Exhibit 1.1
AVISTA CORPORATION
2,750,000 Shares of Common
Stock
Underwriting
Agreement
December 12, 2006
UBS Securities LLC,
As Representative of the
several
Underwriters named in Schedule I
hereto
299 Park Avenue
New York, New York 10171-0026,
Ladies and Gentlemen:
Avista Corporation, a Washington
corporation (the “ Company ”), confirms its
agreement with UBS Securities LLC and each of the other
Underwriters named in Schedule I hereto (collectively, the “
Underwriters ”) for whom UBS Securities is acting as
representative (in such capacity you shall hereinafter be referred
to as the “ Representative ”), with respect to
(i) the issue and sale by the Company and the purchase by the
Underwriters, acting severally and not jointly, of the respective
numbers of shares of Common Stock, without par value (“Common
Stock”), and the preferred share purchase rights appurtenant
thereto (the “ Rights ”), of the Company set
forth in Schedule I hereto and (ii) the grant by the Company
to the Underwriters, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any
part of 412,500 additional shares of Common Stock and the preferred
share purchase rights apparent thereto, to cover over-allotments,
if any. The aforesaid 2,750,000 shares of Common Stock (the
“Initial Securities”) to be purchased by the
Underwriters and all or any part of the 412,500 shares of Common
Stock subject to the option described in Section 2(b) hereof
(the “Option Securities”) are hereinafter called,
collectively, the “Securities”. The Rights will be
issued in accordance with the Rights Agreement, dated
November 15, 1999 (the “ Rights Agreement
”), between the Company and the Bank of New York, as rights
agent.
To the extent there is only one
Underwriter named in Schedule I hereto, the terms
“Representative” and “Underwriters” as used
herein shall mean such Underwriter.
1. The Company represents and
warrants to, and agrees with, each of the Underwriters
that:
(a) An “automatic shelf
registration statement” as defined under Rule 405 under the
Securities Act of 1933, as amended (the “ Act ”)
on Form S-3 (File No. 333-139239) in respect of the Securities
has been filed with the Securities and Exchange Commission (the
“ Commission ”) not earlier than three years
prior to the date hereof; such registration statement, and any
post-effective amendment thereto, became effective on filing; and
no stop order suspending the effectiveness of such registration
statement has been issued and no proceeding for that purpose has
been initiated or, to the best knowledge of the Company, threatened
by the Commission, and no notice of objection of the Commission to
the use of such registration statement or any part thereof or any
post-effective amendment thereto pursuant to Rule 401(g)(2) under
the Act has been received by the Company; in this
agreement,
(i) the base prospectus filed as
part of such registration statement, in the form in which it has
most recently been filed with the Commission on or prior to the
date of this Agreement, is called the “ Basic
Prospectus ”;
(ii) any preliminary prospectus
(including any preliminary prospectus supplement) relating to the
Securities filed with the Commission pursuant to Rule 424(b) under
the Act is called a “ Preliminary Prospectus
”;
(iii) such registration statement,
as deemed revised pursuant to Rule 430B(f)(1) under the Act on the
effective date of such registration statement for purposes of
Section 11 of the Act (as such section applies to the Company
and the Underwriters for the Securities pursuant to Rule 430B(f)(2)
under the Act (the “ Effective Date ”)),
including the exhibits thereto and all documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under the
Act at the Effective Date but excluding the Statement of
Eligibility on Form T-1, is called the “ Registration
Statement ”;
(iv) the Basic Prospectus, as
amended and supplemented immediately prior to the Applicable Time
(as defined in Section 1(c) hereof), is called the “
Pricing Prospectus ”;
(v) the form of the final prospectus
relating to the Securities filed with the Commission pursuant to
Rule 424(b) under the Act in accordance with Section 5(a)
hereof is called the “ Prospectus ”;
(vi) any reference to the Basic
Prospectus, the Pricing Prospectus, any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Act, as of the date of such
prospectus;
(vii) any reference to any amendment
or supplement to the Basic Prospectus, any Preliminary Prospectus
or the Prospectus shall be deemed to refer to and include the form
of prospectus contained in any post-effective amendment to the
Registration Statement, any prospectus supplement relating to the
Securities filed with the Commission pursuant to Rule 424(b) under
the Act and any documents filed under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), and
incorporated therein, in each case after the date of the Basic
Prospectus, such Preliminary Prospectus, or the Prospectus, as the
case may be;
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(viii) any reference to any
amendment to the Registration Statement shall be deemed to refer to
and include any annual report of the Company filed pursuant to
Section 13(a) or 15(d) of the Exchange Act after the effective
date of the Registration Statement that is incorporated by
reference in the Registration Statement; and
(ix) any “issuer free writing
prospectus” as defined in Rule 433 under the Act relating to
the Securities is called an “ Issuer Free Writing
Prospectus ”;
(b) No order preventing or
suspending the use of any Preliminary Prospectus or any Issuer Free
Writing Prospectus has been issued by the Commission;
(c) the Pricing Prospectus, at the
time of filing thereof with the Commission, conformed in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did not contain an
untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through the
Representative expressly for use therein;
(d) For the purposes of this
Agreement, the “Applicable Time” is 8:30 am (Eastern
time) on the date of this Agreement; the Pricing Prospectus and the
information included on Schedule III hereto, all considered
together (together the “ Pricing Disclosure Package
”), as of the Applicable Time, did not include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty
shall not apply to statements or omissions made in reliance upon
and in conformity with information furnished in writing to the
Company by an Underwriter through the Representative expressly for
use therein; no Issuer Free Writing Prospectus listed on Schedule
II(a) hereto conflicted or will conflict with the information
contained in the Registration Statement, the Pricing Prospectus, or
the Prospectus; and no such Issuer Free Writing Prospectus,
considered together with the Pricing Disclosure Package as of the
Applicable Time, included any untrue statement of a material fact
or omitted to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which
they were made, not misleading; provided, however, that this
representation and warranty shall not apply to statements or
omissions made in an Issuer Free Writing Prospectus in reliance
upon and in conformity with information furnished in writing to the
Company by an Underwriter through the Representative expressly for
use therein;
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(e) The documents incorporated by
reference in the Pricing Prospectus and the Prospectus, when they
became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the
Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or
omitted to state a material fact necessary to make the statements
therein, in light of the circumstances under which they were made,
not misleading; any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement
thereto, when such documents are filed with the Commission, as the
case may be, will conform in all material respects to the
requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder and will not
contain an untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading;
provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the
Company by an Underwriter through the Representative expressly for
use therein; and no such documents were filed with the Commission
since the Commission’s close of business on the business day
immediately prior to the date of this Agreement and prior to the
time of the execution and delivery of this Agreement, except as set
forth on Schedule II (b) hereto;
(f) The Registration Statement
conforms, and any further amendments or supplements to the
Registration Statement will conform, in all material respects to
the requirements of the Act and the rules and regulations of the
Commission thereunder and do not and will not, as of the Effective
Date, contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply
to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by
an Underwriter through the Representative expressly for use
therein;
(g) The Prospectus and any
amendments or supplements thereto, when filed with the Commission,
will conform in all material respects to the requirements of the
Act and the rules and regulations of the Commission thereunder, and
the Prospectus and any amendments and supplements thereto, when
they are filed with the Commission and at the Time of Delivery (as
defined below), will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make
the statements made, in light of the circumstances under which they
were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through the
Representative expressly for use therein;
(h) Except as set forth in or
contemplated by the Pricing Prospectus, (i) since the
respective dates as of which information is given in the
Registration Statement and the Pricing Prospectus, there has not
been (A) any material adverse change in or affecting the
business, financial condition, shareholders’ equity or
results of
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operations of the Company and its
subsidiaries, considered as a whole, or any development reasonably
expected to result in such a material adverse change (in each case,
a “ Material Adverse Change ”), (B) any
transaction entered into by the Company or any subsidiary thereof
which is material to the Company and its subsidiaries as a whole
other than transactions in the ordinary course of business, and
(C) any change in the capital stock or long-term debt of the
Company or any of its subsidiaries (except for shares of common
stock issued under the Company’s Dividend-Reinvestment and
Stock Purchase Plan and employee benefit plans and director and/or
executive compensation plans and except for scheduled maturities of
long-term debt) and (ii) neither the Company nor any of its
subsidiaries has any contingent obligation which is material to the
Company and its subsidiaries as a whole;
(i) The Company has been duly
incorporated and is validly existing in good standing as a
corporation under the laws of the State of Washington, is duly
qualified to do business and in good standing as a foreign
corporation under the laws of the States of Idaho, Montana and
Oregon, and has corporate and other power and authority and has all
material required approvals and authorizations to own, lease and
operate its properties, and to transact an electric and/or gas
public utility business in such jurisdictions;
(j) The Company has an authorized
capitalization as set forth in the Pricing Prospectus, and all of
the issued shares of capital stock of the Company have been duly
and validly authorized and issued, are fully paid and
non-assessable;
(k) Each of Avista Capital, Inc.
(“ Avista Capital ”), Avista Energy, Inc.
(“ Avista Energy ”) and Advantage IQ, Inc.
(“ Advantage IQ ”) is duly incorporated and
validly existing in good standing under the laws of the State of
Washington and has corporate and other power and authority and has
all material required approvals and authorizations to own, lease
and operate its properties, and to transact its
business;
(l) All of the issued shares of
capital stock of Avista Capital, Avista Energy and Advantage IQ
have been duly and validly authorized and issued, are fully paid
and non-assessable; 1,715,000 shares of Avista Capital’s
capital stock are issued and outstanding and the Company is the
record and beneficial owner of all shares of such capital stock;
11,822,899 shares of Avista Energy’s capital stock are issued
and outstanding and Avista Capital is the record and beneficial
owner of 11,801,728 shares of such capital stock; and 29,591,434
shares of Advantage IQ’s capital stock are issued and
outstanding (which consist of (i) 2,031,814 shares of
non-voting preferred stock and (ii) 27,559,620 shares of
common stock) and Avista Capital is the record and beneficial owner
of 1,849,698 shares of such preferred stock and 27,540,570 shares
of such common stock; and the shares of capital stock of Avista
Capital, Avista Energy and Advantage IQ that are owned directly or
indirectly by the Company are owned free and clear of all security
interests, liens, encumbrances, equities and claims;
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(m) The Securities have been duly
authorized by all necessary corporate action on the part of the
Company, and, when issued and delivered against payment therefore
as provided in this Agreement, the Securities will be validly
issued,
fully paid and nonassessable, will
not be subject to any preemptive or similar rights and will be free
and clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever; the Securities will be
substantially in the form previously delivered to the
Representative; and the Securities will conform in all material
respects to the description thereof contained in the Pricing
Disclosure Package and the Prospectus; except as set forth in the
Pricing Prospectus, there are no outstanding options, warrants,
conversion rights, subscription rights, preemptive rights, rights
of first refusal or other rights or agreements of any nature
outstanding to subscribe for or to purchase any shares of Common
Stock of the Company or any other securities of the Company of any
kind binding on the Company (except pursuant to dividend
reinvestment, stock purchase or ownership, stock option, director
or employee benefit plans) and there are no outstanding securities
or instruments of the Company containing anti-dilution or similar
provisions that will be triggered by the issuance of the Shares as
described in this Agreement; there are no restrictions upon the
voting or transfer of any shares of the Company’s Common
Stock pursuant to the Company’s Restated Articles of
Incorporation or By-laws; there are no agreements or other
obligations (contingent or otherwise) that may require the Company
to repurchase or otherwise acquire any shares of its Common Stock;
no person has the right, contractual or otherwise, to cause the
Company to issue to it, or to register pursuant to the Act, any
shares of capital stock or other securities of the Company upon the
filing of the Registration Statement or the issuance or sale of the
Securities hereunder;
(n) The Common Stock is registered
pursuant to Section 12(b) of the Securities Exchange Act of
1934, as amended (the “ Exchange Act ”) and is
currently listed and quoted on the New York Stock Exchange under
the trading symbol “AVA”;
(o) The issue and sale of the
Securities and the compliance by the Company with all of the
provisions of the Securities and this Agreement and the
consummation by the Company of the transactions herein and therein
contemplated will not (i) violate the Company’s Restated
Articles of Incorporation, as amended, or By-laws or
(ii) result in a breach or violation of any of the terms or
provisions of, or constitute a default under, (A) any statute
or, to the knowledge of the Company, any order, rule or regulation
of any court or any federal or state regulatory authority or other
governmental agency or body having jurisdiction over the Company or
any of its subsidiaries or any of their properties, or (B) any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, which breach,
violation or default referred to in this clause (ii) would
individually, or in the aggregate, have, or would be reasonably
expected to have, a material adverse effect on the business,
financial condition, shareholders’ equity or results of
operations of the Company and its subsidiaries considered as a
whole (in each case, a “ Material Adverse Effect
”);
(p) No consent, approval,
authorization, order, registration or qualification of or with any
court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties is
required for the issue and sale of the Securities or the
consummation by the Company of the transactions contemplated by
this Agreement, except the registration under the Act of the
Securities
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and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Securities by the Underwriters,
and such consents, approvals, authorizations, filings or
registrations as may be required by the Washington Utilities and
Transportation Commission (the “ WUTC ”), the
Idaho Public Utilities Commission (the “ IPUC ”)
and the Public Utility Commission of Oregon (the “
OPUC ”);
(q) None of the Company, Avista
Capital, Avista Energy and Advantage IQ is (i) currently in
violation of its Restated Articles of Incorporation or By-laws or,
(ii) except as set forth in the Pricing Prospectus, in default
in the performance or observance of any obligation, agreement,
covenant or condition contained in any indenture, mortgage, deed of
trust, loan agreement, lease or other agreement or instrument to
which it is a party or by which it or any of its properties may be
bound which default, in the case of clause (ii) would have, or
would be reasonably expected to have, a Material Adverse Effect,
except for any such default in the performance or observance of any
such obligation, agreement, covenant or condition that has been
waived in accordance with the applicable agreement;
(r) Other than as set forth in the
Pricing Prospectus, neither the Company nor any of its subsidiaries
(i) is in violation of any statute, or any rule, regulation,
decision or order of any governmental agency or body or any court
relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the
environmental or human exposure to hazardous or toxic substances
(collectively, “ environmental laws ”),
(ii) does not own or operate any real property which to its
knowledge is contaminated with any substance that is subject to any
environmental laws, (iii) is not to its knowledge liable for
any off-site disposal or contamination pursuant to any
environmental laws, and (iv) is not subject to any claim
relating to any environmental laws and the Company is not aware of
any pending investigation which could reasonably be expected to
lead to such a claim, which, in the case of (i), (ii), (iii), or
(iv), would reasonably be expected to result in a Material Adverse
Effect;
(s) The statements set forth in the
Pricing Prospectus and the Prospectus under the caption
“Description of Common Stock”, insofar as they purport
to constitute a summary of the terms of the Securities, and under
the caption “Underwriting”, insofar as they purport to
describe the provisions of the laws and documents referred to
therein, are accurate and fairly present the information purported
to be given;
(t) The Rights Agreement has been
duly authorized, executed and delivered by the Company; when the
Rights shall have been issued in accordance with the terms of this
Agreement such Rights will constitute legally issued and binding
obligations, subject to regulatory approval and other conditions
specified in the Rights Agreement;
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(u) Other than as set forth in the
Pricing Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party
or of which any property of the Company or any of its subsidiaries
is the subject, which, if determined adversely to the Company or
any of its subsidiaries, would individually or in the aggregate
have a Material Adverse Effect; and, to the best of the
Company’s knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others;
(v) The Company is not, and, after
giving effect to the offering and sale of the Securities, will not
be an “investment company”, as such term is defined in
the United States Investment Company Act of 1940, as amended (the
“ Investment Company Act ”);
(w) (i) At the time of filing the
Registration Statement, (ii) at the time of the most recent
amendment thereto for the purposes of complying with
Section 10(a)(3) of the Act (whether such amendment was by
post-effective amendment, incorporated report filed pursuant to
Section 13 or 15(d) of the Exchange Act or form of
prospectus), and (iii) at the time the Company or any person
acting on its behalf (within the meaning, for this clause only, of
Rule 163(c) under the Act) made any offer relating to the
Securities in reliance on the exemption of Rule 163 under the Act,
the Company was a “well-known seasoned issuer” as
defined in Rule 405 under the Act; and (B) at the earliest
time after the filing of the Registration Statement that the
Company or another offering participant made a bona fide offer
(within the meaning of Rule 164(h)(2) under the Act) of the
Securities, the Company was not an “ineligible issuer”
as defined in Rule 405 under the Act.
(x) The Company is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange
Act;
(y) Deloitte & Touche LLP,
who have certified certain financial statements of the Company and
its subsidiaries and have audited the Company’s internal
control over financial reporting and management’s assessment
thereof, is a registered public accounting firm, and is independent
with respect to the Company and its subsidiaries, each within the
meaning of the Exchange Act and the rules and regulations of the
Commission thereunder and the rules and regulations of the Public
Company Accounting Oversight Board;
(z) The Company maintains internal
control over financial reporting (as such term is defined in Rule
13a-15(f) under the Exchange Act) that complies with the
requirements of the Exchange Act and has been designed by the
Company’s principal executive officer and principal financial
officer, or under their supervision, to provide reasonable
assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in
accordance with generally accepted accounting principles; the
Company’s internal control over financial reporting is
effective; and the Company is not aware of any material weaknesses
in its internal control over financial reporting;
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(aa) Since the date of the latest
audited financial statements included or incorporated by reference
in the Pricing Prospectus, there has been no change in the
Company’s internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect,
the Company’s internal control over financial reporting;
and
(bb) The Company maintains
disclosure controls and procedures (as such term is defined in Rule
13a-15(e) under the Exchange Act) that comply with the requirements
of the Exchange Act and have been designed to ensure that material
information relating to the Company and its subsidiaries is
communicated to the Company’s principal executive officer and
principal financial officer. The Company’s disclosure
controls and procedures are effective.
2. (a) Subject to the terms and
conditions herein set forth, the Company agrees to issue and sell
to each of the Underwriters, severally and not jointly, and each of
the Underwriters agrees, severally and not jointly, to purchase
from the Company, at a price per share set forth in Schedule III,
the number of Initial Securities set forth in Schedule I opposite
the name of such Underwriter, plus any additional number of Initial
Securities which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 10 hereof, subject, in
each case, to such adjustments among Underwriters as the
Representative in its sole discretion shall make to eliminate any
sales or purchases of fractional shares.
(b) In addition, subject to the
terms and conditions herein set forth, the Company, acting
severally and not jointly, hereby grants an option to the
Underwriters, severally and not jointly, to purchase up to an
additional 412,500 shares of Common Stock, at the price per share
set forth in Schedule III, less an amount per share equal to any
dividends or distributions declared by the Company and payable on
the Initial Securities but not payable on the Option Securities.
The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part from time to time only for
the purpose of covering overallotments which may be made in
connection with the offering and distribution of the Initial
Securities upon notice by the Representative to the Company setting
forth the number of Option Securities as to which the several
Underwriters are then exercising the option and the time and date
of payment and delivery for such Option Securities. Any such time
and date of delivery (an “ Option Securities Time of
Delivery ”) shall be determined by the Representative,
but shall not be later than seven full business days after the
exercise of said option, nor in any event prior to the Time of
Delivery, as hereinafter defined. If the option is exercised as to
all or any portion of the Option Securities, each of the
Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being
purchased which the number of Initial Securities set forth in
Schedule I opposite the name of such Underwriter bears to the total
number of Initial Securities, subject in each case to such
adjustments as the Representative in its discretion shall make to
eliminate any sales or purchases of fractional shares.
(c) Payment . Payment of the
purchase price for, and delivery of certificates for, the
Securities shall be made at the offices of Dewey Ballantine LLP,
counsel for the Company, at 1301 Avenue of the Americas, New York,
New York 10019, (the “Closing Location”) or at such
other place as shall be agreed upon by the
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Representative and the Company, at
10:00 A.M. (Eastern time) on the third business day after the date
hereof (unless postponed in accordance with the provisions of
Section 10), or such other time not later than ten business
days after such date as shall be agreed upon by the Representative
and the Company (such time and date of payment and delivery being
herein called “ Time of Delivery ”).
In addition, in the event that any
or all of the Option Securities are purchased by the Underwriters,
payment of the purchase price for, and delivery of certificates
for, such Option Securities shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the
Representative and the Company, on each Option Securities Time of
Delivery as specified in the notice from the Representative to the
Company.
Payment shall be made to the Company
by wire transfer of immediately available funds to a bank account
designated by the Company, against delivery to the Representative
for the respective accounts of the Underwriters of certificates for
the Securities to be purchased by them. It is understood that each
Underwriter has authorized the Representative, for its account, to
accept de
