bear interest for each Interest Reset
Period at a rate calculated with reference to LIBOR and the
Spread or Spread Multiplier, if any, and subject to the Maximum
Interest Rate, if any, and the Minimum Interest Rate, if any,
specified in the LIBOR Note and the pricing supplement.
Unless otherwise specified in the pricing supplement,
"LIBOR" for each Interest Reset Period will be determined by the
Calculation Agent and will be:
(a)(1) if "LIBOR Reuters" is specified in the Note
and the pricing supplement as the Reporting Service, the
arithmetic mean of the offered rates (unless the specified
Designated LIBOR Page (as hereinafter defined) by its terms
provides only for a single rate, in which case the single
rate will be used) for deposits in the Index Currency
specified in the LIBOR Note and the pricing supplement in
the London interbank market, for the period of the Index
Maturity so specified commencing on the related Interest
Reset Date for the Interest Reset Period, which appear or
appears on the Designated LIBOR Page at approximately 11:00
A.M., London time, on the second London Banking Day (as
defined above) before such Interest Reset Date (a "LIBOR
Determination Date"), or (2) if "LIBOR Telerate" is
specified in the Note and the pricing supplement as the
Reporting Service, the rate for deposits in the Index
Currency, for the period of such Index Maturity commencing
on the Interest Reset Date (or, if the pound sterling is the
Index Currency, commencing on the LIBOR Determination Date),
that appears on the Designated LIBOR Page at approximately
11:00 A.M., London time, on the LIBOR Determination Date;
(b) with respect to a LIBOR Determination Date on
which fewer than two offered rates appear (if "LIBOR
Reuters" is specified in the Note as the Reporting Service
and calculation of LIBOR is based on the arithmetic mean of
the offered rates) or on which no rate appears (if the
Reporting Service specified in the Note and the pricing
supplement is either (1) "LIBOR Reuters" and the Designated
LIBOR Page by its terms provides only for a single rate or
(2) "LIBOR Telerate"), the Calculation Agent will request
the principal London office of each of four major reference
banks in the London interbank market selected by the
Calculation Agent, in its discretion (after consultation
with Avista Corp.), to provide the Calculation Agent with
its offered quotations for deposits in the Index Currency,
for the period of the Index Maturity commencing on the
Interest Reset Date (or, if the pound sterling is the Index
Currency, commencing on the LIBOR Determination Date) for
such Interest Reset Period and in a principal amount equal
to an amount of not less than U.S.$1 million (or the
equivalent amount in the Index Currency) that is
representative of a single transaction in the Index Currency
in the market at such time, to prime banks in the London
interbank market at approximately 11:00 A.M., London time,
on the LIBOR Determination Date; if at least two such
quotations are provided, LIBOR, in respect of the LIBOR
Determination Date, shall be the arithmetic mean of such
quotations;
(c) if fewer than two quotations are so provided,
LIBOR in respect of the LIBOR Determination Date will be the
arithmetic mean of the rates quoted by three major banks in
the applicable Principal Financial Center for the country of
the Index Currency on the LIBOR Determination Date selected
by the Calculation Agent, in its discretion (after
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consultation with Avista Corp.), at approximately 11:00 A.M.
on the LIBOR Determination Date, for loans in the Index
Currency to leading European banks, for the period of the
Index Maturity commencing on the Interest Reset Date (or, if
the pound sterling is the Index Currency, commencing on the
LIBOR Determination Date) for the Interest Reset Period and
in a principal amount of not less than U.S.$1 million (or
the equivalent amount in the Index Currency) that is
representative of a single transaction in the Index Currency
in the market at such time; provided, however, that if fewer
than three banks selected by the Calculation Agent are
quoting rates described above, LIBOR for such Interest Reset
Period shall be the same as LIBOR for the immediately
preceding Interest Reset Period (or, if there was no such
previous Interest Reset Period, the rate of interest on the
Note for the Interest Reset Period shall be the Initial
Interest Rate).
"Designated LIBOR Page" means (x) if "LIBOR Reuters" is
specified in a LIBOR Note and the pricing supplement as the
Reporting Service, the display on the Reuters monitor money rates
service (or any successor service) for the purpose of displaying
the London interbank rates of major banks for the Index Currency,
or (y) if "LIBOR Telerate" is so specified as the Reporting
Service, the display on Bridge Telerate, Inc., or any successor
service, for the purpose of displaying the London interbank rates
of major banks for the Index Currency.
"Index Currency", with respect to any LIBOR Note, means the
currency (including any composite currency) so specified in the
LIBOR Note and the pricing supplement. If no currency is so
specified, "Index Currency" means U.S. dollars.
"Principal Financial Center" will be, for purposes of clause
(c) above, the principal financial center of the country of the
specified Index Currency, which generally will be the capital
city of such country, except that with respect to U.S. Dollars,
Deutsche Marks and Euros, the Principal Financial Center will be
the City of New York, Frankfurt or Brussels, as the case may be.
Prime Rate Notes
Each Prime Rate Note will bear interest for each Interest
Reset Period at a rate calculated with reference to the Prime
Rate and the Spread or Spread Multiplier, if any, and subject to
the Maximum Interest Rate, if any, and the Minimum Interest Rate,
if any, specified in the Prime Rate Note and the pricing
supplement.
Unless otherwise specified in the pricing supplement, the
"Prime Rate" for each Interest Reset Period in respect of each
Prime Rate Note will be determined by the Calculation Agent on
the Calculation Date and will be
(a) the rate (expressed as a percentage per annum) as
of the second Business Day before the related Interest Reset
Date (a "Prime Rate Determination Date") as published in
H.15(519) opposite the heading "Bank Prime Loan", or
(b) if that rate is not so published prior to 9:00
A.M., New York City time, on the Calculation Date, the rate
as of such Prime Rate Determination Date as published in
H.15 Daily Update under the heading "Bank Prime Loan", or
(c) if that rate is not so published before 3:00 P.M.,
New York City time, on the Calculation Date, the arithmetic
mean of the rates publicly announced by each bank named on
the Reuters Screen USPRIME1 Page (as defined below) as the
bank's prime rate or base lending rate as in effect on such
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Prime Rate Determination Date as quoted on the Reuters
Screen USPRIME1 Page on such Prime Rate Determination Date
or
(d) if fewer than four such rates appear on the Reuters
Screen USPRIME1 Page for the Prime Rate Determination Date,
the arithmetic mean of the prime rates quoted on the basis
of the actual number of days in the year divided by 360 as
of the close of business on the Prime Rate Determination
Date by at least two of three major money center banks in
The City of New York selected by the Calculation Agent, in
its discretion (after consultation with Avista Corp.), from
which quotations are requested; provided, however, that if
fewer than two prime rates are quoted by major money center
banks as described above, there shall be included in the
group of rates whose arithmetic mean is to be so determined
the prime rates or base lending rates, as of such Prime Rate
Determination Date, of that number of substitute banks or
trust companies organized and doing business under the laws
of the United States, or any State thereof, in each case
having total equity capital of at least U.S. $500 million
and being subject to supervision or examination by Federal
or State authority, selected by the Calculation Agent, in
its discretion (after consultation with Avista Corp.),
which, when added to the number of rates provided by major
money center banks as aforesaid, shall equal two.
If in any calendar month the Prime Rate is not published in
H.15(519) or H.15 Daily Update and the banks or trust companies
selected are not quoting as described in the preceding paragraph,
the "Prime Rate" for the Interest Reset Period will be Prime Rate
for the immediately preceding Interest Reset Period (or, if there
was no such previous Interest Reset Period in respect of such
Prime Rate Note, the rate of interest on the Prime Rate Note for
the Interest Reset Period shall be the Initial Interest Rate).
"Reuters Screen USPRIME1 Page" means the display designated
as Page "USPRIME1" on the Reuters monitor money rates service (or
such other page as may replace the USPRIME1 Page on that service
for the purpose of displaying prime rates or base lending rates
of major United States banks).
Treasury Rate Notes
Each Treasury Rate Note will bear interest for each Interest
Reset Period at a rate calculated with reference to the Treasury
Rate and the Spread or Spread Multiplier, if any, and subject to
the maximum Interest Rate, if any, and the minimum Interest Rate,
if any, specified in the Treasury Rate Note and the pricing
supplement.
Unless otherwise specified in the pricing supplement, the
"Treasury Rate" for each Interest Reset Period in respect of each
Treasury Rate Note will be determined by the Calculation Agent on
the Calculation Date and will be
(a) the rate (expressed as a percentage per annum) for
the auction held on the Treasury Rate Determination Date (as
hereinafter defined) for the Interest Reset Period of direct
obligations of the United States ("Treasury bills") having
the Index Maturity specified in the Treasury Rate Note and
the pricing supplement, as such rate shall appear under the
heading "Investment Rate" on the display on Bridge Telerate,
Inc., or any successor service, on page 56 or page 57, or
any other page that may replace either thereof on that
service, or
(b) if that rate is not published by 3:00 P.M., New
York City time, on the Calculation Date, the Bond Equivalent
Yield of the rate on Treasury Bills having the Index
Maturity specified in the Treasury Rate Note and in the
pricing supplement as of such Treasury Rate Determination
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Date, as such rate shall be published in H.15 Daily Update
under the heading "U.S. Government Securities/Treasury
Bills/Auction High", or
(c) if that rate is not so published by 3:00 P.M., New
York City time, on the Calculation Date, the Bond Equivalent
Yield of the auction rate of Treasury Bills having the Index
Maturity specified above, as otherwise announced by the
United States Department of the Treasury; or
(d) if that rate is not so announced by the United
States Department of the Treasury, or if that auction is not
held, the Bond Equivalent Yield of the rate as of such
Treasury Rate Determination Date of Treasury Bills having
the Index Maturity specified above, as such rate shall be
published in H.15 (519) under the heading "U.S. Government
Securities/Treasury Bills/Secondary Market"; or
(e) if that rate is not so published by 3:00 P.M., New
York City time, on the Calculation Date, the rate as of such
Treasury Rate Determination Date of Treasury Bills having
the Index Maturity specified above, as that rate shall be
published in H.15 Daily Update under the heading "U.S.
Government Securities/Treasury Bills/Secondary Market"; or
(f) if that rate is not so published by 3:00 P.M., New
York City time, on the Calculation Date, the Bond Equivalent
Yield of the arithmetic mean of the secondary market bid
rates, as of approximately 3:30 P.M., New York City time, on
the Treasury Rate Determination Date, of three leading
primary United States government securities dealers selected
by the Calculation Agent, in its discretion (after
consultations with Avista Corp.), for the issue of Treasury
Bills with a remaining maturity closest to the Index
Maturity specified in the Treasury Rate Note and in the
pricing supplement; provided, however, that if the dealers
selected as aforesaid by the Calculation Agent are not
quoting bid rates as described above, then the "Treasury
Rate" for such Interest Reset Period will be deemed to be
the same as the Treasury Rate for the immediately preceding
Interest Reset Period (or, if there was no such previous
Interest Reset Period in respect of such Treasury Rate Note,
the rate of interest on the Note for the Interest Reset
Period shall be the Initial Interest Rate).
The "Treasury Rate Determination Date" for each Interest
Reset Period is the day of the week in which the Interest Reset
Date for the Interest Reset Period falls on which Treasury bills
would normally be auctioned. (As of the date of this Prospectus
Supplement, Treasury bills are normally sold at auction on Monday
of each week, unless that day is a legal holiday, in which case
the auction is normally held on the following Tuesday, except
that such auction may be held on the preceding Friday.) If, as
the result of a legal holiday, an auction is held on the
preceding Friday, such Friday is the Treasury Rate Determination
Date pertaining to the Interest Reset Period commencing in the
next week. If an auction date falls on any day that would
otherwise be an Interest Reset Date for a Treasury Rate Note,
then the Interest Reset Date is instead the Business Day
immediately following such auction date.
"Bond Equivalent Yield" shall be calculated in accordance
with the following formula and expressed as a percentage:
Bond Equivalent Yield = D x N
-----------------
360 - (D x M)
where "D" refers to the applicable rate per annum for Treasury
Bills quoted on a bank discount basis, "N" refers to 365 or 366,
as the case may be, and "M" refers to the actual number of days
in the interest period for which the interest rate is being
calculated.
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REDEMPTION
The pricing supplement relating to each Note will indicate
either that such Note cannot be redeemed at the election of
Avista Corp. before Stated Maturity or that the Note will be
redeemable, at the election of Avista Corp., in whole or in part,
on any date on or after the date designated as the "Initial
Redemption Date" in the pricing supplement, at the applicable
redemption price plus accrued interest to the date fixed for
redemption. If the Note is so redeemable, the redemption price
will initially be a percentage of the principal amount of the
Note to be redeemed equal to the "Initial Redemption Price"
specified in the pricing supplement for the twelve-month period
commencing on the Initial Redemption Date and will decline for
the twelve-month period commencing on each anniversary of the
Initial Redemption Date by a percentage of principal amount equal
to the "Reduction Percentage" specified in the pricing supplement
until the redemption price is 100% of the principal amount of the
Note. The pricing supplement may specify a "Redemption
Limitation Date" before which Avista Corp. may not redeem a Note
as contemplated above as a part of, or in anticipation of, any
refunding operation by the application, directly or indirectly,
of moneys borrowed having an effective interest cost to Avista
Corp. (calculated in accordance with generally accepted financial
practice) less than the effective interest cost to Avista Corp.
(similarly calculated) of such Note.
The pricing supplement relating to each Note will also
specify any sinking fund or other mandatory redemption provisions
applicable to the Note, and any provisions for the redemption or
purchase by Avista Corp. of the Note at the option of the Holder.
Reference is made to the information contained under
"DESCRIPTION OF THE DEBT SECURITIES -- Redemption" in the
accompanying Prospectus.
LIMITATION ON SECURED DEBT
The Indenture will provide that, so long as any of the Notes
remain Outstanding, Avista Corp. will not create, issue, incur or
assume any Secured Debt (as hereinafter defined) other than
Permitted Secured Debt (as hereinafter defined) without the
consent of the Holders of a majority in principal amount of the
Outstanding Indenture Securities of all series (including the
Notes) and tranches with respect to which this covenant is made
(all such Indenture Securities being hereinafter called
"Benefitted Securities"), considered as one class; provided,
however, that this covenant will not prohibit the creation,
issuance, incurrence or assumption of any Secured Debt if either:
(a) Avista Corp. makes effective provision whereby all
Benefitted Securities then Outstanding will be secured
equally and ratably with such Secured Debt; or
(b) Avista Corp. delivers to the Trustee bonds, notes
or other evidences of indebtedness secured by the Lien (as
hereinafter defined) which secures such Secured Debt in an
aggregate principal amount equal to the aggregate principal
amount of the Benefitted Securities then Outstanding and
meeting certain other requirements set forth in the
Indenture.
"Debt", with respect to any Person, means:
(a) indebtedness of the Person for borrowed money
evidenced by a bond, debenture, note or other written
instrument or agreement by which the Person is obligated to
repay such borrowed money; and
(b) any guaranty by the Person of any such indebtedness
of another Person.
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"Debt" does not include, among other things:
(x) indebtedness of the Person under any installment
sale or conditional sale agreement or any other agreement
relating to indebtedness for the deferred purchase price of
property or services;
(y) obligations of the Person under any lease agreement
(including any lease intended as security), whether or not
such obligations are required to be capitalized on the
balance sheet of the Person under generally accepted
accounting principles, or
(z) liabilities secured by any Lien on any property
owned by the Person if and to the extent the Person has not
assumed or otherwise become liable for the payment thereof.
"Excepted Property" includes, among other things, cash,
deposit accounts, securities; contracts, leases and other
agreements of all kinds; contract rights, bills, notes and other
instruments; revenues, accounts and accounts receivable and
unbilled revenues, claims, demands and judgments; governmental
and other licenses, permits, franchises, consents and allowances
(except to the extent that any of the same constitute rights or
interests relating to the occupancy or use of real property);
certain intellectual property rights and other general
intangibles; vehicles, movable equipment and aircraft; all goods,
stock in trade, wares, merchandise and inventory held for sale or
lease in the ordinary course of business; materials, supplies,
inventory and other personal property consumable in the operation
of any property of Avista Corp.; fuel; portable tools and
equipment; furniture and furnishings; computers and data
processing, telecommunications and other facilities used
primarily for administrative or clerical purposes or otherwise
not used in connection with the operation or maintenance of
electric, gas or water utility facilities; coal, ore, gas, oil
and other minerals and timber; electric energy, gas (natural or
artificial), steam, water and other products generated, produced,
manufactured, purchased or otherwise acquired by Avista Corp.;
real property, gas wells, pipe lines, and other facilities used
primarily for the production or gathering of natural gas; all
property which is the subject of a lease agreement designating
Avista Corp. as lessee and Avista Corp.'s interest in such
property and such lease agreement, whether or not such lease
agreement is intended as security.
"Lien" means any mortgage, deed of trust, pledge, security
interest, conditional sale or other title retention agreement or
any lease in the nature thereof.
"Permitted Secured Debt" means, as of any particular time:
(a) Secured Debt which matures less than one year from
the date of the issuance or incurrence thereof and is not
extendible at the option of the issuer; and any refundings,
refinancings and/or replacements of any such Secured Debt by
or with similar Secured Debt;
(b) Secured Debt secured by Purchase Money Liens or any
other Liens existing or placed upon property at the time of,
or within one hundred eighty (180) days after, the
acquisition thereof by Avista Corp., and any refundings,
refinancings and/or replacements of any such Secured Debt;
provided, however, that no such Purchase Money Lien or other
Lien shall extend to or cover any property of Avista Corp.
other than (1) the property so acquired and improvements,
extensions and additions to such property and renewals,
replacements and substitutions of or for the property or any
part or parts of the property and (2) with respect to
Purchase Money Liens, other property subsequently acquired
by Avista Corp.;
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(c) Secured Debt relating to governmental obligations
the interest on which is not included in gross income for
purposes of federal income taxation pursuant to Section 103
of the Internal Revenue Code of 1986, as amended (or any
successor provision of law), for the purpose of financing or
refinancing, in whole or in part, costs of acquisition or
construction of property to be used by Avista Corp., to the
extent that the Lien which secures the Secured Debt is
required either by applicable law or by the issuer of such
governmental obligations or is otherwise necessary in order
to establish or maintain such exclusion from gross income;
and any refundings, refinancings and/or replacements of any
Secured Debt by or with similar Secured Debt;
(d) Secured Debt (i) which is related to the
construction or acquisition of property not previously owned
by Avista Corp. or (ii) which is related to the financing of
a project involving the development or expansion of property
of Avista Corp. and (iii) in either case, the obligee in
respect of which has no recourse to Avista Corp. or any
property of Avista Corp. other than the property constructed
or acquired with the proceeds of such transaction or the
project financed with the proceeds of such transaction (or
the proceeds of such property or such project); and any
refundings, refinancings and/or replacements of any such
Secured Debt by or with Secured Debt described in clause
(iii) above;
(e) Secured Debt permitted as described in the first
paragraph under this heading; and
(f) in addition to the Permitted Secured Debt described
in clauses (a) through (e) above, Secured Debt not otherwise
so permitted in an aggregate principal amount not exceeding
10% of the total assets of Avista Corp. and its consolidated
subsidiaries, as shown on the latest balance sheet of Avista
Corp. and its consolidated subsidiaries, audited by
independent certified public accountants, dated before the
date of the creation, issuance, incurrence or assumption of
such Secured Debt.
"Purchase Money Lien" means, with respect to any property
being acquired by Avista Corp., a Lien on such property which
(a) is taken or retained by the transferor of the
property to secure all or part of the purchase price
thereof;
(b) is granted to one or more Persons other than the
transferor which, by making advances or incurring an
obligation, give value to enable the grantor of such Lien to
acquire rights in or the use of the property;
(c) is held by a trustee or agent for the benefit of
one or more Persons described in clause (a) or (b) above,
provided that such Lien may be held, in addition, for the
benefit of one or more other Persons which has given, or may
thereafter give, value to or for the benefit or account of
the grantor of such Lien for one or more other purposes; or
(d) otherwise constitutes a purchase money mortgage or
a purchase money security interest under applicable law;
and, without limiting the generality of the foregoing, for
purposes of the Indenture, the term Purchase Money Lien will
be deemed to include any Lien described above whether or not
the Lien
(x) permits the issuance or other incurrence of
additional indebtedness secured by such Lien on the
property,
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(y) permits the subjection to such Lien of additional
property and the issuance or other incurrence of additional
indebtedness on the basis thereof and/or
(z) has been granted before the acquisition of the
property, attaches to or otherwise covers property other
than the property being acquired and/or secures obligations
issued before and/or after the issuance of the obligations
delivered in connection with such acquisition.
"Secured Debt", with respect to any Person, means Debt
created, issued, incurred or assumed by such Person which is
secured by a Lien upon any property (other than Excepted
Property) of Avista Corp., real, personal or mixed, of whatever
kind or nature and wherever located, whether owned at the date of
the initial authentication and delivery of the Notes or
thereafter acquired.
BOOK-ENTRY ONLY ISSUANCE - THE DEPOSITORY TRUST COMPANY
DTC will act as securities depositary for the Notes. The
Notes will be issued only as fully-registered securities
registered in the name of Cede & Co. (DTC's nominee). One or more
fully-registered global certificates for the Notes, representing
the aggregate principal amount of Notes, will be issued and will
be deposited with DTC.
The following is based upon information furnished by DTC:
DTC is a limited-purpose trust company organized
under the New York Banking Law, a "banking
organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New
York Uniform Commercial Code and a "clearing agency"
registered pursuant to the provisions of Section 17A of
the Securities Exchange Act of 1934, as amended. DTC
holds securities that its participants ("Participants")
deposit with DTC. DTC also facilitates the settlement
among Participants of securities transactions, such as
transfers and pledges, in deposited securities through
electronic computerized book-entry changes in
Participants' accounts, thereby eliminating the need
for physical movement of securities certificates.
"Direct Participants" in DTC include securities brokers
and dealers, banks, trust companies, clearing
corporations and certain other organizations. DTC is
owned by a number of its Direct Participants and by the
NYSE, the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access
to the DTC system is also available to others, such as
securities brokers and dealers, banks and trust
companies that clear transactions through or maintain a
custodial relationship with a Direct Participant either
directly or indirectly ("Indirect Participants"). The
rules applicable to DTC and its Participants are on
file with the Securities and Exchange Commission.
Purchases of Notes within the DTC system must be
made by or through Direct Participants, which will
receive a credit for the Notes on DTC's records. The
ownership interest of each actual purchaser of each
Note ("Beneficial Owner") is in turn to be recorded on
the Direct and Indirect Participants' records.
Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are
expected to receive written confirmation providing
details of the transaction, as well as periodic
statements of their holdings, from the Direct or
Indirect Participants through which the Beneficial
Owners entered into the transaction. Transfers of
ownership interests in the Notes are to be accomplished
by entries made on the books of Participants acting on
behalf of Beneficial Owners. Beneficial Owners will not
receive certificates representing their ownership
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interests in the Notes, except in the event that use of
the book-entry system for the Notes is discontinued, as
discussed below.
To facilitate subsequent transfers, all Notes
deposited by Participants with DTC are registered in
the name of DTC's partnership nominee, Cede & Co. The
deposit of Notes with DTC and their registration in the
name of Cede & Co. effect no change in beneficial
ownership. DTC has no knowledge of the actual
Beneficial Owners of the Notes; DTC's records reflect
only the identity of the Direct Participants to whose
accounts such Notes are credited, which may or may not
be the Beneficial Owners. The Participants will remain
responsible for keeping account of their holdings on
behalf of their customers.
The delivery of notices and other communications
by DTC to Direct Participants, by Direct Participants
to Indirect Participants, and by Direct Participants
and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any
statutory or regulatory requirements as may be in
effect from time to time.
Redemption notices will be sent to Cede & Co., as
registered Holder of the Notes. If less than all of
the Notes are being redeemed, DTC's practice is to
determine by lot the amount of the interest of each
Direct Participant to be redeemed.
Neither DTC nor Cede & Co. will itself consent or
vote with respect to Notes. Under its usual procedures,
DTC mails an Omnibus Proxy to Avista Corp. as soon as
possible after the record date. The Omnibus Proxy
assigns Cede & Co.'s consenting or voting rights to
those Direct Participants to whose accounts the Notes
are credited on the record date (identified in a
listing attached to the Omnibus Proxy).
Payments on the Notes will be made to DTC. DTC's
practice is to credit Direct Participants' accounts on
the relevant payment date in accordance with their
respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment
on such payment date. Payments by Participants to
Beneficial Owners will be governed by standing
instructions and customary practices, as is the case
with securities held for the accounts of customers in
bearer form or registered in "street name", and will be
the responsibility of such Participants and not of DTC
or Avista Corp., subject to any statutory or regulatory
requirements as may be in effect from time to time.
Payment to DTC will be the responsibility of Avista
Corp., disbursement of payments to Direct Participants
will be the responsibility of DTC, and further
disbursement of payments to the Beneficial Owners will
be the responsibility of Direct Participants and
Indirect Participants.
Management of DTC is aware that some computer
applications, systems and the like for processing data
("Systems") that are dependent upon calendar dates,
including dates before, on, and after January 1, 2000,
may encounter "Year 2000 problems." DTC has informed
Direct Participants and Indirect Participants and other
members of the financial community (the "Industry")
that it has developed and is implementing a program so
that its Systems, as the same relate to the timely
payment of distributions (including principal and
interest payments) to securityholders, book-entry
deliveries, and settlement of trades within DTC
("Depositary Services"), continue to function
appropriately. This program includes a technical
assessment and a remediation plan, each of which is
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complete. Additionally, DTC's plan includes a testing
phase, which is expected to be completed within
appropriate time frames.
However, DTC's ability to perform its services
properly is also dependent upon other parties,
including, but not limited to, issuers and their
agents, as well as DTC's Direct Participants and
Indirect Participants, third party vendors from whom
DTC licenses software and hardware, and third party
vendors on whom DTC relies for information or the
provision of services, including telecommunication and
electrical utility service providers, among others.
DTC has informed the Industry that it is contacting
(and will continue to contact) third party vendors from
whom DTC acquires services to: (1) impress upon them
the importance of such services being Year 2000
compliant; and (2) determine the extent of their
efforts for Year 2000 remediation (and, as appropriate,
testing) of their services. In addition, DTC is in the
process of developing such contingency plans as it
deems appropriate.
According to DTC, the information in the preceding
two paragraphs with respect to DTC has been provided to
the Industry for informational purposes only and is not
intended to serve as a representation, warranty, or
contract modification of any kind.
DTC may discontinue providing its services as securities
depositary for the Notes at any time by giving notice to Avista
Corp. Under such circumstances, in the event that a successor
securities depositary is not obtained, Note certificates will be
delivered to the Beneficial Owners. Additionally, Avista Corp.
may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor depositary). In that event,
certificates for the Notes will be delivered.
The information in this section concerning DTC and DTC's
book-entry system and procedures has been obtained from sources
that Avista Corp. believes to be reliable, but Avista Corp. takes
no responsibility for the accuracy thereof. Neither Avista
Corp., the Trustee nor the Agents will have any responsibility or
liability for any aspect of the records relating to or payments
made on account of beneficial ownership interests in the Notes or
for maintaining, supervising or reviewing any records relating
thereto.
Except as provided herein, a Beneficial Owner of an interest
in a global Note certificate may not receive physical delivery of
Notes. Accordingly, each Beneficial Owner must rely on the
procedures of DTC to exercise any rights under the Notes.
CERTAIN UNITED STATES TAX CONSIDERATIONS
The following is a discussion of certain U.S. income tax
considerations based on the Internal Revenue Code of 1986, as
amended (the "Code"), existing and proposed Treasury regulations
(the "Regulations"), published rulings, and judicial decisions,
all as currently in effect. This discussion deals only with
Notes held as capital assets (within the meaning of Section 1221
of the Code) by U.S. Holders (as defined below) that are initial
purchasers, and not with special classes of holders such as
banks, insurance companies, dealers in securities or currencies,
traders in securities that elect to mark to market, tax-exempt
organizations, persons holding Notes as part of a straddle,
hedging or conversion transaction, or persons whose functional
currency is not the U.S. dollar. All persons considering the
purchase of Notes are advised to consult their own tax advisors
concerning the consequences, in their particular circumstances,
under the Code and the laws of any other taxing jurisdiction, of
the ownership of the Notes.
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As used herein, the term "U.S. Holder" means a beneficial
owner of a Note that is for United States federal income tax
purposes:
(a) a citizen or resident of the United States;
(b) a corporation, partnership or other entity created
or organized under the laws of the United States or any
political subdivision thereof;
(c) an estate the income of which is subject to United
States federal income tax without regard to its source; or
(d) a trust if a court within the United States is able
to exercise primary supervision over the administration of
the trust and one or more United States persons have the
authority to control all substantial decisions of the trust.
PAYMENTS OF INTEREST
Interest on a Note, other than original issue discount,
generally will be taxable to a U.S. Holder as ordinary income at
the time it is received or accrued, depending on the holder's
regular method of accounting for tax purposes.
ORIGINAL ISSUE DISCOUNT
General
Original issue discount ("OID") is the excess of the "stated
redemption price at maturity" of a Note over its issue price if
such excess equals or exceeds a "de minimis amount" (as defined
below). The issue price of a Note generally will be the first
price at which a substantial amount of Notes included in the
issue of which the Note is a part is sold other than to bond
houses, brokers, or similar persons or organizations acting in
the capacity of underwriters, placement agents, or wholesalers.
The stated redemption price at maturity is the sum of all
payments provided for under the terms of the Note other than
"qualified stated interest". A qualified stated interest payment
is generally any one of a series of stated interest payments on a
Note that are unconditionally payable at least annually at a
single fixed rate (with certain exceptions for lower rates paid
during some periods) applied to the outstanding principal amount
of the Note. Notes issued with OID are hereinafter called "OID
Notes". Special rules for "Floating Rate Notes" are described
below under "Notes Issued with Floating Interest Rates."
U.S. Holders of OID Notes that mature more than one year
from the date of issuance generally must include OID in income as
ordinary interest income in advance of actual receipt of some or
all of the corresponding interest payments from Avista Corp.
U.S. Holders of OID Notes generally must include in income the
daily portion of OID as it accrues during each accrual period
over the life of a Note under a formula based upon the
compounding of interest at a rate that provides for a constant
yield to maturity (the "Constant Yield Method").
The Constant Yield Method
Under the Constant Yield Method, the amount of OID
includible in income by a U.S. Holder of an OID Note is the sum
of the daily portions of OID with respect to the OID Note for
each day during the taxable year or portion of the taxable year
on which the U.S. Holder holds such OID Note ("accrued OID").
The daily portion is determined by allocating to each day in any
"accrual period" a pro rata portion of the OID allocable to that
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accrual period. Accrual periods with respect to a Note may be of
any length selected by the U.S. Holder and may vary in length
over the term of the Note as long as:
(a) no accrual period is longer than one year and
(b) each scheduled payment of interest or principal on
the Note occurs on either the final or first day of an
accrual period.
The amount of OID allocable to an accrual period equals the
excess of
(x) the product of the OID Note's adjusted issue price
at the beginning of the accrual period and such Note's yield
to maturity (determined on the basis of compounding at the
close of each accrual period and properly adjusted for the
length of the accrual period) over
(y) the sum of the payments of qualified stated
interest on the Note allocable to the accrual period.
The "adjusted issue price" of an OID Note at the beginning
of any accrual period is the issue price of the Note:
(a) increased by the amount of accrued OID for each
prior accrual period; and
(b) decreased by the amount of any payments previously
made on the Note that were not qualified stated interest
payments.
For purposes of determining the amount of OID allocable to
an accrual period, if an interval between payments of qualified
stated interest on the Note contains more than one accrual
period, the amount of qualified stated interest payable at the
end of the interval (including any qualified stated interest that
is payable on the first day of the accrual period immediately
following the interval) is allocated pro rata on the basis of
relative lengths to each accrual period in the interval, and the
adjusted issue price at the beginning of each accrual period in
the interval must be increased by the amount of any qualified
stated interest that has accrued before the first day of the
accrual period but that is not payable until the end of the
interval. The amount of OID allocable to an initial short
accrual period may be computed using any reasonable method if all
other accrual periods other than a final short accrual period are
of equal length.
The amount of OID allocable to the final accrual period is
the difference between
(a) the amount payable at the maturity of the Note
(other than any payment of qualified stated interest) and
(b) the Note's adjusted issue price as of the beginning
of the final accrual period.
Because OID is calculated based on the compounding of
interest, U.S. Holders will generally have to include in income
increasingly greater amounts of OID in successive accrual
periods.
De Minimis OID
In general, if the excess of a Note's stated redemption
price at maturity over its issue price is less than 1/4 of 1
percent of the Note's stated redemption price at maturity
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multiplied by the number of complete years to its maturity (the
"de minimis amount"), then such excess, if any, constitutes "de
minimis original issue discount" and the Note is not an OID Note.
Unless the election described below under "Election to Treat All
Interest as Original Issue Discount" is made, a United States
Holder of a Note with de minimis original issue discount must
include such de minimis original issue discount in income as
stated principal payments on the Note are made. The includible
amount with respect to each such payment will equal the product
of the total amount of the Note's de minimis original issue
discount and a fraction, the numerator of which is the amount of
the principal payment made and the denominator of which is the
stated principal amount of the Note.
Short Term Notes
In general, an individual or other cash basis U.S. Holder of
a Note with a term of one year or less (a "short-term Note") is
not required to accrue OID (as specially defined below for the
purposes of this paragraph) for U.S. federal income tax purposes
unless it elects to do so (but may be required to include any
stated interest in income as the interest is received). Accrual
basis U.S. Holders and certain other U.S. Holders, including
banks, regulated investment companies, dealers in securities,
common trust funds, U.S. Holders who hold Notes as part of
certain identified hedging transactions, certain pass-through
entities and cash basis U.S. Holders who so elect, are required
to accrue OID on short-term Notes on either a straight-line basis
or under the Constant Yield Method (based on daily compounding),
at the election of the U.S. Holder. In the case of a U.S. Holder
not required and not electing to include OID in income currently,
any gain realized on the sale or retirement of the short-term
Note will be ordinary income to the extent of the OID accrued on
a straight-line basis (unless an election is made to accrue the
OID under the Constant Yield Method) through the date of sale or
retirement. U.S. Holders who are not required and do not elect
to accrue OID on short-term Notes will be required to defer
deductions for interest on borrowings allocable to short-term
Notes in an amount not exceeding the deferred income until the
deferred income is realized.
For purposes of determining the amount of OID subject to
these rules, all interest payments on a short-term Note,
including stated interest, are included in the short-term Note's
stated redemption price at maturity.
Election to Treat All Interest as Original Issue Discount
A U.S. Holder may elect to include in gross income all
interest that accrues on a Note using the Constant Yield Method,
with the modifications described below. For purposes of this
election, interest includes stated interest, OID, de minimis
original issue discount, market discount, de minimis market
discount and unstated interest, as adjusted by an amortizable
bond premium (described below under "Notes Purchased at a
Premium") or acquisition premium.
In applying the Constant Yield Method to a Note with respect
to which this election has been made, the issue price of the Note
will equal its cost to the electing U.S. Holder, the issue date
of the Note will be the date of its acquisition by the electing
U.S. Holder, and no payments on the Note will be treated as
payments of qualified stated interest. This election will
generally apply only to the Note with respect to which it is made
and may not be revoked without the consent of the Internal
Revenue Service. If this election is made with respect to a Note
with amortizable bond premium, then the electing U.S. Holder will
be deemed to have elected to apply amortizable bond premium
against interest with respect to all debt instruments with
amortizable bond premium (other than debt instruments the
interest on which is excludible from gross income) held by the
electing U.S. Holder as of the beginning of the taxable year in
which the Note with respect to which the election is made is
acquired or thereafter acquired. The deemed election with
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respect to amortizable bond premium may not be revoked without
the consent of the Internal Revenue Service.
Notes Issued with Floating Interest Rates
Floating Rate Notes are subject to special rules. For these
purposes, a Floating Rate Note will qualify as a "variable rate
debt instrument" if it:
(a) has an issue price that does not exceed the total
noncontingent principal payments by more than the lesser of
(1) the product of (A) the total noncontingent principal
payments, (B) the number of complete years to maturity from
the issue date and (C) .015 and (2) 15 percent of the total
noncontingent principal payments; and
(b) does not provide for stated interest other than
stated interest compounded or paid at least annually at (1)
one or more "qualified floating rates," (2) a single fixed
rate and one or more qualified floating rates, (3) a single
"objective rate" or (4) a single fixed rate and a single
objective rate that is a "qualified inverse floating rate."
A qualified floating rate or objective rate in effect at any
time during the term of the instrument must be set at a "current
value" of that rate. A "current value" of a rate is the value of
the rate on any day that is no earlier than 3 months before the
first day on which that value is in effect and no later than 1
year following that first day.
A variable rate is a "qualified floating rate" if:
(a) variations in the value of the rate can reasonably
be expected to measure contemporaneous variations in the
cost of newly borrowed funds in the currency in which the
Note is denominated; or
(b) it is equal to the product of such a rate and
either (1) a fixed multiple that is greater than 0.65 but
not more that 1.35, or (2) a fixed multiple greater than
0.65 but not more than 1.35, increased or decreased by a
fixed rate.
If a Note provides for two or more qualified floating rates that
(a) are within 0.25 percentage points of each other on the issue
date or (b) can reasonably be expected to have approximately the
same values throughout the term of the Note, the qualified
floating rates together constitute a single qualified floating
rate. A rate is not a qualified floating rate, however, if the
rate is subject to certain restrictions (including caps, floors,
governors, or other similar restrictions) unless such
restrictions are fixed throughout the term of the Note or are not
reasonably expected to significantly affect the yield on the
Note.
An "objective rate" is a rate, other than a qualified
floating rate, that is determined using a single, fixed formula
and that is based on objective financial or economic information
that is not within the control of or unique to the circumstances
of the issuer or a related party. A variable rate is not an
objective rate, however, if it is reasonably expected that the
average value of the rate during the first half of the Note's
term will be either significantly less than or significantly
greater than the average value of the rate during the final half
of the Note's term. An objective rate is a "qualified inverse
floating rate" if:
(a) the rate is equal to a fixed rate minus a qualified
floating rate; and
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(b) the variations in the rate can reasonably be
expected to inversely reflect contemporaneous variations in
the cost of newly borrowed funds.
If interest on a Note is stated at a fixed rate for an
initial period of one year or less followed by either a qualified
floating rate or an objective rate for a subsequent period and:
(a) the fixed rate and the qualified floating rate or
objective rate have values on the issue date of the Note
that do not differ by more than 0.25 percentage points; or
(b) the value of the qualified floating rate or
objective rate is intended to approximate the fixed rate,
the fixed rate and the qualified floating rate or the objective
rate constitute a single qualified floating rate or objective
rate. Under these rules, CD Rate Notes, CMT Rate Notes,
Commercial Paper Rate Notes, Federal Funds Rate Notes, LIBOR
Notes, Prime Rate Notes and Treasury Rate Notes should generally
be treated as "variable rate debt instruments."
In general, if
(a) a Floating Rate Note that provides for stated
interest at a single qualified floating rate or objective
rate throughout the term thereof qualifies as a "variable
rate debt instrument," and
(b) interest on such Note is unconditionally payable in
cash or other property (other than debt instruments of the
issuer),
then all stated interest on the Note is qualified stated interest
and will be taxed accordingly. The amount of OID for such Notes,
if any, is determined by using, in the case of a qualified
floating rate or qualified inverse floating rate, the value as of
the issue date of the qualified floating rate or qualified
inverse floating rate, or, in the case of any other objective
rate, a fixed rate that reflects the yield reasonably expected
for the Note.
In general, any other Floating Rate Note that qualifies as a
variable rate debt instrument will be converted into an
"equivalent" fixed rate debt instrument for purposes of
determining the amount and accrual of OID and qualified stated
interest on the Note. For this calculation, the amount of
interest and OID accruals on the Note are generally determined
by:
(a) determining a fixed rate substitute for each
variable rate provided under the Floating Rate Note
(generally, the value of each variable rate as of the issue
date or, in the case of an objective rate that is not a
qualified inverse floating rate, a rate that reflects the
reasonably expected yield on the Note);
(b) constructing the equivalent fixed rate debt
instrument (using the fixed rate substitutes described
above);
(c) determining the amount of qualified stated interest
and OID with respect to the equivalent fixed rate debt
instrument, and
(d) making the appropriate adjustments for actual
variable rates during the applicable accrual period.
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If a Floating Rate Note does not qualify as a "variable rate
debt instrument," then the Note would be treated as a contingent
payment debt obligation. The effect of treating a Floating Rate
Note as a contingent payment debt obligation would be to require
a U.S. Holder, regardless of its regular method of accounting, to
accrue income based on the "comparable yield" of the Floating
Rate Note (i.e., the yield at which Avista Corp.
---
would issue a fixed rate debt instrument with the same maturity
and with terms and conditions otherwise similar to the Floating
Rate Note). As a result, a U.S. Holder could accrue income in
excess of cash payments actually received, and any gain or loss
upon the sale, exchange or retirement of the Floating Rate Note
would be treated as other than long-term capital gain or loss.
NOTES PURCHASED AT A PREMIUM
A U.S. Holder that purchases a Note for an amount in excess
of its "stated redemption price at maturity" may elect to treat
such excess as "amortizable bond premium," in which case the
amount required to be included in the U.S. Holder's income each
year with respect to interest on the Note will be reduced by the
amount of amortizable bond premium allocable (based on the Note's
yield to maturity) to such year. Any election to amortize bond
premium shall apply to all bonds (other than bonds the interest
on which is excludible from gross income) held by the U.S. Holder
at the beginning of the first taxable year to which the election
applies or thereafter acquired by the U.S. Holder, and is
irrevocable without the consent of the Internal Revenue Service.
See also "Original Issue Discount -Election to Treat All Interest
as Original Issue Discount."
BASIS AND SALES, EXCHANGES OR RETIREMENTS
A U.S. Holder's tax basis in a Note will generally equal the
cost of such Note to the U.S. Holder plus the total amount of OID
or market discount included in such U.S. Holder's income plus the
amount of income, if any, attributable to de minimis OID and de
minimis market discount included in the U.S Holder's income with
respect to the Note, less (a) any payments received by such U.S.
Holder that are not qualified stated interest and (b) the amount
of any amortizable bond premium applied to reduce interest on the
Note.
Upon the sale, exchange or payment of a Note having a
maturity date more than one year from the date of issuance, the
U.S. Holder of a Note will generally realize capital gain or loss
equal to the difference between the amount realized and the U.S.
Holder's tax basis in such Note. U.S. Holders of OID Notes that
have a maturity date one year or less from the date of issuance,
and who do not elect to accrue OID using the Constant Yield
Method, will generally be required to treat gain realized on the
sale, exchange or payment of such Note as interest income to the
extent of OID accrual on a straight-line basis through the date
of the such sale, exchange or payment. Capital gain of a non-
corporate U.S. Holder is generally subject to a maximum tax rate
of 20% in respect of property held for more than one year. Under
current law, the deductibility of capital losses is subject to
certain limitations.
BACKUP WITHHOLDING
Certain backup withholding and information reporting
requirements may apply to payments on a Note to registered U.S.
Holders who are not otherwise exempt from such requirements
pursuant to the Code. In general, with respect to non-corporate
U.S. Holders, information reporting requirements will apply to
payments of principal, any premium and interest on a Note and the
proceeds of the sale of a Note before maturity, and to the
accrual of OID on OID Notes and backup withholding at a rate of
31% will apply to such payments and to payments of OID if the
U.S. Holder fails to provide an accurate taxpayer identification
number or is notified by the Internal Revenue Service that it has
failed to report all interest and dividends required to be shown
on its federal income tax returns. Any amounts withheld from a
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payment to a U.S. Holder under backup withholding rules would be
allowed as a refund or a credit against such U.S. Holder's U.S.
federal income tax provided the required information is furnished
to the Internal Revenue Service.
SUPPLEMENTAL PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis by Avista
Corp. through Morgan Stanley & Co. Incorporated, Merrill Lynch &
Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and
Salomon Brothers Inc, the Agents, who have agreed to use
reasonable efforts to solicit offers to purchase the Notes;
provided that Avista Corp. has reserved its right to sell,
solicit and accept offers to purchase Notes on its own behalf.
Avista Corp. will have the sole right to accept offers to
purchase Notes and may reject any offer in whole or in part. An
Agent will have the right to reject any offer in whole or in
part. Payment of the purchase price of the Notes will be
required to be made in immediately available funds. Unless
otherwise specified in the pricing supplement, Avista Corp. will
pay an Agent, in connection with sales of Notes resulting from a
solicitation made or an offer to purchase received by such Agent,
a commission ranging from .125% to .875% of the initial offering
price of the Notes to be sold, depending upon the maturity of the
Notes.
Avista Corp. may also sell Notes to an Agent as principal
for its own account at discounts to be agreed upon at the time of
sale. The Notes may be resold to investors and other purchasers
at a fixed offering price or at prevailing market prices, or
prices related thereto at the time of such resale or otherwise,
as determined by the Agent and specified in the pricing
supplement. An Agent may offer the Notes it has purchased as
principal to other dealers. An Agent may sell the Notes to any
dealer at a discount and, unless otherwise specified in the
pricing supplement, such discount allowed to any dealer will not
be in excess of the discount to be received by such Agent from
Avista Corp. After the initial public offering of the Notes that
are to be resold by the Agents to investors and other purchasers
on a fixed public offering price basis, the public offering
price, concession, and discount may be changed.
In order to facilitate the offering of the Notes, the Agents
may engage in transactions that stabilize, maintain or otherwise
affect the price of the Notes. Specifically, the Agents may
overallot in connection with the offering, creating a short
position in the Notes for their own account. In addition, to
cover overallotments or to stabilize the price of the Notes, the
Agents may bid for, and purchase, the Notes in the open market.
Finally, any underwriting syndicate participating in a sale of
Notes to one or more Agents acting as principal may reclaim
selling concessions allowed to an underwriter or a dealer for
distributing the Notes in the offering, if the syndicate
repurchases previously distributed Notes in transactions to cover
syndicate short positions, in stabilization transactions or
otherwise. Any of these activities may stabilize or maintain the
market price of the Notes above independent market levels. The
Agents are not required to engage in these activities, and may
end any of these activities at any time.
The Agents may be deemed to be "underwriters" within the
meaning of the Securities Act of 1933, as amended (the
"Securities Act"). Avista Corp. and the Agents have agreed to
indemnify each other against certain liabilities, including
liabilities under the federal securities laws, or to contribute
to payments made in respect of any such liabilities. Avista
Corp. has also agreed to reimburse the Agents for certain
expenses.
Avista Corp. does not intend to apply for the listing of the
Notes on a national securities exchange, but has been advised by
the Agents that the Agents intend to make a market in the Notes,
as permitted by applicable laws and regulations. The Agents are
not obligated to do so, however, and the Agents may discontinue
S-29
<PAGE>
making a market at any time without notice. No assurance can be
given as to the liquidity of any trading market for the Notes.
Concurrently with the offering of Notes through the Agent as
described herein, Avista Corp. may issue other Debt Securities
under the Indenture referred to herein. Any Debt Securities sold
by Avista Corp. pursuant to the Prospectus will reduce the
aggregate principal amount of Notes that may be offered by this
Prospectus Supplement and the Prospectus.
The Agents and/or certain of their affiliates may engage in
transactions with and perform services for Avista Corp. and
certain of its affiliates in the ordinary course of business.
LEGAL MATTERS
The following information supplements the information
regarding legal opinions contained under "LEGAL MATTERS" in the
accompanying prospectus. In addition to the matters referred to
in the prospectus, certain U.S. federal income tax matters will
be passed upon for Avista Corp. by Thelen Reid & Priest LLP. The
opinions of Paine, Hamblen, Coffin, Brooke & Miller LLP and
Thelen Reid & Priest LLP, each as counsel to Avista Corp., and
Sullivan & Cromwell, as counsel to the Agents, will be
conditioned upon, and subject to certain assumptions regarding,
future action required to be taken by Avista Corp. and the
Trustee in connection with the issuance and sale of any
particular Note, the specific terms of Notes and other matters
which may affect the validity of Notes but which cannot be
ascertained on the date of such opinions.
S-30
<PAGE>
PROSPECTUS
$400,000,000
AVISTA CORPORATION
DEBT SECURITIES
---------------
Avista Corporation may offer from time to time up to $400,000,000, in
principal amount of its unsecured debt securities, in one or more series, at
prices and on terms to be determined at the time of sale.
One or more supplements to this prospectus will indicate the terms of
each series of debt securities, and each tranche within a series including,
where applicable, the
. series designation,
. principal amount,
. stated maturity date,
. interest rate and interest payment dates,
. initial public offering price, and
. provisions for redemption, if any.
Avista Corp. may sell the debt securities to or through underwriters,
dealers or agents or directly to one or more purchasers. The applicable
prospectus supplement will describe each offering of the debt securities.
---------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is August 17, 1999
<PAGE>
THIS PROSPECTUS INCORPORATES BY REFERENCE IMPORTANT BUSINESS AND
FINANCIAL INFORMATION ABOUT AVISTA CORP. THAT IS NOT INCLUDED IN OR DELIVERED
WITH THIS PROSPECTUS. SEE "AVAILABLE INFORMATION". YOU MAY OBTAIN COPIES OF
DOCUMENTS CONTAINING SUCH INFORMATION FROM US, WITHOUT CHARGE, BY EITHER CALLING
OR WRITING TO US AT:
AVISTA CORPORATION
POST OFFICE BOX 3727
SPOKANE, WASHINGTON 99220
ATTENTION: TREASURER
TELEPHONE: (509) 489-0500
TABLE OF CONTENTS
PAGE PAGE
---- ----
AVAILABLE INFORMATION............ 4 Remedies....................... 10
AVISTA CORPORATION............... 5 Consolidation, Merger, Sale of
Assets and Other Transactions.. 12
USE OF PROCEEDS.................. 5
Modification of Indenture...... 13
DESCRIPTION OF DEBT SECURITIES... 6
Duties of the Trustee;
General...................... 6 Resignation; Removal........... 15
Payment and Paying Agents.... 7 Evidence of Compliance......... 16
Registration and Transfer.... 8 Governing Law.................. 16
Redemption................... 8 PLAN OF DISTRIBUTION................ 16
Satisfaction And Discharge... 8 LEGAL MATTERS....................... 17
Events of Default............ 9 EXPERTS............................. 17
WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OTHER THAN
THIS PROSPECTUS AND THE USUAL SUPPLEMENTS TO THIS PROSPECTUS. YOU SHOULD NOT
ASSUME THAT THE INFORMATION CONTAINED OR INCORPORATED IN THIS PROSPECTUS IS
ACCURATE AS OF ANY DATE AFTER AUGUST 17, 1999, WHICH IS THE DATE OF THIS
PROSPECTUS. WE ARE NOT OFFERING TO SELL THE DEBT SECURITIES AND WE ARE NOT
SOLICITING OFFERS TO BUY THE DEBT SECURITIES IN ANY JURISDICTION IN WHICH OFFERS
ARE NOT PERMITTED.
3
<PAGE>
AVAILABLE INFORMATION
Avista Corp. files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy this
information at the SEC's Public Reference Room and at its Regional Offices:
Public Reference Room New York Regional Office Chicago Regional Office
Judiciary Plaza 7 World Trade Center Citicorp Center
450 Fifth Street, N.W. Suite 1300 500 West Madison Street
Room 1024 New York, New York 10048 Suite 1400
Washington, D.C. 20549 Chicago, Illinois 60661-2551
You may obtain information on the operation of the SEC's public
reference rooms by calling the SEC at 1-800-SEC-0330. You may also obtain copies
of such material by mail from the Public Reference Section of the SEC, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates. The
SEC also maintains an Internet site that contains Avista Corp.'s reports, proxy
statements and other information filed with the SEC. The address of that site
is http://www.sec.gov.
Avista Corp.'s Common Stock is listed on the New York and Pacific Stock
Exchanges, and reports, proxy statements and other information concerning Avista
Corp. can also be inspected at the offices of those exchanges located at the New
York Stock Exchange, 20 Broad Street, New York, New York 10005, and the Pacific
Stock Exchange, 301 Pine Street, San Francisco, California 94104, respectively.
Avista Corp. is incorporating into this prospectus by reference:
. Avista Corp.'s most recent Annual Report on Form 10-K filed
with the SEC pursuant to the Exchange Act and
. all other documents filed by Avista Corp. with the SEC
pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the filing of Avista Corp.'s most
recent Annual Report and prior to the termination of the
offering made by this prospectus,
and all of those documents are deemed to be a part of this prospectus from the
date of filing such documents. We refer to the documents incorporated into this
prospectus by reference as the "Incorporated Documents". Any statement contained
in an Incorporated Document may be modified or superseded by a statement in this
prospectus or in any prospectus supplement or in any subsequently filed
Incorporated Document. The Incorporated Documents as of the date of this
prospectus are:
. Annual Report on Form 10-K for the year ended December 31,
1998;
. Quarterly Reports on Form 10-Q for the quarters ended
March 31 and June 30, 1999; and
. Current Report on Form 8-K dated June 15, 1999.
Avista Corp. maintains an Internet site at http://www.avistacorp.com
which contains information concerning Avista Corp. and its affiliates. The
information contained at Avista Corp.'s Internet site is not incorporated in
this prospectus by reference and you should not consider it a part of this
prospectus.
4
<PAGE>
AVISTA CORPORATION
Avista Corp., formerly known as The Washington Water Power Company, was
incorporated in the State of Washington in 1889, and is a diversified energy
services company. Avista Corp.'s subsidiaries include Avista Energy, Avista
Advantage, Avista Labs and Pentzer Corporation. At December 31, 1998, Avista
Corp.'s employees included 1,536 people in its utility operations and
approximately 2,153 people in its majority-owned non-regulated businesses
(energy and non-energy). Avista Corp.'s corporate headquarters are located at
1411 East Mission Avenue, Spokane, Washington 99220, which serves as the Inland
Northwest's center for manufacturing, transportation, health care, education,
communication, agricultural and service businesses.
The Company's operations are organized into four lines of business, two
of which comprise its utility operations. The Energy Delivery business provides
electricity and natural gas in a 26,000 square-mile area in eastern Washington
and northern Idaho, with a combined population of approximately 825,000, as of
December 31, 1998, as well as natural gas services in a 4,000 square-mile area
in northeast and southwest Oregon and South Lake Tahoe region of California,
with a combined population of approximately 459,000, as of such date. The
Generation and Resources business includes the generation and production of
electric energy, and short- and long-term electric and natural gas wholesale
sales and wholesale marketing primarily to, and commodity trading with, other
utilities and power brokers in the Western System Coordinating Council. The
National Energy Trading and Marketing business, which is conducted through
subsidiaries, focuses on commodity trading, energy marketing and energy related
products and services on a national basis. The non-energy business primarily
consists of Pentzer, a private investment firm.
Regulatory, economic and technological changes have brought about the
accelerating transformation of the electric utility industry from a vertically
integrated monopoly to separate market driven businesses. Changes underway in
the utility and energy industries are creating new opportunities to expand
Avista Corp.'s businesses and serve new markets. In pursuing such opportunities,
Avista Corp. is shifting its strategic direction to growth in order to achieve
its goal of becoming a diversified North American energy company.
USE OF PROCEEDS
Avista Corp. intends to use the net proceeds from the issuance and sale
of the debt securities offered by this prospectus (the "Debt Securities") for
any or all of the following purposes: (a) to fund a portion of Avista Corp.'s
construction, facility improvement and maintenance programs, (b) to retire or
exchange one or more outstanding series of its preferred stock, bonds or
long-term notes, (c) to reduce or eliminate short-term debt issued for any of
these purposes, (d) to reimburse Avista Corp.'s treasury for funds previously
expended for these purposes and (e) for other corporate purposes. Avista Corp.
also has an existing shelf registration statement on file with the SEC for the
issuance and sale of Medium-Term Notes, Series C. As of June 30, 1999, Avista
Corp. had $166,000,000 of Medium-Term Notes, Series C available for issuance and
sale, the net proceeds from which may be used for purposes similar to those
enumerated above. The prospectus supplement relating to each series or tranche
of the Debt Securities will indicate the expected use of the proceeds of that
series or tranche.
5
<PAGE>
DESCRIPTION OF THE DEBT SECURITIES
GENERAL
Avista Corp. may issue the Debt Securities in one or more series, or in
one or more tranches within a series, under an Indenture, dated as of April 1,
1998 (the "Original Indenture"), between Avista Corp. and The Chase Manhattan
Bank, as trustee (the "Trustee"), the Original Indenture, as amended and
supplemented from time to time, being hereinafter referred to as the Indenture.
The terms of the Debt Securities will include those stated in the Indenture and
those made part of the Indenture by the Trust Indenture Act. The following
summary is not complete and is subject in all respects to the provisions of, and
is qualified in its entirety by reference to, the Indenture and the Trust
Indenture Act. Avista Corp. has filed the Indenture, as well as a form of
officer's certificate to establish a series of debt securities, as exhibits to
the registration statement of which this prospectus is a part. Capitalized terms
used under this heading which are not otherwise defined in this prospectus have
the meanings set forth in the Indenture. Wherever particular provisions of the
Indenture or terms defined in the Indenture are referred to, those provisions or
definitions are incorporated by reference as part of the statements made in this
prospectus and those statements are qualified in their entirety by that
reference. References to article and section numbers, unless otherwise
indicated, are references to article and section numbers of the Indenture.
In addition to the Debt Securities, other debt securities may be issued
under the Indenture, without any limit on the aggregate principal amount. The
Debt Securities and all other debt securities issued under the Indenture are
collectively referred to as the "Indenture Securities." Each series of Indenture
Securities will be unsecured and will rank pari passu with all other series of
Indenture Securities, except as otherwise provided in the Indenture, and with
all other unsecured and unsubordinated indebtedness of Avista Corp. Except as
otherwise described in the applicable prospectus supplement, the Indenture does
not limit the incurrence or issuance by Avista Corp. of other secured or
unsecured debt, whether under the Indenture, under any other indenture that
Avista Corp. may enter into in the future or otherwise. See the prospectus
supplement relating to any offering of Debt Securities.
The applicable prospectus supplements will describe the following terms
of the Debt Securities of each series or tranche:
(a) the title of the Debt Securities;
(b) any limit upon the aggregate principal amount of the Debt
Securities;
(c) the date or dates on which the principal of the Debt
Securities is payable or the method of determination thereof and the
right, if any, to extend such date or dates;
(d) the rate or rates at which the Debt Securities will bear
interest, if any, or the method by which such rate or rates, if any,
will be determined, the date or dates from which any such interest
will accrue, the interest payment dates on which any such interest
will be payable, the right, if any, of Avista Corp. to defer or extend
an interest payment date, and the regular record date for any interest
payable on any interest payment date and the person or persons to whom
interest on the Debt Securities will be payable on any interest
payment date, if other than the person or persons in whose names the
Debt Securities are registered at the close of business on the regular
record date for such interest;
(e) the place or places where, subject to the terms of the
Indenture as described below under "--Payment and Paying Agents", the
principal of and premium, if any, and interest, if any, on the Debt
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<PAGE>
Securities will be payable and where, subject to the terms of the
Indenture as described below under "--Registration and Transfer", the
Debt Securities may be presented for registration of transfer or
exchange and the place or places where notices and demands to or upon
Avista Corp. in respect of the Debt Securities and the Indenture may
be served; the Security Registrar and Paying Agents for the Debt
Securities; and, if such is the case, that the principal of the Debt
Securities will be payable without presentation or surrender;
(f) any period or periods within which, or date or dates on
which, the price or prices at which and the terms and conditions upon
which the Debt Securities may be redeemed, in whole or in part, at the
option of Avista Corp.;
(g) the obligation or obligations, if any, of Avista Corp. to
redeem or purchase any of the Debt Securities pursuant to any sinking
fund or other mandatory redemption provisions or at the option of the
Holder, and the period or periods within which, or date or dates on
which, the price or prices at which and the terms and conditions upon
which the Debt Securities will be redeemed or purchased, in whole or
in part, pursuant to such obligation, and applicable exceptions to the
requirements of a notice of redemption in the case of mandatory
redemption or redemption at the option of the Holder;
(h) the denominations in which any of the Debt Securities will be
issuable if other than denominations of $1,000 and any integral
multiple of $1,000;
(i) if the Debt Securities are to be issued in global form, the
identity of the depositary; and
(j) any other terms of the Debt Securities.
PAYMENT AND PAYING AGENTS
Except as may be provided in the applicable prospectus supplement,
Avista Corp. will pay interest, if any, on each Debt Security on each interest
payment date to the person in whose name such Debt Security is registered (the
registered holder of any Indenture Security being called a "Holder") as of the
close of business on the regular record date relating to such interest payment
date; provided, however, that Avista Corp. will pay interest at maturity
(whether at stated maturity, upon redemption or otherwise, "Maturity") to the
person to whom principal is paid. However, if there has been a default in the
payment of interest on any Debt Security, such defaulted interest may be payable
to the Holder of such Debt Security as of the close of business on a date
selected by the Trustee which is not more than 30 days and not less than 10 days
before the date proposed by Avista Corp. for payment of such defaulted interest
or in any other lawful manner not inconsistent with the requirements of any
securities exchange on which such Debt Security may be listed, if the Trustee
deems such manner of payment practicable. (See Section 307.)
Unless otherwise specified in the applicable prospectus supplement,
Avista Corp. will pay the principal of and premium, if any, and interest, if
any, on the Debt Securities at Maturity upon presentation of the Debt Securities
at the corporate trust office of The Chase Manhattan Bank in New York, New York,
as paying agent for Avista Corp. Avista Corp. may change the place of payment of
the Debt Securities, may appoint one or more additional paying agents (including
Avista Corp.) and may remove any paying agent, all at its discretion. (See
Section 502.)
7
<PAGE>
REGISTRATION AND TRANSFER
Unless otherwise specified in the applicable prospectus supplement,
Holders may register the transfer of Debt Securities, and may exchange Debt
Securities for other Debt Securities of the same series and tranche, of
authorized denominations and having the same terms and aggregate principal
amount, at the corporate trust office of The Chase Manhattan Bank in New York,
New York, as security registrar for the Debt Securities. Avista Corp. may change
the place for registration of transfer and exchange of the Debt Securities, may
appoint one or more additional security registrars (including Avista Corp.) and
may remove any security registrar, all at its discretion. (See Section 502.)
Except as otherwise provided in the applicable prospectus supplement, no service
charge will be made for any transfer or exchange of the Debt Securities, but
Avista Corp. may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of the Debt Securities. Avista Corp. will not be required
to execute or to provide for the registration of transfer of or the exchange of
(a) any Debt Security during a period of 15 days before giving any notice of
redemption or (b) any Debt Security selected for redemption in whole or in part,
except the unredeemed portion of any Debt Security being redeemed in part. (See
Section 305.)
REDEMPTION
The applicable prospectus supplement will set forth any terms for the
optional or mandatory redemption of Debt Securities. Except as otherwise
provided in the applicable prospectus supplement with respect to Debt Securities
redeemable at the option of the Holder, Debt Securities will be redeemable 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 Debt Securities of a series, or any tranche
thereof, are to be redeemed, the particular Debt Securities 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 provision, by such method of random selection as the
Security Registrar deems fair and appropriate. (See Sections 403 and 404.)
Any notice of redemption at the option of Avista Corp. may state that
such redemption will be conditional upon receipt by the paying agent or agents,
on or before the date fixed for such redemption, of money sufficient to pay the
principal of and premium, if any, and interest, if any, on such Debt Securities
and that if such money has not been so received, such notice will be of no force
or effect and Avista Corp. will not be required to redeem such Debt Securities.
(See Section 404.)
SATISFACTION AND DISCHARGE
Any Indenture Securities, or any portion of the principal amount
thereof, will be deemed to have been paid for purposes of the Indenture and, at
Avista Corp.'s election, the entire indebtedness of Avista Corp. in respect
thereof will be deemed to have been satisfied and discharged, if there shall
have been irrevocably deposited with the Trustee or any Paying Agent (other than
Avista Corp.), in trust:
(a) money in an amount which will be sufficient, or
(b) in the case of a deposit made before the maturity of such
Indenture Securities, Eligible Obligations, which do not contain provisions
permitting the redemption or other prepayment thereof at the option of the
issuer thereof, the principal of and the interest on which when due, without any
regard to reinvestment thereof, will provide moneys which, together with the
money, if any, deposited with or held by the Trustee or such Paying Agent, will
be sufficient, or
(c) a combination of (a) and (b) which will be sufficient,
8
<PAGE>
to pay when due the principal of and premium, if any, and interest, if any, due
and to become due on such Indenture Securities. For this purpose, Eligible
Obligations include direct obligations of, or obligations unconditionally
guaranteed by, the United States, entitled to the benefit of the full faith and
credit thereof and certificates, depositary receipts or other instruments which
evidence a direct ownership interest in such obligations or in any specific
interest or principal payments due in respect thereof and such other obligations
or instruments as shall be specified in an accompanying prospectus supplement.
(See Section 601.)
The right of Avista Corp. to cause its entire indebtedness in respect
of the Indenture Securities 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 instrument creating such series.
The Indenture will be deemed to have been satisfied and discharged when
no Indenture Securities remain outstanding thereunder and Avista Corp. has paid
or caused to be paid all other sums payable by Avista Corp. under the Indenture.
(See Section 602.)
EVENTS OF DEFAULT
Any one or more of the following events with respect to a series of
Indenture Securities that has occurred and is continuing will constitute an
"Event of Default" with respect to such series of Indenture Securities:
(a) failure to pay interest on any Indenture Security of such
series within 60 days after the same becomes due and payable;
provided, however, that no such failure shall constitute an Event of
Default if Avista Corp. has made a valid extension of the interest
payment period with respect to the Indenture Securities of such series
if so provided with respect to such series; or
(b) failure to pay the principal of or premium, if any, on any
Indenture Security of such series within 3 business days after its
Maturity; provided, however, that no such failure will constitute an
Event of Default if Avista Corp. has made a valid extension of the
Maturity of the Indenture Securities of such series, if so provided
with respect to such series; or
(c) failure to perform, or breach of, any covenant or warranty of
Avista Corp. contained in the Indenture for 90 days after written
notice to Avista Corp. from the Trustee or to Avista Corp. and the
Trustee by the Holders of at least 25% in principal amount of the
Outstanding Indenture Securities of such series as provided in the
Indenture unless the Trustee, or the Trustee and the Holders of a
principal amount of Securities of such series not less than the
principal amount of Indenture Securities the Holders of which gave
such notice, as the case may be, agree in writing to an extension of
such period before its expiration; provided, however, that the
Trustee, or the Trustee and the Holders of such principal amount of
Indenture Securities of such series, as the case may be, will be
deemed to have agreed to an extension of such period if corrective
action is initiated by Avista Corp. within such period and is being
diligently pursued; or
(d) default under any bond, debenture, note or other evidence of
indebtedness of Avista Corp. for borrowed money (including Indenture
Securities of other series) or under any mortgage, indenture, or other
instrument to evidence any indebtedness of Avista Corp. for borrowed
money, which default (1) constitutes a failure to make any payment in
excess of $5,000,000 of the principal of, or interest on, such
indebtedness or (2) has resulted in such indebtedness in an amount in
excess of $10,000,000 becoming or being declared due and payable prior
to the date it would otherwise have become due and payable, without
such payment having been made, such indebtedness having been
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<PAGE>
discharged, or such acceleration having been rescinded or annulled,
within a period of 90 days after written notice to Avista Corp. by the
Trustee or to Avista Corp. and the Trustee by the Holders of at least
25% in principal amount of the Outstanding Securities of such series
as provided in the Indenture,
(e) certain events in bankruptcy, insolvency or reorganization of
Avista Corp. (See Section 701.)
(See Section 701.)
REMEDIES
Acceleration of Maturity
If an Event of Default applicable to the Indenture Securities of any
series occurs and is continuing, then either the Trustee or the Holders of not
less than 33% in aggregate principal amount of the Outstanding Indenture
Securities of such series may declare the principal amount (or, if any of the
Outstanding Indenture Securities of such series are Discount Securities, such
portion of the principal amount thereof as may be specified in the terms
thereof) of all of the Outstanding Indenture Securities of such series to be due
and payable immediately by written notice to Avista Corp. (and to the Trustee if
given by the Holders); provided, however, that if an Event of Default occurs and
is continuing with respect to more than one series of Indenture Securities, the
Trustee or the Holders of not less than 33% in aggregate principal amount of the
Outstanding Indenture Securities of all such series, considered as one class,
may make such declaration of acceleration and not the Holders of the Indenture
Securities of any one such series.
At any time after such a declaration of acceleration with respect to
the Indenture Securities of any series has been made, but before a judgment or
decree for payment of the money due has been obtained, such declaration and its
consequences will, without further act, be deemed to have been rescinded and
annulled, if
(a) Avista Corp. has paid or deposited with the Trustee a sum
sufficient to pay
(1) all overdue interest, if any, on all Indenture
Securities of such series;
(2) the principal of and premium, if any, on any Indenture
Securities of such series which have become due
otherwise than by such declaration of acceleration and
interest, if any, thereon at the rate or rates
prescribed therefor in such Indenture Securities;
(3) interest, if any, upon overdue interest, if any, at the
rate or rates prescribed therefor in such Indenture
Securities, to the extent that payment of such interest
is lawful; and
(4) all amounts due to the Trustee under the Indenture in
respect of compensation and reimbursement of expenses;
and
(b) all Events of Default with respect to Indenture Securities
of such series, other than the non-payment of the principal of the
Indenture Securities of such series which has become due solely by
such declaration of acceleration, have been cured or waived as
provided in the Indenture. (See Section 702.)
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Right to Direct Proceedings
If an Event of Default with respect to the Indenture Securities of any
series occurs and is continuing, the Holders of a majority in principal amount
of the Outstanding Indenture Securities of such series will have the right to
direct the time, method and place of conducting any proceedings for any remedy
available to the Trustee in exercising any trust or power conferred on the
Trustee; provided, however, that if an Event of Default occurs and is continuing
with respect to more than one series of Indenture Securities, the Holders of a
majority in aggregate principal amount of the Outstanding Indenture Securities
of all such series, considered as one class, will have the right to make such
direction, and not the Holders of the Indenture Securities of any one of such
series; and provided, further, that (a) such direction does not conflict with
any rule of law or with the Indenture, and could not involve the Trustee in
personal liability in circumstances where indemnity would not, in the Trustee's
sole discretion, be adequate and (b) the Trustee may take any other action
deemed proper by the Trustee which is not inconsistent with such direction. (See
Section 712.)
Limitation on Right to Institute Proceedings
No Holder of any Indenture Security will have any right to institute
any proceeding, judicial or otherwise, with respect to the Indenture or for the
appointment of a receiver or for any other remedy thereunder unless:
(a) such Holder has previously given to the Trustee written notice of
a continuing Event of Default with respect to the Indenture Securities of any
one or more series;
(b) the Holders of a majority in aggregate principal amount of the
outstanding Indenture Securities of all series in respect of which such Event of
Default has occurred, considered as one class, have made written request to the
Trustee to institute proceedings in respect of such Event of Default and have
offered the Trustee reasonable indemnity against costs and liabilities to be
incurred in complying with such request; and
(c) for 60 days after receipt of such notice, the Trustee has failed
to institute any such proceeding and no direction inconsistent with such request
has been given to the Trustee during such 60 day period by the Holders of a
majority in aggregate principal amount of Indenture Securities then Outstanding.
Furthermore, no Holder of Indenture Securities of any series will be
entitled to institute any such action if and to the extent that such action
would disturb or prejudice the rights of other Holders of Indenture Securities
of such series. (See Section 707.)
No Impairment of Right to Receive Payment
Notwithstanding that the right of a Holder to institute a proceeding
with respect to the Indenture is subject to certain conditions precedent, each
Holder of an Indenture Security will have the right, which is absolute and
unconditional, to receive payment of the principal of and premium, if any, and
interest, if any, on such Indenture Security when due and to institute suit for
the enforcement of any such payment, and such rights may not be impaired or
affected without the consent of such Holder. (See Section 708.)
Notice of Default
The Trustee is required to give the Holders notice of any default under
the Indenture to the extent required by the Trust Indenture Act, unless such
default shall have been cured or waived, except that no such notice to Holders
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of a default of the character described in clause (c) under "- Events of
Default" may be given until at least 75 days after the occurrence thereof. For
purposes of the preceding sentence, the term "default" means any event which is,
or after notice or lapse of time, or both, would become, an Event of Default.
The Trust Indenture Act currently permits the Trustee to withhold notices of
default (except for certain payment defaults) if the Trustee in good faith
determines the withholding of such notice to be in the interests of the Holders.
(See Section 802.)
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
Avista Corp. may not consolidate with or merge into any other Person,
or convey or otherwise transfer, or lease, all of its properties, as or
substantially as an entirety, to any Person, unless:
(a) the Person formed by such consolidation or into which Avista
Corp. is merged or the Person which acquires by conveyance or other
transfer, or which leases (for a term extending beyond the last Stated
Maturity of the Indenture Securities then Outstanding), all of the
properties of Avista Corp., as or substantially as an entirety, shall
be a Person organized and existing under the laws of the United
States, any State or Territory thereof or the District of Columbia or
under the laws of Canada or any Province thereof; and
(b) such Person shall expressly assume the due and punctual
payment of the principal of and premium, if any, and interest, if any,
on all the Indenture Securities then Outstanding and the performance
and observance of every covenant and condition of the Indenture to be
performed or observed by Avista Corp.
In the case of the conveyance or other transfer of all of the properties of
Avista Corp., as or substantially as an entirety, to any person as contemplated
above, Avista Corp. would be released and discharged from all obligations under
the Indenture and on all Indenture Securities then outstanding unless Avista
Corp. elects to waive such release and discharge. Upon any such consolidation or
merger or any such conveyance or other transfer of properties of Avista Corp.,
the successor, transferee or lessee would succeed to, and be substituted for,
and would be entitled to exercise every power and right of, Avista Corp. under
the Indenture. (See Sections 1001, 1002 and 1003.)
For purposes of the Indenture, the conveyance, transfer or lease by
Avista Corp. of all of its facilities:
(a) for the generation of electric energy,
(b) for the transmission of electric energy,
(c) for the distribution of electric energy and/or natural gas, in
each case considered alone,
(d) all of its facilities described in clauses (a) and (b), considered
together, or
(e) all of its facilities described in clauses (b) and (c), considered
together,
will in no event be deemed to constitute a conveyance or other transfer of all
the properties of Avista Corp., as or substantially as an entirety, unless,
immediately following such conveyance, transfer or lease, Avista Corp. owns no
unleased properties in the other such categories of property not so conveyed or
otherwise transferred or leased.
The Indenture will not prevent or restrict:
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(a) any consolidation or merger after the consummation of which
Avista Corp. would be the surviving or resulting entity, or
(b) any conveyance or other transfer, or lease, of any part of
the properties of Avista Corp. which does not constitute the entirety, or
substantially the entirety, thereof. (See Section 1004.)
If Avista Corp. conveys or otherwise transfers any part of its
properties which does not constitute the entirety, or substantially the
entirety, thereof to another Person meeting the requirements set forth in the
first paragraph under this heading, and if:
(a) such transferee expressly assumes the due and punctual payment of
the principal of and premium, if any, and interest, if any, on all Indenture
Securities then outstanding and the performance and observance of every covenant
and condition of the Indenture to be performed or observed by Avista Corp.; and
(b) there is delivered to the Trustee an independent expert's
certificate (i) describing the property so conveyed or transferred and
identifying the same as facilities for the generation, transmission or
distribution of electric energy or for the storage, transportation or
distribution of natural gas and (ii) stating that the aggregate principal amount
of the Indenture Securities then outstanding does not exceed 70% of the fair
value of such property,
then Avista Corp. would be released and discharged from all obligations and
covenants under the Indenture and on all Indenture Securities then outstanding
unless Avista Corp. elects to waive such release and discharge. In such event,
the transferee would succeed to, and be substituted for, and would be entitled
to exercise every right and power of, Avista Corp. under the Indenture. (See
Section 1005.)
MODIFICATION OF INDENTURE
Modifications Without Consent
Avista Corp. and the Trustee may enter into one or more supplemental
indentures, without the consent of any Holders of Indenture Securities, for any
of the following purposes:
(a) to evidence the succession of another Person to Avista Corp.
and the assumption by any such successor of the covenants of Avista
Corp. in the Indenture and in the Indenture Securities; or
(b) to add one or more covenants of Avista Corp. or other
provisions for the benefit of all Holders of Indenture Securities or
for the benefit of the Holders of, or to remain in effect only so long
as there shall be Outstanding, Indenture Securities of one or more
specified series, or one or more Tranches thereof, or to surrender any
right or power conferred upon Avista Corp. by the Indenture; or
(c) to change or eliminate any provisions of the Indenture or to
add any new provisions to the Indenture, provided that if such change,
elimination or addition adversely affects the interests of the Holders
of the Indenture Securities of any series or Tranche in any material
respect, such change, elimination or addition will become effective
with respect to such series or Tranche only when no Indenture Security
of such series or Tranche remains Outstanding; or
(d) to provide collateral security for the Indenture Securities
or any series thereof; or
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(e) to establish the form or terms of the Indenture Securities of
any series or Tranche as permitted by the Indenture; or
(f) to provide for the authentication and delivery of bearer
securities and coupons appertaining thereto representing interest, if
any, thereon and for the procedures for the registration, exchange and
replacement thereof and for the giving of notice to, and the
solicitation of the vote or consent of, the Holders thereof, and for
any and all other matters incidental thereto; or
(g) to evidence and provide for the acceptance of appointment by
a successor trustee with respect to the Indenture Securities of one or
more series; or
(h) to provide for the procedures required to permit the
utilization of a non-certificated system of registration for all, or
any series or Tranche of, the Indenture Securities; or
(i) to change any place or places where (1) the principal of and
premium, if any, and interest, if any, on all or any series of
Indenture Securities, or any Tranche thereof, will be payable, (2) all
or any series of Indenture Securities, or any Tranche thereof, may be
surrendered for registration of transfer, (3) all or any series of
Indenture Securities, or any Tranche thereof, may be surrendered for
exchange and (4) notices and demands to or upon Avista Corp. in
respect of all or any series of Indenture Securities, or any Tranche
thereof, and the Indenture may be served; or
(j) to cure any ambiguity, to correct or supplement any provision
therein which may be defective or inconsistent with any other
provision therein, or to make any other changes to the provisions
thereof or to add any other provisions with respect to matters and
questions arising under the Indenture, so long as such other changes
or additions do not adversely affect the interests of the Holders of
Indenture Securities of any series or Tranche in any material respect.
Without limiting the generality of the foregoing, if the Trust
Indenture Act is amended after the date of the Original Indenture in such a way
as to require changes to the Indenture or the incorporation therein of
additional provisions or so as to permit changes to, or the elimination of,
provisions which, at the date of the Original Indenture or at any time
thereafter, were required by the Trust Indenture Act to be contained in the
Indenture, the Indenture will be deemed to have been amended so as to conform to
such amendment or to effect such changes or elimination, and Avista Corp. and
the Trustee may, without the consent of any Holders of Indenture Securities,
enter into one or more supplemental indentures to evidence or effect such
amendment. (See Section 1101.)
Modifications Requiring Consent
Except as provided above, the consent of the Holders of a majority in
aggregate principal amount of the Indenture Securities of all series then
Outstanding, considered as one class is required for the purpose of adding any
provisions to, or changing in any manner, or eliminating any of the provisions
of, the Indenture pursuant to one or more supplemental indentures; provided,
however, that if less than all of the series of Indenture Securities Outstanding
are directly affected by a proposed supplemental indenture, then the consent
only of the Holders of a majority in aggregate principal amount of Outstanding
Indenture Securities of all series so directly affected, considered as one
class, will be required; and provided, further, that if the Indenture Securities
of any series have been issued in more than one Tranche and if the proposed
supplemental indenture directly affects the rights of the Holders of one or
more, but less than all, of such Tranches, then the consent only of the Holders
of a majority in aggregate principal amount of the Outstanding Indenture
Securities of all Tranches so directly affected, considered as one class, will
be required; and provided, further, that no such amendment or modification may:
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(a) change the Stated Maturity of the principal of, or any
installment of principal of or interest on, any Indenture Security
other than pursuant to the terms thereof, or reduce the principal
amount thereof or the rate of interest thereon (or the amount of any
installment of interest thereon) or change the method of calculating
such rate or reduce any premium payable upon the redemption thereof,
or reduce the amount of the principal of any Discount Security that
would be due and payable upon a declaration of acceleration of
Maturity or change the coin or currency (or other property) in which
any Indenture Security or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of
any such payment on or after the Stated Maturity of any Indenture
Security (or, in the case of redemption, on or after the redemption
date) without, in any such case, the consent of the Holder of such
Indenture Security;
(b) reduce the percentage in principal amount of the Outstanding
Indenture Securities of any series, or any Tranche thereof, the
consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any
waiver of compliance with any provision of the Indenture or of any
default thereunder and its consequences, or reduce the requirements
for quorum or voting, without, in any such case, the consent of the
Holder of each Outstanding Indenture Security of such series or
Tranche; or
(c) modify certain of the provisions of the Indenture relating to
supplemental indentures, waivers of certain covenants and waivers of
past defaults with respect to the Indenture Securities of any series,
or any Tranche thereof, without the consent of the Holder of each
outstanding Indenture Security of such series or Tranche.
A supplemental indenture which changes or eliminates any covenant or
other provision of the Indenture which has expressly been included solely for
the benefit of the Holders of, or which is to remain in effect only so long as
there shall be Outstanding, Indenture Securities of one or more specified
series, or one or more Tranches thereof, or modifies the rights of the Holders
of Indenture Securities of such series or Tranche with respect to such covenant
or other provision, will be deemed not to affect the rights under the Indenture
of the Holders of the Indenture Securities of any other series or Tranche.
If the supplemental indenture or other document establishing any series
or Tranche of Indenture Securities so provides, and as specified in the
applicable prospectus supplement and/or pricing supplement, the Holders of such
Indenture Securities will be deemed to have consented, by virtue of their
purchase of such Indenture Securities, to a supplemental indenture containing
the additions, changes or eliminations to or from the Indenture which are
specified in such supplemental indenture or other document, no Act of such
Holders will be required to evidence such consent and such consent may be
counted in the determination of whether the Holders of the requested principal
amount of Indenture Securities have consented to such supplemental indenture.
(See Section 1102.)
DUTIES OF THE TRUSTEE; RESIGNATION; REMOVAL
The Trustee will have, and will be subject to, all the duties and
responsibilities specified with respect to an indenture trustee under the Trust
Indenture Act. Subject to such provisions, the Trustee will be under no
obligation to exercise any of the powers vested in it by the Indenture at the
request of any Holder of Indenture Securities, unless such Holder offers it
reasonable indemnity against the costs, expenses and liabilities which might be
incurred thereby. The Trustee will not be required to expend or risk its own
funds or otherwise incur personal financial liability in the performance of its
duties if the Trustee reasonably believes that repayment or adequate indemnity
is not reasonably assured to it. (See Sections 801 and 803.)
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The Trustee may resign at any time with respect to the Indenture
Securities of one or more series by giving written notice thereof to Avista
Corp. or may be removed at any time with respect to the Indenture Securities of
one or more series by Act of the Holders of a majority in principal amount of
the outstanding Indenture Securities of such series delivered to the Trustee and
Avista Corp. No resignation or removal of the Trustee and no appointment of a
successor trustee will become effective until the acceptance of appointment by a
successor trustee in accordance with the requirements of the Indenture. So long
as no Event of Default or event which, after notice or lapse of time, or both,
would become an Event of Default has occurred and is continuing, if Avista Corp.
has delivered to the Trustee with respect to one or more series a resolution of
its Board of Directors appointing a successor trustee with respect to that or
those series and such successor has accepted such appointment in accordance with
the terms of the Indenture, the Trustee with respect to that or those series
will be deemed to have resigned and the successor will be deemed to have been
appointed as trustee in accordance with the Indenture.
(See Section 810.)
EVIDENCE OF COMPLIANCE
Compliance with the Indenture provisions is evidenced by written
statements of Avista Corp. officers or persons selected or paid by Avista Corp.
In certain cases, Avista Corp. must furnish opinions of counsel and
certifications of an engineer, appraiser or other expert (who in some cases must
be independent). In addition, the Indenture requires that Avista Corp. give the
Trustee, not less than annually, a brief statement as to Avista Corp.'s
compliance with the conditions and covenants under the Indenture.
GOVERNING LAW
The Indenture and the Indenture Securities will be governed by and
construed in accordance with the laws of the State of New York, except to the
extent that the Trust Indenture of 1939, as amended, shall be applicable.
PLAN OF DISTRIBUTION
Avista Corp. may sell the Debt Securities in any of four ways:
(a) directly to a limited number of institutional purchasers or to a single
purchaser, (b) through agents, (c) through underwriters or (d) through dealers.
The applicable prospectus supplement relating to each series of Debt Securities
will set forth the terms of the offering of such Debt Securities, including the
name or names of any such agents, underwriters or dealers, the purchase price of
such Debt Securities and the net proceeds to Avista Corp. from such sale, any
underwriting discounts and other items constituting underwriters' compensation,
the initial public offering price and any discounts or concessions allowed or
reallowed or paid to dealers. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
If Avista Corp. uses underwriters to sell Debt Securities, the
underwriters will acquire such Debt Securities for their own account and may
resell them in one or more transactions, including negotiated transactions, at a
fixed public offering price or at varying prices determined at the time of sale.
Unless otherwise set forth in the prospectus supplement relating to a series of
Debt Securities, the obligations of any underwriter or underwriters to purchase
such Debt Securities will be subject to certain conditions precedent, and such
underwriter or underwriters will be obligated to purchase all of such Debt
Securities if any are purchased, except that, in certain cases involving a
default by one or more underwriters, less than all of such Debt Securities may
be purchased.
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If an agent of Avista Corp. is used in any sale of a series of Debt
Securities, any commissions payable by Avista Corp. to such agent will be set
forth in the applicable prospectus supplement relating to such Debt Securities.
Unless otherwise indicated in the applicable prospectus supplement, any such
agent will be acting on a best efforts basis for the period of its appointment.
Any underwriters, dealers or agents participating in the distribution
of the Debt Securities may be deemed to be underwriters, and any discounts or
commissions received by them on the sale or resale of Debt Securities may be
deemed to be underwriting discounts and commissions, under the Securities Act.
Agents, underwriters and dealers may be entitled under agreements entered into
with Avista Corp. to indemnification by Avista Corp. against certain
liabilities, including liabilities under the Securities Act.
Unless otherwise provided in the applicable prospectus supplement
relating to a series of Debt Securities, Avista Corp. does not intend to apply
for the listing of the Notes on a national securities exchange, but has been
advised by the agents that they intend to make a market in the Notes, as
permitted by applicable laws and regulations. The agents are not obligated to do
so, however, and the agents may discontinue making a market at any time without
notice. No assurance can be given as to the liquidity of any trading market for
the Notes.
The agents and/or certain of their affiliates may engage in
transactions with and perform services for Avista Corp. and certain of its
affiliates in the ordinary course of business.
LEGAL MATTERS
The validity of the Debt Securities and certain other matters of New
York law and matters of federal securities law will be passed upon for Avista
Corp. by Thelen Reid & Priest LLP, New York, New York, counsel to Avista Corp.
The authorization of the Debt Securities by the Company and certain other
matters of Washington law, as well as the authorization of the Debt Securities
by the public utility regulatory commissions under Washington, Idaho, Montana,
Oregon and California law, will be passed upon for Avista Corp. by Paine,
Hamblen, Coffin, Brooke & Miller LLP, Spokane, Washington, counsel for Avista
Corp. The validity of the Debt Securities will be passed upon for any
underwriters or agents by Sullivan & Cromwell, New York, New York. In giving
their opinions Thelen Reid & Priest LLP and Sullivan & Cromwell may assume the
conclusions of Washington, California, Idaho, Montana and Oregon law set forth
in the opinion of Paine, Hamblen, Coffin, Brooke & Miller LLP.
EXPERTS
The financial statements and the related financial statement schedules
incorporated in this Prospectus by reference from Avista Corp.'s most recent
Annual Report on Form 10-K have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their report, which is incorporated herein by
reference, and have been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing.
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