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Exhibit 4.1
AVISTA
CORPORATION
TO
CITIBANK,
N.A.
As Successor Trustee
under
Mortgage and Deed of
Trust,
dated as of June 1,
1939
Forty-second Supplemental
Indenture
Providing among other
things for a Series of Bonds designated
“First Mortgage
Bonds, 5.95% Series due 2018”
Due June 1,
2018
Dated as of April 1,
2008
FORTY-SECOND SUPPLEMENTAL
INDENTURE
THIS INDENTURE , dated
as of the 1st day of April, 2008, between AVISTA CORPORATION
(formerly known as The Washington Water Power Company), a
corporation of the State of Washington, whose post office address
is 1411 East Mission Avenue, Spokane, Washington 99202 (the
“Company”), and CITIBANK, N.A., formerly First National
City Bank (successor by merger to First National City Trust
Company, formerly City Bank Farmers Trust Company), a national
banking association incorporated and existing under the laws of the
United States of America, whose post office address is 388
Greenwich Street – 14 th Floor, New York, New York 10013 (the “Trustee”), as
Trustee under the Mortgage and Deed of Trust, dated as of
June 1, 1939 (the “Original Mortgage”), executed
and delivered by the Company to secure the payment of Bonds issued
or to be issued under and in accordance with the provisions
thereof, this indenture (the “Forty-second Supplemental
Indenture”) being supplemental to the Original Mortgage, as
heretofore supplemented and amended.
WHEREAS pursuant to a written
request of the Company made in accordance with Section 103 of
the Original Mortgage, Francis M. Pitt (then Individual
Trustee under the Mortgage, as supplemented) ceased to be a trustee
thereunder on July 23, 1969, and all of his powers as
Individual Trustee have devolved upon the Trustee and its
successors alone; and
WHEREAS by the Original
Mortgage the Company covenanted that it would execute and deliver
such further instruments and do such further acts as might be
necessary or proper to carry out more effectually the purposes of
the Original Mortgage and to make subject to the lien of the
Original Mortgage any property thereafter acquired intended to be
subject to the lien thereof; and
WHEREAS the Company has
heretofore executed and delivered, in addition to the Original
Mortgage, the indentures supplemental thereto, and has issued the
series of Bonds, set forth in Exhibit A hereto (the Mortgage,
as supplemented and amended by the First through Forty-first
Supplemental Indentures being herein sometimes called the
“Mortgage”); and
WHEREAS the Original Mortgage
and the First through Fortieth Supplemental Indentures have been
appropriately filed or recorded in various official records in the
States of Washington, Idaho, Montana and Oregon, as set forth in
the First through Forty-first Supplemental Indentures and the
Instrument of Further Assurance, dated December 15, 2001,
hereinafter referred to; and
WHEREAS the Forty-first
Supplemental Indenture, dated as of December 1, 2006 has been
appropriately filed or recorded in the various official records in
the States of Washington, Idaho, Montana and Oregon set forth in
Exhibit B hereto; and
WHEREAS for the purpose of
confirming or perfecting the lien of the Mortgage on certain of its
properties, the Company has heretofore executed and delivered a
Short Form Mortgage and Security Agreement, in multiple
counterparts dated as of various dates in 1992, and such instrument
has been appropriately filed or recorded in the various official
records in the States of Montana and Oregon; and
WHEREAS for the purpose of
confirming or perfecting the lien of the Mortgage on certain of its
properties, the Company has heretofore executed and delivered an
Instrument of Further Assurance dated as of December 15, 2001,
and such instrument has been appropriately filed or recorded in the
various official records in the States of Washington, Idaho,
Montana and Oregon; and
WHEREAS in addition to the
property described in the Mortgage the Company has acquired certain
other property, rights and interests in property; and
WHEREAS Section 8 of the
Original Mortgage provides that the form of each series of Bonds
(other than the First Series) issued thereunder and of the coupons
to be attached to coupon Bonds of such series shall be established
by Resolution of the Board of Directors of the Company; that the
form of such series, as established by said Board of Directors,
shall specify the descriptive title of the Bonds and various other
terms thereof; and that such series may also contain such
provisions not inconsistent with the provisions of the Mortgage as
the Board of Directors may, in its discretion, cause to be inserted
therein expressing or referring to the terms and conditions upon
which such Bonds are to be issued and/or secured under the
Mortgage; and
WHEREAS Section 120 of
the Original Mortgage provides, among other things, that any power,
privilege or right expressly or impliedly reserved to or in any way
conferred upon the Company by any provision of the Mortgage,
whether such power, privilege or right is in any way restricted or
is unrestricted, may be in whole or in part waived or surrendered
or subjected to any restriction if at the time unrestricted or to
additional restriction if already restricted, and the Company may
enter into any further covenants, limitations or restrictions for
the benefit of any one or more series of Bonds issued thereunder,
or the Company may cure any ambiguity contained therein, or in any
supplemental indenture, by an instrument in writing executed and
acknowledged by the Company in such manner as would be necessary to
entitle a conveyance of real estate to record in all of the states
in which any property at the time subject to the lien of the
Mortgage shall be situated; and
WHEREAS the Company now
desires to create a new series of Bonds and to add a provision to
the Original Mortgage, as heretofore amended, regarding policies of
title insurance on the Mortgaged and Pledged Property;
and
WHEREAS the execution and
delivery by the Company of this Forty-second Supplemental Indenture
and the terms of the Bonds of the Forty-second Series, hereinafter
referred to, have been duly authorized by the Board of Directors of
the Company by appropriate Resolutions of said Board of Directors;
and all things necessary to make this Forty-second Supplemental
Indenture a valid, binding and legal instrument have been
performed;
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NOW, THEREFORE, THIS
INDENTURE WITNESSETH: That the Company, in consideration of the
premises and of other good and valuable consideration, the receipt
and sufficiency whereof are hereby acknowledged, hereby confirms
the estate, title and rights of the Trustee (including, without
limitation, the lien of the Mortgage on the property of the Company
subjected thereto, whether now owned or hereafter acquired) held as
security for the payment of both the principal of and interest and
premium, if any, on the Bonds from time to time issued under the
Mortgage according to their tenor and effect and the performance of
all the provisions of the Mortgage and of such Bonds, and, without
limiting the generality of the foregoing, hereby confirms the
grant, bargain, sale, release, conveyance, assignment, transfer,
mortgage, pledge, setting over and confirmation unto the Trustee,
contained in the Mortgage, of all the following described
properties of the Company, whether now owned or hereafter acquired,
namely:
All of the property, real,
personal and mixed, of every character and wheresoever situated
(except any hereinafter or in the Mortgage expressly excepted)
which the Company now owns or, subject to the provisions of
Section 87 of the Original Mortgage, may hereafter acquire
prior to the satisfaction and discharge of the Mortgage, as fully
and completely as if herein or in the Mortgage specifically
described, and including (without in anywise limiting or impairing
by the enumeration of the same the scope and intent of the
foregoing or of any general description contained in Mortgage) all
lands, real estate, easements, servitudes, rights of way and
leasehold and other interests in real estate; all rights to the use
or appropriation of water, flowage rights, water storage rights,
flooding rights, and other rights in respect of or relating to
water; all plants for the generation of electricity, power houses,
dams, dam sites, reservoirs, flumes, raceways, diversion works,
head works, waterways, water works, water systems, gas plants,
steam heat plants, hot water plants, ice or refrigeration plants,
stations, substations, offices, buildings and other works and
structures and the equipment thereof and all improvements,
extensions and additions thereto; all generators, machinery,
engines, turbines, boilers, dynamos, transformers, motors, electric
machines, switchboards, regulators, meters, electrical and
mechanical appliances, conduits, cables, pipes and mains; all lines
and systems for the transmission and distribution of electric
current, gas, steam heat or water for any purpose; all towers,
mains, pipes, poles, pole lines, conduits, cables, wires, switch
racks, insulators, compressors, pumps, fittings, valves and
connections; all motor vehicles and automobiles; all tools,
implements, apparatus, furniture, stores, supplies and equipment;
all franchises (except the Company’s franchise to be a
corporation), licenses, permits, rights, powers and privileges; and
(except as hereinafter or in the Mortgage expressly excepted) all
the right, title and interest of the Company in and to all other
property of any kind or nature.
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The property so conveyed or
intended to be so conveyed under the Mortgage shall include, but
shall not be limited to, the property set forth in Exhibit C
hereto, the particular description of which is intended only to aid
in the identification thereof and shall not be construed as
limiting the force, effect and scope of the foregoing.
TOGETHER WITH all and
singular the tenements, hereditaments and appurtenances belonging
or in anywise appertaining to the aforesaid property or any part
thereof, with the reversion and reversions, remainder and
remainders and (subject to the provisions of Section 57 of the
Original Mortgage) the tolls, rents, revenues, issues, earnings,
income, product and profits thereof, and all the estate, right,
title and interest and claim whatsoever, at law as well as in
equity, which the Company now has or may hereafter acquire in and
to the aforesaid property and franchises and every part and parcel
thereof.
THE COMPANY HEREBY CONFIRMS
that, subject to the provisions of Section 87 of the Original
Mortgage, all the property, rights, and franchises acquired by the
Company after the date thereof (except any hereinbefore or
hereinafter or in the Mortgage expressly excepted) are and shall be
as fully embraced within the lien of the Mortgage as if such
property, rights and franchises had been owned by the Company at
the date of the Original Mortgage and had been specifically
described therein.
PROVIDED THAT the following
were not and were not intended to be then or now or hereafter
granted, bargained, sold, released, conveyed, assigned,
transferred, mortgaged, pledged, set over or confirmed under the
Mortgage and were, are and shall be expressly excepted from the
lien and operation namely: (l) cash, shares of stock and
obligations (including Bonds, notes and other securities) not
hereafter specifically pledged, paid, deposited or delivered under
the Mortgage or covenanted so to be; (2) merchandise,
equipment, materials or supplies held for the purpose of sale in
the usual course of business or for consumption in the operation of
any properties of the Company; (3) bills, notes and accounts
receivable, and all contracts, leases and operating agreements not
specifically pledged under the Mortgage or covenanted so to be;
(4) electric energy and other materials or products generated,
manufactured, produced or purchased by the Company for sale,
distribution or use in the ordinary course of its business; and
(5) any property heretofore released pursuant to any
provisions of the Mortgage and not heretofore disposed of by the
Company; provided, however, that the property and rights expressly
excepted from the lien and operation of the Mortgage in the above
subdivisions (2) and (3) shall (to the extent permitted
by law) cease to be so excepted in the event that the Trustee or a
receiver or trustee shall enter upon and take possession of the
Mortgaged and Pledged Property in the manner provided in
Article XII of the Original Mortgage by reason of the
occurrence of a Completed Default as defined in said
Article XII.
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TO HAVE AND TO HOLD all such
properties, real, personal and mixed, granted, bargained, sold,
released, conveyed, assigned, transferred, mortgaged, pledged, set
over or confirmed by the Company in the Mortgage as aforesaid, or
intended so to be, unto the Trustee, and its successors, heirs and
assigns forever.
IN TRUST NEVERTHELESS, for
the same purposes and upon the same terms, trusts and conditions
and subject to and with the same provisos and covenants as set
forth in the Mortgage, this Forty-second Supplemental Indenture
being supplemental to the Mortgage.
AND IT IS HEREBY FURTHER
CONFIRMED by the Company that all the terms, conditions, provisos,
covenants and provisions contained in the Mortgage shall affect and
apply to the property in the Mortgage described and conveyed, and
to the estates, rights, obligations and duties of the Company and
the Trustee and the beneficiaries of the trust with respect to said
property, and to the Trustee and its successors in the trust, in
the same manner and with the same effect as if the said property
had been owned by the Company at the time of the execution of the
Original Mortgage, and had been specifically and at length
described in and conveyed to said Trustee by the Original Mortgage
as a part of the property therein stated to be conveyed.
The Company further covenants
and agrees to and with the Trustee and its successor or successors
in such trust under the Mortgage, as follows:
ARTICLE I
Forty-second Series of
Bonds
SECTION 1. (I) There shall be
a Series of Bonds designated “First Mortgage Bonds, 5.95%
Series due 2018” (herein sometimes referred to as the
“Bonds of the Forty-second Series”), each of which
shall also bear the descriptive title First Mortgage Bond and the
form thereof, which has been established by Resolution of the Board
of Directors of the Company, is set forth on Exhibit D hereto.
The Bonds of the Forty-second Series shall be issued as fully
registered Bonds in denominations of One Thousand Dollars and, at
the option of the Company, any amount in excess thereof (the
exercise of such option to be evidenced by the execution and
delivery thereof) and shall be dated as in Section 10 of the
Original Mortgage provided.
The Bonds of the Forty-second
Series shall mature, shall bear interest and shall be payable as
set forth below:
(a) the principal of Bonds of
the Forty-second Series shall (unless theretofore paid) be payable
on the Stated Maturity Date (as hereinafter defined);
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(b) the Bonds of the
Forty-second Series shall bear interest at the rate of five and
ninety-five one-hundredths percentum (5.95%) per annum;
interest on such Bonds shall accrue from and including the date of
the initial authentication and delivery thereof, except as
otherwise provided in the form of bond attached hereto as
Exhibit D; interest on such Bonds shall be payable on each
Interest Payment Date and at Maturity (as each of such terms is
hereafter defined); and interest on such Bonds during any period
for which payment is made shall be computed on the basis of a
360-day year consisting of twelve 30-days months;
(c) the principal of and
premium, if any, and interest on each Bond of the Forty-second
Series payable at Maturity shall be payable upon presentation
thereof at the office or agency of the Company in the Borough of
Manhattan, The City of New York, in such coin or currency as at the
time of payment is legal tender for public and private debts. The
interest on each Bond of the Forty-second Series (other than
interest payable at Maturity) shall be payable by check, in similar
coin or currency, mailed to the registered owner thereof as of the
close of business on the Record Date (as hereinafter defined) next
preceding each Interest Payment Date; provided, however, that if
such registered owner shall be a securities depositary, such
payment may be made by such other means in lieu of check as shall
be agreed upon by the Company, the Trustee and such registered
owner.
(d) The Bonds of the
Forty-second Series shall be redeemable in whole at any time, or in
part from time to time, at the option of the Company at a
redemption price equal to the greater of
(i) 100% of the principal
amount of the Bonds being redeemed, and
(ii) the sum of the present
values of the remaining scheduled payments of principal of and
interest (not including any portion of any scheduled payment of
interest which accrued prior to the redemption date) on the Bonds
being redeemed discounted to the date of redemption on a semiannual
basis (assuming a 360-day year consisting of twelve 30-day months)
at a discount rate equal to the Treasury Yield (as hereinafter
defined) plus 37.5 basis points,
plus , in the case of
either (i) or (ii) above, whichever is applicable,
accrued interest on such Bonds to the date of
redemption.
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(e) (i) “Treasury
Yield” means, with respect to any redemption of Bonds of the
Forty-second Series, the rate per annum equal to the semiannual
equivalent yield to maturity of the Comparable Treasury Issue,
assuming a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable
Treasury Price. The Treasury Yield shall be calculated as of the
third business day preceding the redemption date or, if the Bonds
to be redeemed are to be caused to be deemed to have been paid
within the meaning of Section 106 of the Original Mortgage, as
amended, prior to the redemption date, then as of the third
business day prior to the earlier of (x) the date notice of
such redemption is mailed to bondholders pursuant to
Section 52 of the Original Mortgage, as amended, and
(y) the date irrevocable arrangements with the Trustee for the
mailing of such notice shall have been made, as the case may be
(the “Calculation Date”).
(ii) “Comparable
Treasury Issue” means the United States Treasury security
selected by an Independent Investment Banker as having a maturity
comparable to the remaining term of the Bonds of the Forty-second
Series that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues
of corporate debt securities of comparable maturity to the
remaining term of the Bonds.
(iii) “Comparable
Treasury Price” means, (A) the average of the bid and
asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) on the third business
day preceding the Calculation Date, as set forth in the H.15 Daily
Update of the Federal Reserve Bank of New York or (B) if such
release (or any successor release) is not published or does not
contain such prices on such business day, the Reference Treasury
Dealer Quotation for the Calculation Date.
(iv) “H.15(519)”
means the weekly statistical release entitled “Statistical
Release H.15 (519)”, or any successor publication, published
by the Board of Governors of the Federal Reserve System.
(v) “H.15 Daily
Update” means the daily update of H.15(519) available through
the worldwide website of the Board of Governors of the Federal
Reserve System or any successor site or publication.
(vi) “Independent
Investment Banker” means UBS Securities LLC, BNY Capital
Markets, Inc., Goldman, Sachs & Co. or, if so determined
by the Company, any other independent investment banking
institution of national standing appointed by the Company and
reasonably acceptable to the Trustee.
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(vii) “Reference
Treasury Dealer Quotation” means, with respect to the
Reference Treasury Dealer, the average, as determined by the
Trustee, of the bid and asked prices for the Comparable Treasury
Issue (expressed in each case as a percentage of its principal
amount and quoted in writing to the Trustee by such Reference
Treasury Dealer at 5:00 p.m. on the third business day preceding
the Calculation Date).
(viii) “Reference
Treasury Dealer” means a primary U.S. Government securities
dealer in New York City appointed by the Company and reasonably
acceptable to the Trustee.
(II) (a) At the option of the
registered owner, any Bonds of the Forty-second Series, upon
surrender thereof for cancellation at the office or agency of the
Company in the Borough of Manhattan, The City of New York, shall be
exchangeable for a like aggregate principal amount of Bonds of the
same Series of other authorized denominations.
The Bonds of the Forty-second
Series shall be transferable, upon the surrender thereof for
cancellation, together with a written instrument of transfer in
form approved by the registrar duly executed by the registered
owner or by his duly authorized attorney, at the office or agency
of the Company in the Borough of Manhattan, The City of New
York.
Upon any exchange or transfer
of Bonds of the Forty-second Series, the Company may make a charge
therefor sufficient to reimburse it for any tax or taxes or other
governmental charge, as provided in Section 12 of the Original
Mortgage, but the Company hereby waives any right to make a charge
in addition thereto or any exchange or transfer of Bonds of the
Forty-second Series; provided, however, that the Company shall not
be required to make any transfer or exchange of any Bonds of the
Forty-second Series for a period of 10 days next preceding any
selection of such Bonds for redemption, nor shall it be required to
make transfers or exchange of any Bonds of the Forty-second Series
which shall have been selected for redemption in whole or in
part.
The Bonds of the Forty-second
Series are initially to be issued in global form, registered in the
name of Cede & Co., as nominee for The Depository Trust
Company (the “Depositary”). Notwithstanding the
provisions of subdivision (a) above, such Bonds shall not be
transferable, nor shall any purported transfer be registered,
except as follows:
(i) such Bonds may be
transferred in whole, and appropriate registration of transfer
effected, to the Depositary, or by the Depositary to another
nominee thereof, or by any nominee of the Depositary to any other
nominee thereof, or by the Depositary or any nominee thereof to any
successor securities depositary or any nominee thereof;
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(ii) such Bonds may be
transferred in whole, and appropriate registration of transfer
effected, to the beneficial holders thereof, and thereafter shall
be transferable, if:
(A) The Depositary, or any
successor securities depositary, shall have notified the Company
and the Trustee that (I) it is unwilling or unable to continue
to act as securities depositary with respect to such Bonds or (II)
it is no longer a clearing agency registered under the Securities
Exchange Act of 1934, as amended, and, in either case, the Trustee
shall not have been notified by the Company within one hundred
twenty (120) days of the identity of a successor securities
depositary with respect to such Bonds; or
(B) the Company shall have
delivered to the Trustee a written order to the effect that such
Bonds shall be so transferable on and after a date specified
therein.
The Bonds of the Forty-second
Series, when in global form, shall bear a legend as to such global
form and the foregoing restrictions on transfer substantially as
set forth below:
This global bond is held by
Cede & Co., as nominee for The Depository Trust Company
(the “Depositary”) for the benefit of the beneficial
owners hereof. This bond may not be transferred, nor may any
purported transfer be registered, except that (i) this bond
may be transferred in whole, and appropriate registration of
transfer effected, if such transfer is by Cede & Co., as
nominee for the Depositary, to the Depositary, or by the Depositary
to another nominee thereof, or by any nominee of the Depositary to
any other nominee thereof, or by the Depositary or any nominee
thereof to any successor Bonds depositary or any nominee thereof;
and (ii) this bond may be transferred, and appropriate
registration of transfer effected, to the beneficial holders
hereof, and thereafter shall be transferable without restrictions
(except as provided in the preceding paragraph) if: (A) the
Depositary, or any successor securities depositary, shall have
notified the Company and the Trustee that (I) it is unwilling
or unable to continue to act as securities depositary with respect
to the Bonds or (II) it is no longer a clearing agency registered
under the Securities Exchange Act of 1934, as amended, and, in
either case, the Trustee shall not have been notified by the
Company within one hundred twenty (120) days of the identity
of a successor securities depositary with respect to the Bonds; or
(B) the Company shall have delivered to the Trustee a written
order to the effect that the Bonds shall be so transferable on and
after a date specified therein.
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(III) For all purposes of
this Forty-second Supplemental Indenture, except as otherwise
expressly provided or unless the context otherwise requires, the
terms listed below, when used with respect to the Bonds of the
Forty-second Series, shall have the meanings specified
below:
“ Interest Payment
Date ” means June 1 and December 1 in each
year, commencing December 1, 2008.
“ Maturity
” means the date on which the principal of the Bonds of the
Forty-second Series becomes due and payable, whether at the Stated
Maturity Date, upon redemption or acceleration, or
otherwise.
“ Record Date
”, with respect to any Interest Payment Date, means the
May 15 or November 15, as the case may be, next preceding
such Interest Payment Date.
“ Stated Maturity
Date ” means June 1, 2018.
(IV) Notwithstanding the
provisions of Section 106 of the Original Mortgage, as
amended, the Company shall not cause any Bonds of the Forty-second
Series, or any portion of the principal amount thereof, to be
deemed to have been paid as provided in such Section and its
obligations in respect thereof to be deemed to be satisfied and
discharged prior to the Maturity thereof unless the Company shall
deliver to the Trustee either:
(a) an instrument wherein the
Company, notwithstanding the effect of Section 106 of the
Original Mortgage, as amended, in respect of such Bonds, shall
assume the obligation (which shall be absolute and unconditional)
to irrevocably deposit with the Trustee such additional sums of
money, if any, or additional government obligations (meeting the
requirements of Section 106), if any, or any combination
thereof, at such time or times, as shall be necessary, together
with the money and/or government obligations theretofore so
deposited, to pay when due the principal of and premium, if any,
and interest due and to become due on such Bonds or portions
thereof, all in accordance with and subject to the provisions of
Section 106; provided, however, that such instrument may state
that the obligation of the Company to make additional deposits as
aforesaid shall be subject to the delivery to the Company by the
Trustee of a notice asserting the deficiency accompanied by an
opinion of an independent accountant showing the calculation
thereof (which opinion shall be obtained at the expense of the
Company); or
(b) an Opinion of Counsel to
the effect that the holders of such Bonds, or portions of the
principal amount thereof, will not recognize income, gain or loss
for United States federal income tax purposes as a result of the
satisfaction and discharge of the Company’s indebtedness in
respect thereof and will be subject to United States federal income
tax on the same amounts, at the same times and in the same manner
as if such satisfaction and discharge had not been
effected.
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(V) The Bonds of the
Forty-second Series shall have such further terms as are set forth
in Exhibit D hereto. If there shall be a conflict between the terms
of the form of bond and the provisions of the Mortgage, the
provisions of the Mortgage shall control to the extent permitted by
law.
(VI) Upon the delivery of
this Forty-second Supplemental Indenture, Bonds of the Forty-second
Series in an aggregate principal amount of $250,000,000 are to be
authenticated and delivered, upon the basis of Property Additions,
and will be Outstanding, in addition to $986,700,000 aggregate
principal amount of Bonds of prior Series Outstanding at the date
of delivery of this Forty-second Supplemental Indenture; it being
understood that, subject to the provisions of the Mortgage, there
shall be no limit under the Mortgage upon the aggregate principal
amount of Bonds of the Forty-second Series which may be
authenticated and delivered hereunder.
ARTICLE II
Amendments of Original
Mortgage
SECTION
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