1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-3701
THE WASHINGTON WATER POWER COMPANY
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(Exact name of registrant as specified in its charter)
Washington 91-0462470
- --------------------------------------------- -----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1411 East Mission Avenue, Spokane, Washington 99202-2600
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 509-489-0500
Web site: http://www.wwpco.com ------------
None
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [X] No [ ]
At April 30, 1997, 55,960,360 shares of Registrant's Common Stock, no par value
(the only class of common stock), were outstanding.
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THE WASHINGTON WATER POWER COMPANY
Index
Page No.
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Part I. Financial Information:
Item 1. Financial Statements
Consolidated Statements of Income - Three Months Ended
March 31, 1997 and 1996........................................... 3
Consolidated Balance Sheets - March 31, 1997
and December 31, 1996............................................. 4
Consolidated Statements of Capitalization - March 31, 1997
and December 31, 1996............................................. 5
Consolidated Statements of Cash Flows - Three Months Ended
March 31, 1997 and 1996........................................... 6
Schedule of Information by Business Segments - Three Months Ended
March 31, 1997 and 1996........................................... 7
Notes to Consolidated Financial Statements............................ 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......................... 11
Part II. Other Information:
Item 5. Other Information................................................. 14
Item 6. Exhibits and Reports on Form 8-K.................................. 15
Signature............................................................................... 16
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CONSOLIDATED STATEMENTS OF INCOME
The Washington Water Power Company
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For the Three Months Ended March 31
Thousands of Dollars
1997 1996
--------- ---------
OPERATING REVENUES .......................... $ 284,046 $ 248,004
--------- ---------
OPERATING EXPENSES:
Operations and maintenance ............... 169,014 129,967
Administrative and general ............... 18,554 19,240
Depreciation and amortization ............ 17,462 17,159
Taxes other than income taxes ............ 14,956 13,692
--------- ---------
Total operating expenses ............... 219,986 180,058
--------- ---------
INCOME FROM OPERATIONS ...................... 64,060 67,946
--------- ---------
OTHER INCOME (EXPENSE):
Interest expense ......................... (16,316) (15,306)
Net gain on subsidiary transactions ...... -- 16,986
Merger-related expenses .................. -- (1,500)
Other income (deductions)-net ............ 6,813 (233)
--------- ---------
Total other income (expense)-net ....... (9,503) (53)
--------- ---------
INCOME BEFORE INCOME TAXES .................. 54,557 67,893
INCOME TAXES ................................ 24,709 25,984
--------- ---------
NET INCOME .................................. 29,848 41,909
DEDUCT-Preferred stock dividend requirements 1,778 2,266
--------- ---------
INCOME AVAILABLE FOR COMMON STOCK ........... $ 28,070 $ 39,643
========= =========
Average common shares outstanding (thousands) 55,960 55,958
EARNINGS PER SHARE OF COMMON STOCK .......... $ 0.50 $ 0.71
Dividends paid per common share ............. $ 0.31 $ 0.31
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
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CONSOLIDATED BALANCE SHEETS
The Washington Water Power Company
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Thousands of Dollars
March 31, December 31,
1997 1996
------------ ------------
ASSETS:
PROPERTY:
Utility plant in service-net .............................. $1,973,927 $1,951,604
Construction work in progress ............................. 31,974 38,696
---------- ----------
Total ................................................... 2,005,901 1,990,300
Less: Accumulated depreciation and amortization .......... 605,175 592,424
---------- ----------
Net utility plant ....................................... 1,400,726 1,397,876
---------- ----------
OTHER PROPERTY AND INVESTMENTS:
Investment in exchange power-net .......................... 73,627 75,312
Non-utility properties and investments-net ................ 149,349 149,747
Other-net ................................................. 22,936 22,670
---------- ----------
Total other property and investments .................... 245,912 247,729
---------- ----------
CURRENT ASSETS:
Cash and cash equivalents ................................. 35,002 8,211
Temporary cash investments ................................ 18,421 19,709
Accounts and notes receivable-net ......................... 102,455 148,742
Materials and supplies, fuel stock and natural gas stored . 29,314 31,729
Prepayments and other ..................................... 20,581 19,998
---------- ----------
Total current assets .................................... 205,773 228,389
---------- ----------
DEFERRED CHARGES:
Regulatory assets for deferred income tax ................. 170,954 164,753
Conservation programs ..................................... 56,539 57,703
Prepaid power purchases ................................... 27,576 30,935
Unamortized debt expense .................................. 24,506 23,148
Other-net ................................................. 35,327 26,765
---------- ----------
Total deferred charges .................................. 314,902 303,304
---------- ----------
TOTAL ................................................. $2,167,313 $2,177,298
========== ==========
CAPITALIZATION AND LIABILITIES:
CAPITALIZATION (See Consolidated Statements of Capitalization) $1,597,586 $1,590,262
---------- ----------
CURRENT LIABILITIES:
Accounts payable .......................................... 72,338 95,268
Taxes and interest accrued ................................ 61,299 37,344
Other ..................................................... 50,959 70,873
---------- ----------
Total current liabilities ............................... 184,596 203,485
---------- ----------
NON-CURRENT LIABILITIES AND DEFERRED CREDITS:
Non-current liabilities ................................... 28,733 27,855
Deferred income taxes ..................................... 322,595 312,529
Other ..................................................... 33,803 43,167
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Total non-current liabilities and deferred credits ...... 385,131 383,551
---------- ----------
COMMITMENTS AND CONTINGENCIES (Note 3)
TOTAL ................................................. $2,167,313 $2,177,298
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
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CONSOLIDATED STATEMENTS OF CAPITALIZATION
The Washington Water Power Company
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Thousands of Dollars
March 31, December 31,
1997 1996
------------ ------------
COMMON EQUITY:
Common stock, no par value: 200,000,000 shares authorized:
shares outstanding: 55,960,360 .............................................. $ 594,853 $ 594,853
Note receivable from employee stock ownership plan ............................ (10,832) (11,009)
Capital stock expense and other paid in capital ............................... (10,112) (10,112)
Unrealized investment gain-net ................................................ 6,278 5,703
Retained earnings ............................................................. 142,083 131,301
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Total common equity ....................................................... 722,270 710,736
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PREFERRED STOCK-CUMULATIVE:
10,000,000 shares authorized:
Not subject to mandatory redemption:
Flexible Auction Series J; 500 shares outstanding ($100,000 stated value) ... 50,000 50,000
----------- -----------
Total not subject to mandatory redemption ................................. 50,000 50,000
----------- -----------
Subject to mandatory redemption:
$8.625, Series I; 300,000 shares outstanding ($100 stated value) ............ 30,000 30,000
$6.95, Series K; 350,000 shares outstanding ($100 stated value) ............ 35,000 35,000
----------- -----------
Total subject to mandatory redemption ..................................... 65,000 65,000
----------- -----------
COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED
TRUST SECURITIES .............................................................. 60,000 --
----------- -----------
LONG-TERM DEBT:
First Mortgage Bonds:
7 1/8% due December 1, 2013 ................................................. 66,700 66,700
7 2/5% due December 1, 2016 ................................................. 17,000 17,000
Secured Medium-Term Notes:
Series A - 5.95% to 8.06% due 2000 through 2023 ........................... 227,000 227,000
Series B - 6.50% to 8.25% due 1997 through 2010 ........................... 141,000 141,000
----------- -----------
Total first mortgage bonds ................................................ 451,700 451,700
----------- -----------
Pollution Control Bonds:
6% Series due 2023 .......................................................... 4,100 4,100
Unsecured Medium-Term Notes:
Series A - 7.94% to 9.58% due 1997 through 2007 ............................. 72,500 72,500
Series B - 6.75% to 8.55% due 1999 through 2023 ............................. 120,000 120,000
----------- -----------
Total unsecured medium-term notes ......................................... 192,500 192,500
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Notes payable (due within one year) to be refinanced .......................... 25,000 85,000
Other ......................................................................... 27,016 31,226
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Total long-term debt ...................................................... 700,316 764,526
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TOTAL CAPITALIZATION ............................................................. $ 1,597,586 $ 1,590,262
=========== ===========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (Decrease) in Cash and Cash Equivalents
The Washington Water Power Company
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For the Three Months Ended March 31
Thousands of Dollars
1997 1996
-------- --------
OPERATING ACTIVITIES:
Net income ............................................................... $ 29,848 $ 41,909
NON-CASH REVENUES AND EXPENSES
INCLUDED IN NET INCOME:
Depreciation and amortization .......................................... 17,462 17,159
Provision for deferred income taxes .................................... 9,609 1,678
Allowance for equity funds used during construction .................... (290) (170)
Power and natural gas cost deferrals and amortization .................. (8,658) 6,163
Deferred revenues and other-net ........................................ (3,903) 3,764
(Increase) decrease in working capital components:
Receivables and prepaid expenses-net ................................. 31,269 4,419
Materials & supplies, fuel stock and natural gas stored .............. 2,415 1,590
Payables and other accrued liabilities ............................... (5,762) 14,079
Other-net ............................................................ 3,771 6,825
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NET CASH PROVIDED BY OPERATING ACTIVITIES ................................... 75,761 97,416
-------- --------
INVESTING ACTIVITIES:
Construction expenditures (excluding AFUDC-equity funds) ................. (16,038) (15,910)
Other capital requirements ............................................... (1,027) (2,034)
(Increase) decrease in other noncurrent balance sheet items-net .......... 7,236 (18,281)
Assets acquired and investments in subsidiaries .......................... (1,689) (234)
-------- --------
NET CASH USED IN INVESTING ACTIVITIES ....................................... (11,518) (36,459)
-------- --------
FINANCING ACTIVITIES:
Increase (decrease) in short-term borrowings ............................. (60,000) (29,500)
Proceeds from issuance of preferred trust securities ..................... 60,000 --
Sale of common stock-net ................................................. 177 366
Other-net ................................................................ (18,464) (392)
-------- --------
NET FINANCING ACTIVITIES BEFORE CASH DIVIDENDS .............................. (18,287) (29,526)
Less cash dividends paid .............................................. (19,165) (19,384)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES ....................................... (37,452) (48,910)
-------- --------
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS ........................ 26,791 12,047
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ............................ 8,211 5,164
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD .................................. $ 35,002 $ 17,211
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period:
Interest ............................................................... $ 12,707 $ 11,652
Income taxes ........................................................... $ 1,305 $ 1,564
Non-cash financing and investing activities .............................. $ 91 $ 32,125
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
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SCHEDULE OF INFORMATION BY BUSINESS SEGMENTS
The Washington Water Power Company
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For the Three Months Ended March 31
Thousands of Dollars
1997 1996
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OPERATING REVENUES:
Energy Delivery .............................. $ 118,746 $ 121,040
Energy Trading ............................... 126,352 96,990
Non-energy ................................... 38,948 29,974
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Total operating revenues ................... $ 284,046 $ 248,004
========== ==========
OPERATIONS AND MAINTENANCE EXPENSES:
Energy Delivery:
Natural gas purchased for resale ........... $ 32,339 $ 34,756
Other ...................................... 14,663 14,917
Energy Trading:
Power purchased ............................ 71,907 38,510
Fuel for generation ........................ 9,663 7,314
Other ...................................... 11,527 12,320
Non-energy ................................... 28,915 22,150
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Total operations and maintenance expenses .. $ 169,014 $ 129,967
========== ==========
ADMINISTRATIVE AND GENERAL EXPENSES:
Energy Delivery .............................. $ 11,500 $ 12,155
Energy Trading ............................... 4,925 3,751
Non-energy ................................... 2,129 3,334
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Total administrative and general expenses .. $ 18,554 $ 19,240
========== ==========
DEPRECIATION AND AMORTIZATION EXPENSES:
Energy Delivery .............................. $ 8,113 $ 8,507
Energy Trading ............................... 6,624 6,914
Non-energy ................................... 2,725 1,738
---------- ----------
Total depreciation and amortization expenses $ 17,462 $ 17,159
========== ==========
INCOME FROM OPERATIONS:
Energy Delivery .............................. $ 40,643 $ 40,137
Energy Trading ............................... 18,855 25,381
Non-energy ................................... 4,562 2,428
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Total income from operations ............... $ 64,060 $ 67,946
========== ==========
INCOME AVAILABLE FOR COMMON STOCK:
Energy operations ............................ $ 26,730 $ 27,917
Non-energy operations ........................ 1,340 11,726
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Total income available for common stock .... $ 28,070 $ 39,643
========== ==========
ASSETS: (1996 amounts at December 31)
Energy Delivery .............................. $1,010,415 $1,014,451
Energy Trading ............................... 665,117 683,599
Other energy ................................. 259,833 223,379
Non-energy ................................... 231,948 255,869
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Total assets ............................... $2,167,313 $2,177,298
========== ==========
CAPITAL EXPENDITURES (excluding AFUDC/AFUCE):
Energy Delivery .............................. $ 12,976 $ 13,927
Energy Trading ............................... 2,594 1,441
Non-energy ................................... 1,144 323
---------- ----------
Total capital expenditures ................. $ 16,714 $ 15,691
========== ==========
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE STATEMENTS.
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THE WASHINGTON WATER POWER COMPANY
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The accompanying financial statements of The Washington Water Power Company
(Company) for the interim periods ended March 31, 1997 and 1996 are unaudited
but, in the opinion of management, reflect all adjustments, consisting only of
normal recurring accruals, necessary for a fair statement of the results of
operations for those interim periods. The results of operations for the interim
periods are not necessarily indicative of the results to be expected for the
full year. These financial statements do not contain the detail or footnote
disclosure concerning accounting policies and other matters which would be
included in full fiscal year financial statements; therefore, they should be
read in conjunction with the Company's audited financial statements included in
the Company's Annual Report on Form 10-K for the year ended December 31, 1996.
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
NEW ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) issued FAS No. 128, entitled
"Earnings per Share" and FAS No. 129, entitled "Disclosure of Information about
Capital Structure," which are both effective for the fiscal year ending December
31, 1997. Additional disclosure related to the Company's capital structure will
be required in the 1997 Annual Report on Form 10-K. The Company does not expect
any significant impact on the Company's financial position or results of
operations as a result of adopting these standards.
NOTE 2. FINANCINGS
COMPANY-OBLIGATED MANDATORILY REDEEMABLE PREFERRED SECURITIES OF WASHINGTON
WATER POWER CAPITAL I
On January 23, 1997, Washington Water Power Capital I, a business trust, issued
to the public $60,000,000 of Preferred Trust Securities having a distribution
rate of 7 7/8%. Concurrent with the issuance of the Preferred Trust Securities,
the Trust issued $1,855,675 of Common Trust Securities to the Company. The sole
assets of the Trust are the Company's 7 7/8% Junior Subordinated Deferrable
Interest Debentures, Series A, with a principal amount of $61,855,675. The
Company has guaranteed the payment of distributions on, and redemption price and
liquidation amount in respect of, the Preferred Trust Securities to the extent
that the Trust has funds available for such payment from the debt securities.
These debt securities may be redeemed at the Company's option on or after
January 15, 2002 and mature January 15, 2037. Upon maturity or prior redemption
of such debt securities, the Trust Securities will be mandatorily redeemed. The
Company's consolidated statement of capitalization reflects only the $60 million
of new Preferred Trust Securities.
Reference is made to the information relating to financings and borrowings as
discussed under the caption "Liquidity and Capital Resources" in Item 2.
"Management's Discussion and Analysis of Financial Condition and Results of
Operations".
NOTE 3. COMMITMENTS AND CONTINGENCIES
NEZ PERCE TRIBE
On December 6, 1991, the Nez Perce Tribe filed an action against the Company in
U. S. District Court for the District of Idaho alleging, among other things,
that two dams formerly operated by the Company, the Lewiston Dam on the
Clearwater River and the Grangeville Dam on the South Fork of the Clearwater
River, provided inadequate passage to migrating anadromous fish in violation of
rights under treaties between the Tribe and the United States made in 1855 and
1863. The Lewiston and Grangeville Dams, which had been owned and operated by
other utilities under hydroelectric licenses from the Federal Power Commission
(the "FPC", predecessor of the Federal Energy Regulatory Commission (FERC))
prior to acquisition by the Company, were acquired by the Company in 1937 with
the approval of the FPC, but were dismantled and removed in 1973 and 1963,
respectively. Allegations of actual loss under different assumptions range
between $425 million and $650 million, together with $100 million in punitive
damages.
On November 21, 1994, the Company filed a Motion for Summary Judgment of
Dismissal. On March 28, 1996, a U.S. District judge entered a summary judgment
in favor of the Company dismissing the complaint. The Tribe filed a notice of
appeal to the Ninth Circuit Court of Appeals on April 24, 1996. A mediation
conference was held on October 11, 1996. Following the conclusion of that
conference, briefing schedules were vacated indefinitely to accommodate a
mediation process and the parties have selected a mediator. The Company is
presently unable to assess the likelihood of an adverse outcome in this
litigation, or estimate an amount or range of potential loss in the event of an
adverse outcome.
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THE WASHINGTON WATER POWER COMPANY
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OIL SPILL
The Company completed an updated investigation of an oil spill from an
underground storage tank that occurred several years ago in downtown Spokane at
the site of the Company's steam heat plant. Underground soil testing conducted
in 1993 showed that the oil had migrated approximately one city block beyond the
steam plant property. On December 6, 1993, the Company asked the Department of
Ecology (DOE) to enter into negotiations for a Consent Decree. The Consent
Decree, entered on November 8, 1994, provided for an extensive Remedial
Investigation (RI) and Feasibility Study (FS) to determine the appropriate
cleanup action. The RI and FS were completed in 1995 and an RI/FS report was
approved by the DOE in 1996. A Cleanup Action Plan (CAP) was determined by DOE
in 1996. The 1994 Consent Decree was amended to include the CAP with court
approval on December 2, 1996. The Company is now implementing the CAP. The
Company presently estimates that the total cleanup cost, including costs
incurred to-date, will approximate $12 million. As of March 31, 1997, an accrual
of $3.1 million is reflected on the Company's financial statements, which
represents the Company's best estimate of its uninsured liability.
On August 17, 1995, a lawsuit was filed against the Company in Superior Court of
the State of Washington for Spokane County by Davenport Sun International Hotels
and Properties, Inc., the owner of a hotel property in downtown Spokane,
Washington. The Complaint alleges that the oil released from the Company's
Central Steamplant trespassed on property owned by the plaintiff. In addition,
the plaintiff claims that the Steamplant has caused a diminution of value of
plaintiff's land. After mediation, the matter was resolved by settlement and
compromise, subject to certain conditions. If the settlement agreement fails or
is terminated, the Company is presently unable to assess the likelihood of an
adverse outcome in this litigation, or estimate an amount or range of potential
loss in the event of an adverse outcome.
FIRESTORM
On October 16, 1991, gale-force winds struck a five-county area in eastern
Washington and a seven-county area in northern Idaho. These winds were
responsible for causing 92 separate wildland fires, resulting in two deaths and
the loss of 114 homes and other structures, some of which were located in the
Company's service territory. Five separate class action lawsuits have been filed
against the Company by private individuals in the Superior Court for Spokane
County. All of these suits were certified as class actions on September 16,
1994, and bifurcated for trial of liability and damage issues by order of the
same date.
The Company was also served with two suits in Spokane County Superior Court
filed on April 20, 1994 and on September 15, 1994, both of which sought
individual damages from separate and for alleged wrongful death of two persons.
Five additional and separate suits were brought by Grange Insurance Company, and
were filed in Spokane County Superior Court on October 10, 1994, for
approximately $2.2 million paid to Grange insureds for the same fire areas.
Complainants in all cases allege various theories of tortious conduct, including
negligence, creation of a public nuisance, strict liability and trespass; in
most cases, complainants allege that fires were caused by electric distribution
and/or transmission lines downed by wind-downed trees. The lawsuits seek
recovery for property damage, emotional and mental distress, lost income and
punitive damages, but do not specify the amount of damages being sought. All
cases are in a discovery phase. Plaintiffs' motion for consolidation of all
liability trials was denied without prejudice. Plaintiffs also filed a Motion to
Decertify all cases on damage issues, which motion was denied following a
hearing held on January 27, 1997. Still pending is a WWP Motion for
Discretionary Review before the Washington Court of Appeals (Div. III) on class
certification issues, which was heard by the Court on February 4, 1997. Trial
dates on liability issues have been set on various dates beginning March 2,
1998 with the last trial scheduled to begin November 9, 1998. The Company has
received a settlement demand for settlement of class action litigation which is
within the Company's insurance coverage limits. The Company is presently unable
to assess the likelihood of an adverse outcome or estimate an amount or range of
potential loss in the event of an adverse outcome.
WILLIAMS LAKE LAWSUIT
On December 21, 1995, a lawsuit was commenced in Vancouver, British Columbia
against the Company's subsidiary, Pentzer Corporation (Pentzer), by Tondu Energy
Systems, Inc. and T.E.S. Williams Lake Partnership alleging contract violations,
conspiracy, misrepresentation and breach of fiduciary duties in regard to the
1993 sale of assets of Pentzer Energy Services, Inc. to B.C. Gas, Inc. and a
U.S. subsidiary of B.C. Gas. The claims involve an alleged first right to
purchase interests in the Williams Lake, British Columbia wood-fired generating
station. The suit seeks damages in excess of $10 million, plus exemplary
damages, prejudgment interest, costs and attorneys' fees. Also named as
defendants are B.C. Gas, Inc., Inland Pacific Energy (Williams Lake) Corp.,
Pentzer Energy Services, Inc. and WP Energy Company. The Company is presently
unable to assess the likelihood of an adverse outcome or estimate an amount or
range of potential loss in the event of an adverse outcome.
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THE WASHINGTON WATER POWER COMPANY
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OTHER CONTINGENCIES
The Company routinely assesses, based on in-depth studies, expert analyses and
legal reviews, its contingencies, obligations and commitments for remediation of
contaminated sites, including assessments of ranges and probabilities of
recoveries from other responsible parties who have and have not agreed to a
settlement and recoveries from insurance carriers. The Company's policy is to
immediately accrue and charge to current expense identified exposures related to
environmental remediation sites based on estimates of investigation, cleanup and
monitoring costs to be incurred.
The Company must be in compliance with requirements under the Clean Air Act
Amendments (CAAA) by the year 2000 at both the Centralia and Colstrip thermal
generating plants, in which the Company maintains an ownership interest. The
Company is presently unable to determine the financial impact of these
requirements.
The Company has potential liabilities under the Federal Endangered Species Act
(ESA) for species of fish that have either already been added to the endangered
species list, been listed as "threatened" or been petitioned for listing. Thus
far, measures which have been adopted and implemented have had minimal impact on
the Company. Future actions to save these, and other as yet unidentified fish or
wildlife species, particularly as the Company is relicensing several of its
hydroelectric facilities, could impact the Company's operations. It is currently
not possible to determine the likely financial impact of any further actions.
At this time, management believes that the ultimate outcome of all the claims
and actions discussed in this note should not have a material adverse effect on
the Company's consolidated operations or financial position.
The Company has long-term contracts related to the purchase of fuel for thermal
generation, natural gas and hydroelectric power. The Company also has various
agreements for the purchase, sale or exchange of electric energy with other
utilities, cogenerators, small power producers and government agencies.
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THE WASHINGTON WATER POWER COMPANY
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Company is primarily engaged as a utility providing electric and natural gas
sales and services. The Energy Delivery business includes distribution and
transmission services for retail electric and all natural gas operations. Usage
by retail customers varies from year to year primarily as a result of weather
conditions, the economy in the Company's service area, customer growth,
conservation, appliance efficiency and other technology. The Energy Trading
(Generation and Resources) business includes generation and production, short
and long-term wholesale electric and natural gas commodity trading and sales,
and energy services. Revenues from the sale of energy to other utilities and the
cost of electric power purchases vary from year to year depending on the
electric wholesale power market, which is affected by several factors, including
the availability of water for hydroelectric generation, the availability of base
load plants in the region and the demand for power in other areas of the
country. Other factors affecting the wholesale power market include an
increasing number of power brokers and marketers and competition from low cost
generation being developed by independent power producers. The non-energy
business primarily includes the operations of the portfolio companies of Pentzer
Corporation (Pentzer), a wholly owned subsidiary of the Company.
RESULTS OF OPERATIONS
OVERALL OPERATIONS
First quarter 1997 net income available for common stock was $28.1 million, an
$11.5 million decrease from 1996 first quarter net income of $39.6 million. The
decrease in earnings was primarily the result of an $11.1 million transactional
gain, net of tax and other adjustments, from the sale of property held for sale
by one of Pentzer's subsidiaries which occurred in the first quarter of 1996.
The 1996 earnings also reflect the expensing of $1.0 million, on an after-tax
basis, related to the terminated merger between the Company and Sierra Pacific
Resources.
First quarter 1997 earnings per share were $0.50 as compared to $0.71 for the
same period in 1996. Energy operations income available for common stock
contributed $0.48 to earnings per share for the first quarter of 1997 compared
to $0.50 in the first quarter of 1996. Non-energy operations income available
for common stock contributed $0.02 to earnings per share for the first quarter
of 1997 compared to $0.21 in the same period in 1996.
ENERGY OPERATIONS
REVENUES
Total Energy Delivery revenues decreased $2.3 million in the first quarter of
1997 from the first quarter of 1996. Retail electric revenues decreased $1.5
million in the first quarter of 1997 compared to the same period in 1996,
primarily as a result of weather 1% warmer than normal during the first quarter
of 1997, compared to 9% colder than normal in the same period in 1996.
Transmission revenues increased $2.2 million in first quarter 1997 compared to
1996 due to increased wholesale electric sales. Total natural gas revenues
decreased $3.1 million in the first quarter of 1997 from 1996, primarily due to
decreased therm sales as a result of warmer weather in 1997. In addition to the
lower sales volumes, residential and commercial revenues also decreased due
to decreases in natural gas prices. Purchased gas cost adjustments effective in
Washington, Idaho and Oregon decreased the prices paid by customers in 1997 by
4.4%, 8.5% and 8.59%, respectively.
Energy Trading revenues increased $29.4 million, or 30%, in the first quarter of
1997 compared to the same period in 1996, primarily due to new power contracts
for long-term wholesale electric service and increased short-term sales.
Revenues from long-term sales increased $7.0 million in the first quarter of
1997 over 1996, while revenues from short-term sales increased $21.4 million
during the same period. Total sales volumes during the first three months of
1997 nearly doubled from the same period in 1996, but average prices were down
by approximately 15% from the first quarter of 1996. In spite of these increases
in sales and revenues, increased purchased power expense (see below), combined
with reduced hydroelectric generation and increased competition, which put
pressure on margins, resulted in a $6.5 million decrease in Energy Trading's
income from operations.
EXPENSES
Total operating expenses decreased by $2.8 million for Energy Delivery
operations and increased by $35.9 million for Energy Trading operations during
the first quarter of 1997 compared to 1996.
Commitments under new long-term wholesale sales contracts and increased
short-term sales, combined with increased costs under some long-term purchased
power contracts, resulted in a $33.4 million, or 87%, increase in electric
purchased power expense in the first quarter of 1997 over 1996, which accounts
for the majority of the
11
12
THE WASHINGTON WATER POWER COMPANY
- --------------------------------------------------------------------------------
increase in Energy Trading's operating expenses. Streamflows on the Company's
hydroelectric system were 180% of normal for the first quarter of 1997, and are
expected to be 150 percent of normal for all of 1997, but hydroelectric
generation for the first quarter of 1997 was below that of first quarter 1996,
which was the Company's highest year ever for hydroelectric generation. During
the first three months of 1996, hydroelectric generation was 158% of normal, due
to streamflows which were 265% of normal.
Fuel costs increased $2.3 million in the first quarter of 1997 compared to 1996
as a result of higher generation at thermal plants. The increase in generation
was primarily due to increased wholesale sales in 1997 as compared to 1996.
Natural gas purchased expense decreased $2.4 million, or 7%, during the first
three months of 1997 as compared to 1996, primarily due to decreased therm
sales. A large portion of purchased gas expense is variable costs, with the
result that increases or decreases in purchased gas expense are generally offset
by like changes in revenues.
Other operating and maintenance expenses decreased $1.0 million in the first
three months of 1997 from the same period in 1996. The Idaho Power Cost
Adjustment (PCA), which allows the Company to change prices to recover or rebate
a portion of the difference between actual and allowed net power supply costs,
decreased expenses by $2.4 million during the first quarter of 1997 as compared
to the same period in 1996, due to streamflow conditions. Natural gas operations
were negatively affected by the $0.8 million write-off of a natural gas
transaction software program. Transmission expenses associated with increased
wholesale sales increased $0.4 million in the first quarter of 1997 from 1996.
Administrative and general expenses decreased by $1.0 million in the first
quarter of 1997, compared to 1996, due primarily to accruals related to
postretirement and pension benefits in the first quarter of 1996 that did not
occur in 1997.
Income taxes decreased $1.3 million in the first three months of 1997 over 1996
primarily due to adjustments related to revised estimates on certain tax issues.
NON-ENERGY OPERATIONS
Non-energy operations primarily include the results of Pentzer. Pentzer's
business strategy is to acquire controlling interests in a broad range of
middle-market companies, to help these companies grow through internal
development and strategic acquisitions and to sell the portfolio investments
either to the public or to strategic buyers when it becomes most advantageous in
meeting Pentzer's return on invested capital objectives. Pentzer's goal is to
produce financial returns for the Company's shareholders that, over the
long-term, should be higher than those of the energy operations. From time to
time, a significant portion of Pentzer's earnings contributions may be the
result of transactional gains. Accordingly, although the income stream is
expected to be positive, it may be uneven from year to year.
Non-energy operating revenues and expenses increased by $9.0 million and $6.8
million, respectively, during the first quarter of 1997 as compared to 1996
primarily as a result of increased business activity from Pentzer's portfolio
companies. Income from operations totaled $4.6 million, which was a $2.1
million, or 88%, increase in 1997 over 1996. Non-energy income available for
common stock for the first quarter of 1997 was $1.3 million, which represents a
$10.4 million decrease from first quarter 1996 earnings. The 1996 earnings
primarily resulted from a transactional gain totaling $11.1 million, net of
taxes and other adjustments, recorded by Pentzer as a result of the sale of
property by one of its subsidiary companies. Non-transactional income from
portfolio companies in 1997 exceeded 1996 by $0.9 million.
12
13
THE WASHINGTON WATER POWER COMPANY
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LIQUIDITY AND CAPITAL RESOURCES
OVERALL OPERATIONS
Operating Activities Cash available from operating activities in the first
quarter of 1997 decreased by $21.7 million from the same period in 1996 due in
large part to the $12.1 million decrease in net income and changes in various
working capital components, such as decreased payables, partially offset by
decreases in receivables and an increased provision for deferred income taxes as
a result of adjustments for depreciation and the FAS 109 regulatory asset. Power
and natural gas cost deferrals decreased cashflows in 1997 as a result of
increased natural gas prices during the first part of this year, reduced prices
paid by natural gas customers and PCA rebates in effect in 1997 as compared to
surcharges in effect during the first quarter of 1996. See the Consolidated
Statements of Cash Flows for additional details.
Investing Activities Cash used in investing activities totaled $36.5 million in
the first quarter of 1996 compared to $11.5 million in the same period in 1997.
Cash used in investing activities was higher during the first quarter of 1996 as
a result of establishment of trusts totaling $10.8 million for postretirement
medical benefits and coal reclamation costs and the $8.2 million net effect on
cash flows of transactions related to the sale of property by Pentzer. Pentzer
received a promissory note for a portion of the sale price of Spokane Industrial
Park. See the Consolidated Statements of Cash Flows for additional information.
Financing Activities Cash used in financing activities totaled $48.9 million in
the first quarter of 1996 compared to $37.5 million in 1997. The 1996 activity
included a reduction in bank borrowings of $29.5 million. Bank borrowings were
decreased by $60.0 million in the first three months of 1997 with the proceeds
of $60 million of Preferred Trust Securities which were issued in January 1997.
See Note 2 to Financial Statements for additional information about these
securities. The reduction of $18.5 million in Other-net reflects the decrease in
short and long-term debt by the non-energy operating companies.
ENERGY OPERATIONS
The Company funds its energy capital expenditures with a combination of
internally-generated cash and external financing. The level of cash generated
internally and the amount that is available for capital expenditures fluctuates
annually. Cash provided by operating activities remains the Company's primary
source of funds for operating needs, dividends and capital expenditures.
Capital expenditures are financed on an interim basis with short-term debt. The
Company has $160 million in committed lines of credit, with no balances
outstanding under these agreements at March 31, 1997. In addition, the Company
may borrow up to $60 million through other borrowing arrangements with banks. As
of March 31, 1997, $25.0 million was outstanding under the other borrowing
arrangements with banks.
During the 1997-1999 period, energy capital expenditures are expected to be $239
million, and in addition, $118.5 million will be required for long-term debt
maturities and preferred stock sinking fund requirements. During this three-year
period, the Company estimates that internally-generated funds will provide
approximately 113% of the funds needed for its capital expenditure program.
External financing will be required to fund a portion of the maturing long-term
debt and preferred stock sinking fund requirements. These estimates of capital
expenditures are subject to continuing review and adjustment. Actual capital
expenditures may vary from these estimates due to factors such as changes in
business conditions, construction schedules and environmental requirements.
NON-ENERGY OPERATIONS
The non-energy operations have $76 million in short-term borrowing arrangements
available ($18.1 million outstanding as of March 31, 1997) to fund corporate
requirements on an interim basis. At March 31, 1997, the non-energy operations
had $37.2 million in cash and marketable securities with $35.9 million in
long-term debt outstanding.
The 1997-1999 non-energy capital expenditures are expected to be $12 million,
and $30 million in debt maturities will also occur. During the next three years,
internally-generated cash and other debt obligations are expected to provide the
majority of the funds for the non-energy capital expenditure requirements. These
estimates of capital expenditures are subject to continuing review and
adjustment. Actual capital expenditures may vary from these estimates due to
factors such as changes in business conditions, acquisitions or sales of
businesses and other transactions.
13
14
THE WASHINGTON WATER POWER COMPANY
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TOTAL COMPANY
The Company's total common equity increased by $11.5 million during the first
quarter of 1997 to $722.3 million, primarily due to a $10.8 million increase in
retained earnings. The Company's consolidated capital structure at March 31,
1997, was 44% debt, 11% preferred stock (including the new Preferred Trust
Securities) and 45% common equity as compared to 48% debt, 7% preferred stock
and 45% common equity at year-end 1996.
SAFE HARBOR FOR FORWARD LOOKING STATEMENTS.
The Company is including the following cautionary statement in this Form 10-Q to
make applicable and to take advantage of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 for any forward-looking
statements made by, or on behalf of, the Company. Forward-looking statements are
all statements other than statements of historical fact, including without
limitation those that are identified by the use of the words "anticipates,"
"estimates," "expects," "intends," "plans," "predicts," and similar expressions.
Such statements are inherently subject to a variety of risks and uncertainties
that could cause actual results to differ materially from those expressed. Such
risks and uncertainties include, among others, changes in the utility regulatory
environment, wholesale and retail competition, weather conditions and various
other matters, many of which are beyond the Company's control. These
forward-looking statements speak only as of the date of the report. The Company
expressly undertakes no obligation to update or revise any forward-looking
statement contained herein to reflect any change in the Company's expectations
with regard thereto or any change in events, conditions, or circumstances on
which any such statement is based. See "Safe Harbor for Forward Looking
Statements" in the Company's Annual Report on Form 10-K for 1996 under Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations - Future Outlook.
PART II. OTHER INFORMATION
ITEM 5. OTHER INFORMATION.
REGULATORY PROCEEDINGS.
More Options for Power Services In February, the Company filed with the
Washington Utilities and Transportation Commission (WUTC) and the Idaho Public
Utilities Commission (IPUC) an experimental More Options for Power Services
(MOPS) tariff that will allow approximately 2,500 residential and 300 commercial
customers direct access to alternative energy providers. The WUTC and IPUC
approved the two-year program, which will begin in mid-1997. Participating
customers will be randomly selected to participate in the program. The Company
will recover approximately half of the lost margin associated with the pilot
program through the energy delivery rate paid by participating customers and
will absorb the remaining margin losses. Program costs will be deferred for
future recovery. The program costs and margin losses are not expected to have a
material impact on the Company's financial condition or results of operations.
Natural Gas General Rate Case The Company is currently planning to file a
natural gas general rate case in Washington during the second quarter of 1997.
ADDITIONAL FINANCIAL DATA.
The following table reflects the ratio of earnings to fixed charges and the
ratio of earnings to fixed charges and preferred dividend requirements:
12 Months Ended
-------------------------------
March 31, December 31,
1997 1996
-------------- --------------
Ratio of Earnings to Fixed Charges 2.74 (x) 2.97 (x)
Ratio of Earnings to Fixed Charges and
Preferred Dividend Requirements 2.32 (x) 2.50 (x)
The Company has long-term purchased power arrangements with various Public
Utility Districts and the interest expense components of these contracts are
included in purchased power expenses. These interest amounts are not included in
the fixed charges and would not have a material impact on fixed charges ratios.
OTHER INFORMATION.
In February, the Company's Board of Directors approved creation of a new
subsidiary, Avista Corp. (Avista), which owns all of the Company's non-regulated
energy and non-energy businesses. The non-regulated energy businesses include
Avista Advantage, Inc. and Avista Energy, Inc. Avista Advantage provides a
variety of energy-related
14
15
THE WASHINGTON WATER POWER COMPANY
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products and services to commercial and industrial customers on a national
basis. Its product line includes real-time metering, consolidated billing,
lighting and security systems, energy technology services and energy commodity
management. Avista Energy focuses on commodity trading, energy marketing and
other related businesses. The non-energy business primarily consists of Pentzer,
which is the parent company to the majority of the Company's non-energy
businesses.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
4.1 Indenture, dated as of January 1, 1997, between The Washington
Water Power Company and Wilmington Trust Company, as Debenture
Trustee.
4.2 Amended and Restated Declaration of Trust of Washington Water
Power Capital I, dated as of January 23, 1997.
4.3 Securities Guarantee Agreement, dated as of January 23, 1997,
between The Washington Water Power Company, as Guarantor, and
Wilmington Trust Company, as Guarantee Trustee, relating to
the Preferred Securities of Washington Water Power Capital I.
12 Computation of ratio of earnings to fixed charges and
preferred dividend requirements.
27 Financial Data Schedule.
(b) Reports on Form 8-K.
None.
15
16
THE WASHINGTON WATER POWER COMPANY
- --------------------------------------------------------------------------------
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE WASHINGTON WATER POWER COMPANY
(Registrant)
Date: May 14, 1997 __________________________________
J. E. Eliassen
Senior Vice President and
Chief Financial Officer
(Principal Accounting and
Financial Officer)
16
17
EXHIBIT 12
THE WASHINGTON WATER POWER COMPANY
Computation of Ratio of Earnings to Fixed Charges and Preferred Dividend
Requirements Consolidated
(Thousands of Dollars)
12 Mos. Ended Years Ended December 31
March 31, --------------------------------------------------------
1997 1996 1995 1994 1993
-------- -------- -------- -------- --------
Fixed charges, as defined:
Interest on long-term debt $ 61,397 $ 60,256 $ 55,580 $ 49,566 $ 47,129
Amortization of debt expense
and premium - net 2,869 2,998 3,441 3,511 3,004
Interest portion of rentals 4,304 4,311 3,962 1,282 924
-------- -------- -------- -------- --------
Total fixed charges $ 68,570 $ 67,565 $ 62,983 $ 54,359 $ 51,057
======== ======== ======== ======== ========
Earnings, as defined:
Net income from continuing ops $ 71,393 $ 83,453 $ 87,121 $ 77,197 $ 82,776
Add (deduct):
Income tax expense 48,237 49,509 52,416 44,696 42,503
Total fixed charges above 68,570 67,565 62,983 54,359 51,057
-------- -------- -------- -------- --------
Total earnings $188,200 $200,527 $202,520 $176,252 $176,336
======== ======== ======== ======== ========
Ratio of earnings to fixed charges 2.74 2.97 3.22 3.24 3.45
Fixed charges and preferred dividend requirements:
Fixed charges above $ 68,570 $ 67,565 $ 62,983 $ 54,359 $ 51,057
Preferred dividend requirements (2) 12,552 12,711 14,612 13,668 12,615
-------- -------- -------- -------- --------
Total $ 81,122 $ 80,276 $ 77,595 $ 68,027 $ 63,672
======== ======== ======== ======== ========
Ratio of earnings to fixed charges
and preferred dividend requirements 2.32 2.50 2.61 2.59 2.77
(1) Calculations have been restated to reflect the results from continuing
operations (ie. excluding discontinued coal mining operations).
(2) Preferred dividend requirements have been grossed up to their pre-tax level.
18
--------------------------------
THE WASHINGTON WATER POWER COMPANY
TO
WILMINGTON TRUST COMPANY,
TRUSTEE
-------------
INDENTURE
DATED AS OF JANUARY 1, 1997
-------------
--------------------------------
19
THE WASHINGTON WATER POWER COMPANY
RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939 AND
INDENTURE, DATED AS OF JANUARY 1, 1997
--------------------------------------------------------------
TRUST INDENTURE ACT SECTION INDENTURE SECTION(S)
--------------------------- --------------------
Section 310(a)(1) . . . . . . . . . . . . . . . . . 809
(a)(2) . . . . . . . . . . . . . . . . . 809
(a)(3) . . . . . . . . . . . . . . . . . Not Applicable
(a)(4) . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . 808, 810
Section 311(a) . . . . . . . . . . . . . . . . . 813
(b) . . . . . . . . . . . . . . . . . 813
(c) . . . . . . . . . . . . . . . . . 813
Section 312(a) . . . . . . . . . . . . . . . . . 901
(b) . . . . . . . . . . . . . . . . . 901
(c) . . . . . . . . . . . . . . . . . 901
Section 313(a) . . . . . . . . . . . . . . . . . 902
(b) . . . . . . . . . . . . . . . . . 902
(c) . . . . . . . . . . . . . . . . . 902
(d) . . . . . . . . . . . . . . . . . 902
Section 314(a) . . . . . . . . . . . . . . . . . 902, 507
(b) . . . . . . . . . . . . . . . . . Not Applicable
(c)(1) . . . . . . . . . . . . . . . . . 102
(c)(2) . . . . . . . . . . . . . . . . . 102
(c)(3) . . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . 102
Section 315(a) . . . . . . . . . . . . . . . . . 801, 803
(b) . . . . . . . . . . . . . . . . . 802
(c) . . . . . . . . . . . . . . . . . 801
(d) . . . . . . . . . . . . . . . . . 801
(e) . . . . . . . . . . . . . . . . . 714
Section 316(a) . . . . . . . . . . . . . . . . . 712, 713
(a)(1)(A). . . . . . . . . . . . . . . . 702, 712
(a)(1)(B). . . . . . . . . . . . . . . . 713
(a)(2) . . . . . . . . . . . . . . . . . Not Applicable
(b) . . . . . . . . . . . . . . . . . 708
Section 317(a)(1) . . . . . . . . . . . . . . . . . 703
(a)(2) . . . . . . . . . . . . . . . . . 705
(b) . . . . . . . . . . . . . . . . . 503
Section 318(a) . . . . . . . . . . . . . . . . . 107
20
TABLE OF CONTENTS
PAGE
----
Recital of the Company . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. General Definitions . . . . . . . 1
Act . . . . . . . . . . . . . . . . . . . . . 2
Affiliate . . . . . . . . . . . . . . . . . . 2
Authenticating Agent . . . . . . . . . . . . 2
Authorized Officer . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . 3
Company . . . . . . . . . . . . . . . . . . . 3
Company Order or Company Request . . . . . . 3
Corporate Trust Office . . . . . . . . . . . 3
corporation . . . . . . . . . . . . . . . . . 3
Declaration . . . . . . . . . . . . . . . . . 3
Discount Security . . . . . . . . . . . . . . 3
Interest . . . . . . . . . . . . . . . . . . 3
Dollar or $ . . . . . . . . . . . . . . . . . 3
Eligible Obligations . . . . . . . . . . . . 3
Event of Default . . . . . . . . . . . . . . 4
Fair Value . . . . . . . . . . . . . . . . . 4
Governmental Authority . . . . . . . . . . . 4
Government Obligations . . . . . . . . . . . 4
Guarantee . . . . . . . . . . . . . . . . . . 4
Holder . . . . . . . . . . . . . . . . . . . 4
Indenture . . . . . . . . . . . . . . . . . . 4
Independent Expert's Certificate . . . . . . 4
Institutional Trustee . . . . . . . . . . . . 5
Interest Payment Date . . . . . . . . . . . . 5
Maturity . . . . . . . . . . . . . . . . . . 5
Notice of Default . . . . . . . . . . . . . . 5
Officer's Certificate . . . . . . . . . . . . 5
Opinion of Counsel . . . . . . . . . . . . . 5
Outstanding . . . . . . . . . . . . . . . . . 5
Paying Agent . . . . . . . . . . . . . . . . 6
Periodic Offering . . . . . . . . . . . . . . 6
Person . . . . . . . . . . . . . . . . . . . 7
Place of Payment . . . . . . . . . . . . . . 7
Predecessor Security . . . . . . . . . . . . 7
Redemption Date . . . . . . . . . . . . . . . 7
Redemption Price . . . . . . . . . . . . . . 7
Regular Record Date . . . . . . . . . . . . . 7
Required Currency . . . . . . . . . . . . . . 7
Responsible Officer . . . . . . . . . . . . . 7
Securities . . . . . . . . . . . . . . . . . 7
Security Register . . . . . . . . . . . . . . 7
Security Registrar . . . . . . . . . . . . . 7
Senior Indebtedness . . . . . . . . . . . . . 7
Special Record Date . . . . . . . . . . . . . 8
Stated Interest Rate . . . . . . . . . . . . 8
Stated Maturity . . . . . . . . . . . . . . . 8
Successor Corporation . . . . . . . . . . . . 8
Tranche . . . . . . . . . . . . . . . . . . . 8
Trust Indenture Act . . . . . . . . . . . . . 8
Trust Securities . . . . . . . . . . . . . . 8
Trustee . . . . . . . . . . . . . . . . . . . 8
United States . . . . . . . . . . . . . . . . 9
Unpaid Interest . . . . . . . . . . . . . . . 9
Washington Water Power Trust . . . . . . . . 9
SECTION 102. Compliance Certificates and Opinions . . . 9
SECTION 103. Content and Form of Documents Delivered
to Trustee . . . . . . . . . . . . . . . . 10
SECTION 104. Acts of Holders . . . . . . . . . . . . . 11
SECTION 105. Notices, Etc. to Trustee and Company . . . 13
SECTION 106. Notice to Holders of Securities; Waiver . 13
21
SECTION 107. Conflict with Trust Indenture Act . . . . 14
SECTION 108. Effect of Headings and Table of Contents . 14
SECTION 109. Successors and Assigns . . . . . . . . . . 14
SECTION 110. Separability Clause . . . . . . . . . . . 14
SECTION 111. Benefits of Indenture . . . . . . . . . . 14
SECTION 112. Governing Law . . . . . . . . . . . . . . 15
SECTION 113. Legal Holidays . . . . . . . . . . . . . . 15
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally . . . . . . . . . . . . . 15
SECTION 202. Form of Trustee's Certificate of
Authentication . . . . . . . . . . . . . . 16
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series . . . 16
SECTION 302. Denominations . . . . . . . . . . . . . . 20
SECTION 303. Execution, Dating, Certificate of
Authentication . . . . . . . . . . . . . . 20
SECTION 304. Temporary Securities . . . . . . . . . . . 23
SECTION 305. Registration, Registration of Transfer
and Exchange . . . . . . . . . . . . . . . 24
SECTION 306. Mutilated, Destroyed, Lost and Stolen
Securities . . . . . . . . . . . . . . . . 25
SECTION 307. Payment of Interest; Interest Rights
Preserved . . . . . . . . . . . . . . . . 26
SECTION 308. Persons Deemed Owners . . . . . . . . . . 27
SECTION 309. Cancellation by Security Registrar . . . . 27
SECTION 310. Computation of Interest . . . . . . . . . 28
SECTION 311. Payment to Be in Proper Currency . . . . . 28
ARTICLE FOUR
REDEMPTION OF SECURITIES
SECTION 401. Applicability of Article . . . . . . . . . 28
SECTION 402. Election to Redeem; Notice to Trustee . . 29
SECTION 403. Selection of Securities to Be Redeemed . . 29
SECTION 404. Notice of Redemption . . . . . . . . . . . 30
SECTION 405. Securities Payable on Redemption Date . . 31
SECTION 406. Securities Redeemed in Part . . . . . . . 31
ARTICLE FIVE
COVENANTS
SECTION 501. Payment of Securities. . . . . . . . . . . 32
SECTION 502. Maintenance of Office or Agency . . . . . 32
22
SECTION 107. Conflict with Trust Indenture Act . . . . 14
SECTION 108. Effect of Headings and Table of Contents . 14
SECTION 109. Successors and Assigns . . . . . . . . . . 14
SECTION 110. Separability Clause . . . . . . . . . . . 14
SECTION 111. Benefits of Indenture . . . . . . . . . . 14
SECTION 112. Governing Law . . . . . . . . . . . . . . 15
SECTION 113. Legal Holidays . . . . . . . . . . . . . . 15
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally . . . . . . . . . . . . . 15
SECTION 202. Form of Trustee's Certificate of
Authentication . . . . . . . . . . . . . . 16
ARTICLE THREE
THE SECURITIES
SECTION 301. Amount Unlimited; Issuable in Series . . . 16
SECTION 302. Denominations . . . . . . . . . . . . . . 20
SECTION 303. Execution, Dating, Certificate of
Authentication . . . . . . . . . . . . . . 20
SECTION 304. Temporary Securities . . . . . . . . . . . 23
SECTION 305. Registration, Registration of Transfer
and Exchange . . . . . . . . . . . . . . . 24
SECTION 306. Mutilated, Destroyed, Lost and Stolen
Securities . . . . . . . . . . . . . . . . 25
SECTION 307. Payment of Interest; Interest Rights
Preserved . . . . . . . . . . . . . . . . 26
SECTION 308. Persons Deemed Owners . . . . . . . . . . 27
SECTION 309. Cancellation by Security Registrar . . . . 27
SECTION 310. Computation of Interest . . . . . . . . . 28
SECTION 311. Payment to Be in Proper Currency . . . . . 28
ARTICLE FOUR
REDEMPTION OF SECURITIES
SECTION 401. Applicability of Article . . . . . . . . . 28
SECTION 402. Election to Redeem; Notice to Trustee . . 29
SECTION 403. Selection of Securities to Be Redeemed . . 29
SECTION 404. Notice of Redemption . . . . . . . . . . . 30
SECTION 405. Securities Payable on Redemption Date . . 31
SECTION 406. Securities Redeemed in Part . . . . . . . 31
ARTICLE FIVE
COVENANTS
SECTION 501. Payment of Securities. . . . . . . . . . . 32
SECTION 502. Maintenance of Office or Agency . . . . . 32
SECTION 503. Money for Securities Payments to Be Held
in Trust . . . . . . . . . . . . . . . . . 33
SECTION 504. Corporate Existence . . . . . . . . . . . 34
SECTION 505. Maintenance of Properties . . . . . . . . 34
SECTION 506. Waiver of Certain Covenants . . . . . . . 35
SECTION 507. Annual Officer's Certificate as to
Compliance. . . . . . . . . . . . . . . . 35
SECTION 508. Restriction on Payment of Dividends, Etc. 36
SECTION 509. Washington Water Power Trusts. . . . . . . 36
ARTICLE SIX
SATISFACTION AND DISCHARGE
SECTION 601. Satisfaction and Discharge of Securities . 37
SECTION 602. Satisfaction and Discharge of Indenture . 39
SECTION 603. Application of Trust Money . . . . . . . . 40
ARTICLE SEVEN
EVENTS OF DEFAULT; REMEDIES
SECTION 701. Events of Default . . . . . . . . . . . . 40
SECTION 702. Acceleration of Maturity; Rescission
and Annulment . . . . . . . . . . . . . . 42
SECTION 703. Collection of Indebtedness and Suits
for Enforcement by Trustee . . . . . . . . 43
SECTION 704. Application of Money Collected . . . . . . 44
SECTION 705. Trustee May File Proofs of Claim . . . . . 44
SECTION 706. Trustee May Enforce Claims without
Possession of Securities . . . . . . . . . 45
SECTION 707. Limitation on Suits . . . . . . . . . . . 46
SECTION 708. Unconditional Right of Holders to Receive
Principal, Premium and Interest . . . . . 46
SECTION 709. Restoration of Rights and Remedies . . . . 47
SECTION 710. Rights and Remedies Cumulative . . . . . . 47
SECTION 711. Delay or Omission Not Waiver . . . . . . . 47
SECTION 712. Control by Holders of Securities . . . . . 47
SECTION 713. Waiver of Past Defaults . . . . . . . . . 48
SECTION 714. Undertaking for Costs . . . . . . . . . . 48
SECTION 715. Waiver of Stay or Extension Laws . . . . . 49
SECTION 716. Action by Holders of Certain Trust
Securities. . . . . . . . . . . . . . . . 49
ARTICLE EIGHT
THE TRUSTEE
SECTION 801. Certain Duties and Responsibilities . . . 50
SECTION 802. Notice of Defaults . . . . . . . . . . . . 51
SECTION 803. Certain Rights of Trustee . . . . . . . . 51
SECTION 804. Not Responsible for Recitals or Issuance of
Securities . . . . . . . . . . . . . . . . 53
23
SECTION 805. May Hold Securities . . . . . . . . . . . 53
SECTION 806. Money Held in Trust . . . . . . . . . . . 53
SECTION 807. Compensation and Reimbursement . . . . . . 53
SECTION 808. Disqualification; Conflicting Interests . 54
SECTION 809. Corporate Trustee Required; Eligibility . 54
SECTION 810. Resignation and Removal; Appointment of
Successor . . . . . . . . . . . . . . . . 55
SECTION 811. Acceptance of Appointment by Successor . . 57
SECTION 812. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . 58
SECTION 813. Preferential Collection of Claims
against Company . . . . . . . . . . . . . 58
SECTION 814. Appointment of Authenticating Agent . . . 59
ARTICLE NINE
LISTS OF HOLDERS; REPORTS BY TRUSTEE AND COMPANY
SECTION 901. Lists of Holders . . . . . . . . . . . . . 61
SECTION 902. Reports by Trustee and Company . . . . . . 61
ARTICLE TEN
CONSOLIDATION, MERGER, CONVEYANCE
OR OTHER TRANSFER
SECTION 1001. Company may Consolidate, etc., Only
on Certain Terms . . . . . . . . . . . . 62
SECTION 1002. Successor Corporation Substituted . . . . 63
SECTION 1003. Release of Company upon Conveyance or
Other Transfer . . . . . . . . . . . . . 63
SECTION 1004. Merger into Company . . . . . . . . . . . 63
SECTION 1005. Transfer of Less than the Entirety . . . 63
ARTICLE ELEVEN
SUPPLEMENTAL INDENTURES
SECTION 1101. Supplemental Indentures without Consent
of Holders . . . . . . . . . . . . . . . 66
SECTION 1102. Supplemental Indentures with Consent of
Holders . . . . . . . . . . . . . . . . . 68
SECTION 1103. Execution of Supplemental Indentures . . 70
SECTION 1104. Effect of Supplemental Indentures . . . . 70
SECTION 1105. Conformity with Trust Indenture Act . . . 70
SECTION 1106. Reference in Securities to Supplemental
Indentures . . . . . . . . . . . . . . . 70
SECTION 1107. Modification Without Supplemental
Indenture . . . . . . . . . . . . . . . . 70
24
ARTICLE TWELVE
MEETINGS OF HOLDERS; ACTION WITHOUT MEETING
SECTION 1201. Purposes for Which Meetings May Be
Called . . . . . . . . . . . . . . . . . 71
SECTION 1202. Call, Notice and Place of Meetings . . . 71
SECTION 1203. Persons Entitled to Vote at Meetings . . 72
SECTION 1204. Quorum; Action . . . . . . . . . . . . . 72
SECTION 1205. Attendance at Meetings; Determination
of Voting Rights; Conduct and Adjournment
of Meetings . . . . . . . . . . . . . . . 73
SECTION 1206. Counting Votes and Recording Action of
Meetings . . . . . . . . . . . . . . . . 74
SECTION 1207. Action without Meeting . . . . . . . . . 75
ARTICLE THIRTEEN
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS
AND DIRECTORS
SECTION 1301. Liability Solely Corporate . . . . . . . 75
ARTICLE FOURTEEN
SUBORDINATION OF SECURITIES
SECTION 1401. Securities Subordinate to Senior
Indebtedness. . . . . . . . . . . . . . . 75
SECTION 1402. Payment Over of Proceeds of Securities. . 76
SECTION 1403. Disputes with Holders of Certain Senior
Indebtedness. . . . . . . . . . . . . . . 78
SECTION 1404. Subrogation. . . . . . . . . . . . . . . 78
SECTION 1405. Obligation of the Company Unconditional. 78
SECTION 1406. Priority of Senior Indebtedness Upon
Maturity. . . . . . . . . . . . . . . . . 79
SECTION 1407. Trustee as Holder of Senior Indebtedness. 79
SECTION 1408. Notice to Trustee to Effectuate
Subordination. . . . . . . . . . . . . . 79
SECTION 1409. Modification, Extension, etc. of Senior
Indebtedness. . . . . . . . . . . . . . . 80
SECTION 1410. Trustee Has No Fiduciary Duty to Holders
of Senior Indebtedness. . . . . . . . . . 80
SECTION 1411. Paying Agents Other Than the Trustee. . . 80
SECTION 1412. Rights of Holders of Senior Indebtedness
Not Impaired. . . . . . . . . . . . . . . 81
SECTION 1413. Effect of Subordination Provisions;
Termination. . . . . . . . . . . . . . . 81
Signatures . . . . . . . . . . . . . . . . . . . . . . . 82
25
INDENTURE, dated as of January 1, 1997 between THE
WASHINGTON WATER POWER COMPANY, a corporation organized and existing
under the laws of the State of Washington (hereinafter sometimes
called the "Company"), and Wilmington Trust Company, a Delaware
banking corporation, trustee (hereinafter sometimes called the
"Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the execution and delivery
of this Indenture to provide for the issuance from time to time of
unsecured subordinated debentures, notes or other evidences of
indebtedness (herein called the "Securities"), to be issued in one or
more series as contemplated herein; all acts necessary to make this
Indenture a valid agreement of the Company have been performed.
NOW, THEREFORE, THIS INDENTURE WITNESSETH that, in
consideration of the premises and of the purchase of the Securities by
the Holders thereof, it is hereby covenanted and agreed by and between
the Company and the Trustee that all the Securities are to be
authenticated and delivered subject to the further covenants,
conditions and trusts hereinafter set forth, and the Company hereby
covenants and agrees to and with the Trustee, for the equal and
ratable benefit of all Holders of the Securities or of series thereof,
as follows:
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
SECTION 101. GENERAL DEFINITIONS.
For all purposes of this Indenture, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as
well as the singular;
(b) all terms used herein without definition which are
defined in the Trust Indenture Act, either directly or by
reference therein, have the meanings assigned to them
therein;
(c) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles in the United
States; and, except as otherwise herein expressly provided,
the term "generally accepted accounting principles" with
respect to any computation required or permitted hereunder
shall mean such accounting principles as are generally
accepted in the United States at the date of such
computation or, at the election of the Company from time to
time, at the
26
date of the execution and delivery of this
Indenture; provided, however, that in determining generally
accepted accounting principles applicable to the Company,
effect shall be given, to the extent required, to any order,
rule or regulation of any administrative agency, regulatory
authority or other governmental body having jurisdiction
over the Company; and
(d) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Indenture as a
whole and not to any particular Article, Section or other
subdivision.
"ACT", when used with respect to any Holder of a Security,
has the meaning specified in Section 104.
"AFFILIATE" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes
of this definition, "CONTROL" when used with respect to any specified
Person means the power to direct generally the management and policies
of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms
"CONTROLLING" and "CONTROLLED" have meanings correlative to the
foregoing.
"AUTHENTICATING AGENT" means any Person (other than the
Company or an Affiliate of the Company) authorized by the Trustee to
act on behalf of the Trustee to authenticate the Securities of one or
more series.
"AUTHORIZED OFFICER" means the Chairman of the Board, the
President, any Vice President, the Treasurer or the Corporate
Secretary or any other duly authorized officer, agent or
attorney-in-fact of the Company named in an Officer's Certificate
signed by any of such corporate officers.
"BOARD OF DIRECTORS" means either the board of directors of
the Company or any committee thereof duly authorized to act in respect
of matters relating to this Indenture.
"BOARD RESOLUTION" means a copy of a resolution certified by
the Corporate Secretary or an Assistant Corporate Secretary of the
Company to have been duly adopted by the Board of Directors and to be
in full force and effect on the date of such certification, and
delivered to the Trustee.
"BUSINESS DAY", when used with respect to a Place of Payment
or any other particular location specified in the Securities or this
Indenture, means any day, other than a Saturday or Sunday, which is
not a day on which banking institutions or trust companies in such
Place of Payment or other location are generally authorized or
required by law, regulation
27
or executive order to remain closed, except as may be otherwise
specified as contemplated by Section 301.
"COMMISSION" means the Securities and Exchange Commission,
as from time to time constituted, created under the Securities
Exchange Act of 1934, as amended, or, if at any time after the date of
the execution and delivery of this Indenture such Commission is not
existing and performing the duties now assigned to it under the Trust
Indenture Act, then the body, if any, performing such duties at such
time.
"COMPANY" means the Person named as the "Company" in the
first paragraph of this Indenture until a successor Person shall have
become such pursuant to the applicable provisions of this Indenture,
and thereafter "Company" shall mean such successor Person.
"COMPANY ORDER" or "COMPANY REQUEST" means a written request
or order signed in the name of the Company by an Authorized Officer
and delivered to the Trustee.
"CORPORATE TRUST OFFICE" means the office of the Trustee at
which at any particular time its corporate trust business shall be
principally administered, which office at the date of the execution
and delivery of this Indenture is located at Rodney Square North, 1100
North Market Street, Wilmington, Delaware 19890.
"CORPORATION" means a corporation, association, company,
joint stock company or business trust.
"DECLARATION", with respect to a Washington Water Power
Trust, means the Declaration of Trust establishing such trust, as the
same shall be amended and restated from time to time.
"DISCOUNT SECURITY" means any Security which provides for an
amount less than the principal amount thereof to be due and payable
upon a declaration of acceleration of the Maturity thereof pursuant to
Section 702. "INTEREST" with respect to a Discount Security means
interest, if any, borne by such Security at a Stated Interest Rate.
"DOLLAR" or "$" means a dollar or other equivalent unit in
such coin or currency of the United States as at the time shall be
legal tender for the payment of public and private debts.
"ELIGIBLE OBLIGATIONS" means:
(a) with respect to Securities denominated in
Dollars, Government Obligations; or
(b) with respect to Securities denominated in a
28
currency other than Dollars or in a composite currency, such
other obligations or instruments as shall be specified with
respect to such Securities as contemplated by Section 301.
"EVENT OF DEFAULT" has the meaning specified in Section
701.
"FAIR VALUE" has the meaning specified in Section 1005.
"GOVERNMENTAL AUTHORITY" means the government of the United
States or of any State or Territory thereof or of the District of
Columbia or of any county, municipality or other political subdivision
of any thereof, or any department, agency, authority or other
instrumentality of any of the foregoing.
"GOVERNMENT OBLIGATIONS" means:
(a) direct obligations of, or obligations the principal
of and interest on which are unconditionally guaranteed by,
the United States entitled to the benefit of the full faith
and credit thereof; and
(b) certificates, depositary receipts or other
instruments which evidence a direct ownership interest in
obligations described in clause (a) above or in any specific
interest or principal payments due in respect thereof;
provided, however, that the custodian of such obligations or
specific interest or principal payments shall be a bank or
trust company (which may include the Trustee or any Paying
Agent) subject to Federal or State supervision or
examination with a combined capital and surplus of at least
Fifty Million Dollars ($50,000,000); and provided, further,
that except as may be otherwise required by law, such
custodian shall be obligated to pay to the holders of such
certificates, depositary receipts or other instruments the
full amount received by such custodian in respect of such
obligations or specific payments and shall not be permitted
to make any deduction therefrom.
"GUARANTEE", with respect to a Washington Water Power Trust,
means a guarantee agreement between the Company and the Institutional
Trustee of such trust for the benefit of the holders from time to time
of any of the Trust Securities of such trust.
"HOLDER" means a Person in whose name a Security is
registered in the Security Register.
"INDENTURE" means the Indenture, dated as of January 1, 1997
as originally executed and delivered and as it has been and may from
time to time be amended and/or supplemented by one or
29
more indentures or other instruments supplemental thereto or hereto
entered into pursuant to the applicable provisions hereof and shall
include the terms of particular series of Securities established as
contemplated by Section 301.
"INDEPENDENT EXPERT'S CERTIFICATE" has the meaning
specified in Section 1005.
"INSTITUTIONAL TRUSTEE", with respect to a Washington Water
Power Trust, has the meaning set forth in the Declaration establishing
such trust.
"INTEREST PAYMENT DATE", when used with respect to any
Security, means the Stated Maturity of an installment of interest on
such Security.
"MATURITY", when used with respect to any Security, means
the date on which the principal of such Security or an installment of
principal becomes due and payable as provided in such Security or in
this Indenture, whether at the Stated Maturity, by declaration of
acceleration, upon call for redemption or otherwise.
"NOTICE OF DEFAULT" has the meaning specified in
Section 701.
"OFFICER'S CERTIFICATE" means a certificate signed by
an Authorized Officer and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel, who
may be counsel for the Company or other counsel acceptable to the
Trustee and who may be an employee or Affiliate of the Company.
"OUTSTANDING", when used with respect to Securities, means,
as of the date of determination, all Securities theretofore
authenticated and delivered under this Indenture, except:
(a) Securities theretofore canceled or delivered
to the Trustee for cancellation;
(b) Securities deemed to have been paid for all
purposes of this Indenture in accordance with Section 601
(whether or not the Company's indebtedness in respect
thereof shall be satisfied and discharged for any other
purpose); and
(c) Securities which have been paid pursuant to Section
306 or in exchange for or in lieu of which other Securities
have been authenticated and delivered pursuant to this
Indenture, other than any such Securities in respect of
which there shall have been
30
presented to the Trustee proof satisfactory to it and the
Company that such Securities are held by a bona fide
purchaser or purchasers in whose hands such Securities are
valid obligations of the Company;
provided, however, that in determining whether or not the Holders of
the requisite principal amount of the Securities Outstanding under
this Indenture, or the Outstanding Securities of any series or
Tranche, have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or whether or not a quorum is
present at a meeting of Holders of Securities,
(x) Securities owned by the Company or any other
obligor upon the Securities or any Affiliate of the Company
or of such other obligor (unless the Company, such obligor
or such Affiliate owns all Securities Outstanding under this
Indenture, or all Outstanding Securities of each such series
and each such Tranche, as the case may be, determined
without regard to this clause (x)) shall be disregarded and
deemed not to be Outstanding, except that, in determining
whether the Trustee shall be protected in relying upon any
such request, demand, authorization, direction, notice,
consent or waiver or upon any such determination as to the
presence of a quorum, only Securities which the Trustee
knows to be so owned shall be so disregarded; provided,
however, that Securities so owned which have been pledged in
good faith may be regarded as Outstanding if it is
established to the reasonable satisfaction of the Trustee
that the pledgee, and not the Company, any such other
obligor or Affiliate of either thereof, has the right so to
act with respect to such Securities and that the pledgee is
not the Company or any other obligor upon the Securities or
any Affiliate of the Company or of such other obligor; and
(y) the principal amount of a Discount Security that
shall be deemed to be Outstanding for such purposes shall be
the amount of the principal thereof that would be due and
payable as of the date of such determination upon a
declaration of acceleration of the Maturity thereof pursuant
to Section 702; and
provided, further, that, in the case of any Security the principal of
which is payable from time to time without presentment or surrender,
the principal amount of such Security that shall be deemed to be
Outstanding at any time for all purposes of this Indenture shall be
the original principal amount thereof less the aggregate amount of
principal thereof theretofore paid.
"PAYING AGENT" means any Person, including the Company,
authorized by the Company to pay the principal of and premium, if
31
any, or interest, if any, on any Securities on behalf of the Company.
"PERIODIC OFFERING" means an offering of Securities of a
series from time to time any or all of the specific terms of which
Securities, including without limitation the rate or rates of
interest, if any, thereon, the Stated Maturity or Maturities thereof
and the redemption provisions, if any, with respect thereto, are to be
determined by the Company or its agents from time to time subsequent
to the initial request for the authentication and delivery of such
Securities by the Trustee, all as contemplated in Section 301 and
clause (b) of Section 303.
"PERSON" means any individual, corporation, partnership,
limited liability partnership, limited liability company, joint
venture, trust or unincorporated organization or any Governmental
Authority.
"PLACE OF PAYMENT", when used with respect to the Securities
of any series, or any Tranche thereof, means the place or places,
specified as contemplated by Section 301, at which, subject to Section
502, principal of and premium, if any, and interest, if any, on the
Securities of such series or Tranche are payable.
"PREDECESSOR SECURITY" of any particular Security means
every previous Security evidencing all or a portion of the same debt
as that evidenced by such particular Security; and, for the purposes
of this definition, any Security authenticated and delivered under
Section 306 in exchange for or in lieu of a mutilated, destroyed, lost
or stolen Security shall be deemed (to the extent lawful) to evidence
the same debt as the mutilated, destroyed, lost or stolen Security.
"REDEMPTION DATE", when used with respect to any Security to
be redeemed, means the date fixed for such redemption by or pursuant
to this Indenture.
"REDEMPTION PRICE", when used with respect to any Security
to be redeemed, means the price at which it is to be redeemed pursuant
to this Indenture.
"REGULAR RECORD DATE" for the interest payable on any
Interest Payment Date on the Securities of any series means the date
specified for that purpose as contemplated by Section 301.
"REQUIRED CURRENCY" has the meaning specified in
Section 311.
"RESPONSIBLE OFFICER", when used with respect to the
Trustee, means any officer of the Trustee assigned by the Trustee to
administer its corporate trust matters.
32
"SECURITIES" means any bonds, notes and other evidences of
indebtedness authenticated and delivered under this Indenture.
"SECURITY REGISTER" and "SECURITY REGISTRAR" have the
respective meanings specified in Section 305.
"SENIOR INDEBTEDNESS" means, with respect to any Person (a)
indebtedness (including premium, if any, and interest, if any,
thereon) of such Person for money borrowed or for the deferred
purchase price of property or services; (b) all other indebtedness
(including premium, if any, and interest, if any, thereon) evidenced
by bonds, debentures, notes or other similar instruments (other than
Securities) issued by such Person; (c) all obligations of such Person
under lease agreements designating such Person as lessee, irrespective
of the treatment of any such lease agreement for accounting, tax or
other purposes; (d) all obligations of such Person for reimbursement
(including premium, if any, and interest, if any thereon) in respect
of any letter of credit, banker's acceptance, security purchase
facility or similar credit transaction; (e) all obligations of the
character referred to in clauses (a) through (d) above of other
Persons for the payment of which such Person is responsible or liable
as obligor, guarantor or otherwise; and (f) all obligations of the
character referred to in clauses (a) through (d) above of other
Persons secured by any lien on any property or asset of such Person
(whether or not such obligation is assumed by such Person); provided,
however, that Senior Indebtedness shall not include (x) any such
indebtedness that is by its terms subordinated to or pari passu with
the Securities or (y) any indebtedness between or among such Person
and its Affiliates, including all other debt securities and guarantees
in respect of such debt securities, issued to (i) any Washington Water
Power Trust or (ii) any other trust, or a trustee of such trust,
partnership or other entity which is a financing vehicle of such
Person in connection with the issuance by such financing vehicle of
preferred securities.
"SPECIAL RECORD DATE" for the payment of any Unpaid Interest
on the Securities of any series means a date fixed by the Trustee
pursuant to Section 307.
"STATED INTEREST RATE" means a rate (whether fixed or
variable) at which an obligation by its terms is stated to bear simple
interest. Any calculation or other determination to be made under this
Indenture by reference to the Stated Interest Rate on an obligation
shall be made (a) if the Company's obligations in respect of any other
indebtedness shall be evidenced or secured in whole or in part by such
obligation, by reference to the lower of the Stated Interest Rate on
such obligation and the Stated Interest Rate on such other
indebtedness and (b) without regard to the effective interest cost to
the Company of such obligation or of any such other indebtedness.
33
"STATED MATURITY", when used with respect to any obligation
or any installment of principal thereof or interest thereon, means the
date on which the principal of such obligation or such installment of
principal or interest is stated to be due and payable (without regard
to any provisions for redemption, prepayment, acceleration, purchase
or extension).
"SUCCESSOR CORPORATION" has the meaning set forth in
Section 1001.
"TRANCHE" means a group of Securities which (a) are of the
same series and (b) have identical terms except as to principal amount
and/or date of issuance.
"TRUST INDENTURE ACT" means, as of any time, the Trust
Indenture Act of 1939, or any successor statute, as in effect at such
time.
"TRUST SECURITIES", with respect to a Washington Water Power
Trust, means the securities issued by such trust, as established in
the Declaration of such trust.
"TRUSTEE" means the Person named as the "Trustee" in the
first paragraph of this Indenture until a successor trustee shall have
become such with respect to one or more series of Securities pursuant
to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean or include each Person who is then a Trustee
hereunder, and, if at any time there is more than one Person acting as
trustee hereunder, "Trustee" shall mean each such Person so acting.
"UNITED STATES" means the United States of America, its
Territories, its possessions and other areas subject to its political
jurisdiction.
"UNPAID INTEREST" has the meaning specified in Section
307.
"WASHINGTON WATER POWER TRUST" means each of Washington
Water Power Capital I, Washington Water Power Capital II and
Washington Water Power Capital III, each a business trust established
under the laws of the State of Delaware, and any other similar trust
established for the purpose of issuing securities upon the issuance
and delivery to it of Securities.
SECTION 102. COMPLIANCE CERTIFICATES AND OPINIONS.
Except as otherwise expressly provided in this Indenture,
upon any application or request by the Company to the Trustee to take
any action under any provision of this Indenture, the Company shall
furnish to the Trustee an Officer's Certificate stating that all
conditions precedent, if any, provided for in
34
this Indenture relating to the proposed action have been complied with
and an Opinion of Counsel stating that in the opinion of such counsel
all such conditions precedent, if any, have been complied with, it
being understood that in the case of any such application or request
as to which the furnishing of such documents is specifically required
by any provision of this Indenture relating to such particular
application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with
a condition or covenant provided for in this Indenture shall include:
(a) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such
individual, such individual has made such examination or
investigation as is necessary to enable such individual to
express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with.
SECTION 103. CONTENT AND FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
(a) Any Officer's Certificate may be based (without further
examination or investigation), insofar as it relates to or is
dependent upon legal matters, upon an opinion of, or representations
by, counsel, unless, in any case, such officer has actual knowledge
that the certificate or opinion or representations with respect to the
matters upon which such Officer's Certificate may be based as
aforesaid are erroneous.
Any Opinion of Counsel may be based (without further
examination or investigation), insofar as it relates to or is
dependent upon factual matters, information with respect to which is
in the possession of the Company, upon a certificate of, or
representations by, an officer or officers of the Company, unless such
counsel has actual knowledge that the certificate or opinion or
representations with respect to the matters upon which his opinion may
be based as aforesaid are erroneous. In addition, any Opinion of
Counsel may be based (without further examination or investigation),
insofar as it relates to or is dependent upon
35
matters covered in an Opinion of Counsel rendered by other counsel,
upon such other Opinion of Counsel, unless such counsel has actual
knowledge that the Opinion of Counsel rendered by such other counsel
with respect to the matters upon which his Opinion of Counsel may be
based as aforesaid are erroneous. If, in order to render any Opinion
of Counsel provided for herein, the signer thereof shall deem it
necessary that additional facts or matters be stated in any Officer's
Certificate provided for herein, then such certificate may state all
such additional facts or matters as the signer of such Opinion of
Counsel may request.
(b) In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is
not necessary that all such matters be certified by, or covered by the
opinion of, only one such Person, or that they be so certified or
covered by only one document, but one such Person may certify or give
an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents. Where any
Person is required to make, give or execute two or more applications,
requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be
consolidated and form one instrument.
(c) Whenever, subsequent to the receipt by the Trustee of
any Board Resolution, Officer's Certificate, Opinion of Counsel or
other document or instrument, a clerical, typographical or other
inadvertent or unintentional error or omission shall be discovered
therein, a new document or instrument may be substituted therefor in
corrected form with the same force and effect as if originally filed
in the corrected form and, irrespective of the date or dates of the
actual execution and/or delivery thereof, such substitute document or
instrument shall be deemed to have been executed and/or delivered as
of the date or dates required with respect to the document or
instrument for which it is substituted. Anything in this Indenture to
the contrary notwithstanding, if any such corrective document or
instrument indicates that action has been taken by or at the request
of the Company which could not have been taken had the original
document or instrument not contained such error or omission, the
action so taken shall not be invalidated or otherwise rendered
ineffective but shall be and remain in full force and effect, except
to the extent that such action was a result of willful misconduct or
bad faith. Without limiting the generality of the foregoing, any
Securities issued under the authority of such defective document or
instrument shall nevertheless be the valid obligations of the Company
entitled to the benefits provided by this Indenture equally and
ratably with all other Outstanding Securities, except as aforesaid.
SECTION 104. ACTS OF HOLDERS.
36
(a) Any request, demand, authorization, direction, notice,
consent, election, waiver or other action provided by this Indenture
to be made, given or taken by Holders may be embodied in and evidenced
by one or more instruments of substantially similar tenor signed by
such Holders in person or by an agent duly appointed in writing or,
alternatively, may be embodied in and evidenced by the record of
Holders voting in favor thereof, either in person or by proxies duly
appointed in writing, at any meeting of Holders duly called and held
in accordance with the provisions of Article Twelve, or a combination
of such instruments and any such record. Except as herein otherwise
expressly provided, such action shall become effective when such
instrument or instruments or record or both are delivered to the
Trustee and, where it is hereby expressly required, to the Company.
Such instrument or instruments and any such record (and the action
embodied therein and evidenced thereby) are herein sometimes referred
to as the "ACT" of the Holders signing such instrument or instruments
and so voting at any such meeting. Proof of execution of any such
instrument or of a writing appointing any such agent, or of the
holding by any Person of a Security, shall be sufficient for any
purpose of this Indenture and (subject to Section 801) conclusive in
favor of the Trustee and the Company, if made in the manner provided
in this Section. The record of any meeting of Holders shall be proved
in the manner provided in Section 1206.
(b) The fact and date of the execution by any Person of any
such instrument or writing may be proved by the affidavit of a witness
of such execution or by a certificate of a notary public or other
officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to
him the execution thereof or may be proved in any other manner which
the Trustee and the Company deem sufficient. Where such execution is
by a signer acting in a capacity other than his individual capacity,
such certificate or affidavit shall also constitute sufficient proof
of his authority.
(c) The ownership, principal amount (except as otherwise
contemplated in clause (y) of the first proviso to the definition of
Outstanding) and serial numbers of Securities held by any Person, and
the date of holding the same, shall be proved by the Security
Register.
(d) Any request, demand, authorization, direction, notice,
consent, election, waiver or other Act of a Holder shall bind every
future Holder of the same Security and the Holder of every Security
issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Trustee or the Company in reliance thereon,
whether or not notation of such action is made upon such Security.
37
(e) Until such time as written instruments shall have been
delivered to the Trustee with respect to the requisite percentage of
principal amount of Securities for the action contemplated by such
instruments, any such instrument executed and delivered by or on
behalf of a Holder may be revoked with respect to any or all of such
Securities by written notice by such Holder or any subsequent Holder,
proven in the manner in which such instrument was proven.
(f) Securities of any series, or any Tranche thereof,
authenticated and delivered after any Act of Holders may, and shall if
required by the Trustee, bear a notation in form approved by the
Trustee as to any action taken by such Act of Holders. If the Company
shall so determine, new Securities of any series, or any Tranche
thereof, so modified as to conform, in the opinion of the Trustee and
the Company, to such action may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities of such series or Tranche.
(g) The Company may, at its option, by Company Order, fix in
advance a record date for the determination of Holders entitled to
give any request, demand, authorization, direction, notice, consent,
waiver or other Act solicited by the Company, but the Company shall
have no obligation to do so; provided, however, that the Company may
not fix a record date for the giving or making of any notice,
declaration, request or direction referred to in the next sentence. In
addition, the Trustee may, at its option, fix in advance a record date
for the determination of Holders of Securities of any series entitled
to join in the giving or making of any Notice of Default, any
declaration of acceleration referred to in Section 702, any request to
institute proceedings referred to in Section 707 or any direction
referred to in Section 712, in each case with respect to Securities of
such series. If any such record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act, or
such notice, declaration, request or direction, may be given before or
after such record date, but only the Holders of record at the close of
business on the record date shall be deemed to be Holders for the
purposes of determining (i) whether Holders of the requisite
proportion of the Outstanding Securities have authorized or agreed or
consented to such Act (and for that purpose the Outstanding Securities
shall be computed as of the record date) and/or (ii) which Holders may
revoke any such Act (notwithstanding subsection (e) of this Section);
and any such Act, given as aforesaid, shall be effective whether or
not the Holders which authorized or agreed or consented to such Act
remain Holders after such record date and whether or not the
Securities held by such Holders remain Outstanding after such record
date.
SECTION 105. NOTICES, ETC. TO TRUSTEE AND COMPANY.
38
Any request, demand, authorization, direction, notice,
consent, election, waiver or Act of Holders or other document provided
or permitted by this Indenture to be made upon, given or furnished to,
or filed with, the Trustee by any Holder or by the Company, or the
Company by the Trustee or by any Holder, shall be sufficient for every
purpose hereunder (unless otherwise expressly provided herein) if the
same shall be in writing and delivered personally to an officer or
other responsible employee of the addressee, or transmitted by
facsimile transmission, telex or other direct written electronic means
to such telephone number or other electronic communications address as
the parties hereto shall from time to time designate, or transmitted
by registered mail, charges prepaid, to the applicable address set
opposite such party's name below or to such other address as either
party hereto may from time to time designate:
If to the Trustee, to:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
Facsimile: (302) 651-1576
If to the Company, to:
The Washington Water Power Company
1411 East Mission Avenue
Spokane, Washington 99202
Attention: Treasurer
Facsimile: (509) 482-4879
Any communication contemplated herein shall be deemed to
have been made, given, furnished and filed if personally delivered, on
the date of delivery, if transmitted by facsimile transmission, telex
or other direct written electronic means, on the date of transmission,
and if transmitted by registered mail, on the date of receipt.
SECTION 106. NOTICE TO HOLDERS OF SECURITIES; WAIVER.
Except as otherwise expressly provided herein, where this
Indenture provides for notice to Holders of any event, such notice
shall be sufficiently given, and shall be deemed given, to Holders if
in writing and mailed, first-class postage prepaid, to each Holder
affected by such event, at the address of such Holder as it appears in
the Security Register, not later than the latest date, and not earlier
than the earliest date, prescribed for the giving of such notice.
In case by reason of the suspension of regular mail service
or by reason of any other cause it shall be impracticable
39
to give such notice to Holders by mail, then such notification as
shall be made with the approval of the Trustee shall constitute a
sufficient notification for every purpose hereunder. In any case where
notice to Holders is given by mail, neither the failure to mail such
notice, nor any defect in any notice so mailed, to any particular
Holder shall affect the sufficiency of such notice with respect to
other Holders.
Any notice required by this Indenture may be waived in
writing by the Person entitled to receive such notice, either before
or after the event otherwise to be specified therein, and such waiver
shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a
condition precedent to the validity of any action taken in reliance
upon such waiver.
SECTION 107. CONFLICT WITH TRUST INDENTURE ACT.
If any provision of this Indenture limits, qualifies or
conflicts with another provision hereof which is required or deemed to
be included in this Indenture by, or is otherwise governed by, any
provision of the Trust Indenture Act, such other provision shall
control; and if any provision hereof otherwise conflicts with the
Trust Indenture Act, the Trust Indenture Act shall control.
SECTION 108. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings in this Indenture and the
Table of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 109. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Indenture by the
Company shall bind its successors and assigns, whether so expressed or
not.
SECTION 110. SEPARABILITY CLAUSE.
In case any provision in this Indenture or the Securities
shall be held to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 111. BENEFITS OF INDENTURE.
Nothing in this Indenture or the Securities, express or
implied, shall give to any Person, other than the parties hereto,
their successors hereunder and the Holders and, to the extent provided
in Sections 104(a) and 716, registered holders of Trust Securities
(other than Trust Securities initially issued and sold to the Company)
and, so long as the notice described in Section
40
1413 shall not have been given, holders of Senior Indebtedness, any
benefit or any legal or equitable right, remedy or claim under this
Indenture.
SECTION 112. GOVERNING LAW.
This Indenture and the Securities shall be governed by and
construed in accordance with the law of the State of New York
(including without limitation Section 5-1401 of the New York General
Obligations Law or any successor to such statute), except to the
extent that the Trust Indenture Act shall be applicable.
SECTION 113. LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date
or Stated Maturity of any Security shall not be a Business Day at any
Place of Payment, then (notwithstanding any other provision of this
Indenture or of the Securities other than a provision in Securities of
any series, or any Tranche thereof, or in the indenture supplemental
hereto, Board Resolution or Officer's Certificate which establishes
the terms of the Securities of such series or Tranche, which
specifically states that such provision shall apply in lieu of this
Section) payment of interest or principal and premium, if any, need
not be made at such Place of Payment on such date, but may be made on
the next succeeding Business Day at such Place of Payment with the
same force and effect as if made on the Interest Payment Date or
Redemption Date, or at the Stated Maturity, and, if such payment is
made or duly provided for on such Business Day, no interest shall
accrue on the amount so payable for the period from and after such
Interest Payment Date, Redemption Date or Stated Maturity, as the case
may be, to such Business Day.
ARTICLE TWO
SECURITY FORMS
SECTION 201. FORMS GENERALLY.
The definitive Securities of each series shall be in
substantially the form or forms established in the indenture
supplemental hereto establishing such series, or in a Board Resolution
establishing such series, or in an Officer's Certificate pursuant to
such a supplemental indenture or Board Resolution, in any case with
such appropriate insertions, omissions, substitutions and other
variations as are required or permitted by this Indenture, and may
have such letters, numbers or other marks of identification and such
legends or endorsements placed thereon as may be required to comply
with the rules of any securities exchange or as may, consistently
herewith, be determined by the officers executing such Securities, as
evidenced by their execution of the Securities. If the form or
41
forms of Securities of any series are established in a Board
Resolution or in an Officer's Certificate pursuant to a Board
Resolution, such Board Resolution and Officer's Certificate, if any,
shall be delivered to the Trustee at or prior to the delivery of the
Company Order contemplated by Section 303 for the authentication and
delivery of such Securities.
The Securities of each series shall be issuable in
registered form without coupons. The definitive Securities shall be
produced in such manner as shall be determined by the officers
executing such Securities, as evidenced by their execution thereof.
SECTION 202. FORM OF TRUSTEE"S CERTIFICATE OF AUTHENTICATION.
The Trustee's certificate of authentication shall be in
substantially the form set forth below:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
-------------------------------
as Trustee
By:
----------------------------
Authorized Officer
ARTICLE THREE
THE SECURITIES
SECTION 301. AMOUNT UNLIMITED; ISSUABLE IN SERIES.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is unlimited.
The Securities may be issued in one or more series. Subject
to the last paragraph of this Section, prior to the authentication and
delivery of Securities of any series there shall be established by
specification in a supplemental indenture or in a Board Resolution, or
in an Officer's Certificate pursuant to a supplemental indenture or a
Board Resolution:
(a) the title of the Securities of such series (which
shall distinguish the Securities of such series from
Securities of all other series);
(b) any limit upon the aggregate principal amount of
the Securities of such series which may be authenti-
42
cated and delivered under this Indenture (except for
Securities authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other
Securities of such series pursuant to Section 304, 305, 306,
406 or 1106 and except for any Securities which, pursuant to
Section 303, are deemed never to have been authenticated and
delivered hereunder);
(c) the Persons (without specific identification) to
whom interest on Securities of such series, or any Tranche
thereof, shall be payable, if other than the Persons in
whose names such Securities (or one or more Predecessor
Securities) are registered at the close of business on the
Regular Record Date for such interest;
(d) the date or dates on which the principal of the
Securities of such series, or any Tranche thereof, is
payable or any formulary or other method or other means by
which such date or dates shall be determined, by reference
to an index or other fact or event ascertainable outside of
this Indenture or otherwise (without regard to any
provisions for redemption, prepayment, acceleration,
purchase or extension); and the right, if any, to extend the
Maturity of the Securities of such series, or any Tranche
thereof, and the duration of any such extension;
(e) the rate or rates at which the Securities of such
series, or any Tranche thereof, shall bear interest, if any
(including the rate or rates at which overdue principal
shall bear interest, if different from the rate or rates at
which such Securities shall bear interest prior to Maturity,
and, if applicable, the rate or rates at which overdue
premium or interest shall bear interest, if any), or any
formulary or other method or other means by which such rate
or rates shall be determined, by reference to an index or
other fact or event ascertainable outside of this Indenture
or otherwise; the date or dates from which such interest
shall accrue; the Interest Payment Dates on which such
interest shall be payable and the Regular Record Date, if
any, for the interest payable on such Securities on any
Interest Payment Date; the basis of computation of interest,
if other than as provided in Section 310; and the right, if
any, to extend the interest payment periods and the duration
of any such extension;
(f) the place or places at which and/or the methods (if
other than as provided elsewhere in this Indenture) by which
(i) the principal of and premium, if any, and interest, if
any, on Securities of such series, or any Tranche thereof,
shall be payable, (ii)
43
registration of transfer of Securities of such series, or
any Tranche thereof, may be effected, (iii) exchanges of
Securities of such series, or any Tranche thereof, may be
effected and (iv) notices and demands to or upon the Company
in respect of the Securities of such series, or any Tranche
thereof, and this Indenture may be served; the Security
Registrar and any Paying Agent or Agents for such series or
Tranche; and, if such is the case, that the principal of
such Securities shall be payable without the presentment or
surrender thereof;
(g) the period or periods within which or the date or
dates on which, the price or prices at which and the terms
and conditions upon which the Securities of such series, or
any Tranche thereof, may be redeemed, in whole or in part,
at the option of the Company;
(h) the obligation or obligations, if any, of the
Company to redeem or purchase the Securities of such series,
or any Tranche thereof, pursuant to any sinking fund or
other mandatory redemption provisions or at the option of a
Holder thereof and the period or periods within which or the
date or dates on which, the price or prices at which and the
terms and conditions upon which such Securities shall be
redeemed or purchased, in whole or in part, pursuant to such
obligation, and applicable exceptions to the requirements of
Section 404 in the case of mandatory redemption or
redemption at the option of the Holder;
(i) the denominations in which Securities of such
series, or any Tranche thereof, shall be issuable if other
than denominations of One Thousand Dollars ($1,000) and any
integral multiple thereof (in the case of Securities issued
to a Washington Water Power Trust or a trustee of such trust
in connection with the issuance of Trust Securities by such
Washington Water Power Trust, the denomination in which such
Securities shall be issuable if other than denominations of
Twenty-Five Dollars ($25) and any integral multiple
thereof);
(j) the currency or currencies, including composite
currencies, in which payment of the principal of and
premium, if any, and interest, if any, on the Securities of
such series, or any Tranche thereof, shall be payable (if
other than in Dollars);
(k) if the principal of or premium, if any, or
interest, if any, on the Securities of such series, or any
Tranche thereof, are to be payable, at the election
44
of the Company or a Holder thereof, in a coin or currency
other than that in which the Securities are stated to be
payable, the period or periods within which, and the terms
and conditions upon which, such election may be made;
(l) if the principal of or premium, if any, or
interest, if any, on the Securities of such series, or any
Tranche thereof, are to be payable, or are to be payable at
the election of the Company or a Holder thereof, in
securities or other property, the type and amount of such
securities or other property, or the formulary or other
method or other means by which such amount shall be
determined, and the period or periods within which, and the
terms and conditions upon which, any such election may be
made;
(m) if the amount payable in respect of the principal
of or premium, if any, or interest, if any, on the
Securities of such series, or any Tranche thereof, may be
determined with reference to an index or other fact or event
ascertainable outside of this Indenture, the manner in which
such amounts shall be determined (to the extent not
established pursuant to clause (e) of this paragraph);
(n) if other than the principal amount thereof, the
portion of the principal amount of Securities of such
series, or any Tranche thereof, which shall be payable upon
declaration of acceleration of the Maturity thereof pursuant
to Section 702;
(o) the terms, if any, pursuant to which the Securities
of such series, or any Tranche thereof, may be converted
into or exchanged for shares of capital stock or other
securities of the Company or any other Person;
(p) the obligations or instruments, if any, which shall
be considered to be Eligible Obligations in respect of the
Securities of such series, or any Tranche thereof,
denominated in a currency other than Dollars or in a
composite currency, and any additional or alternative
provisions for the reinstatement of the Company's
indebtedness in respect of such Securities after the
satisfaction and discharge thereof as provided in Section
601;
(q) if the Securities of such series, or any Tranche
thereof, are to be issued in global form, (i) any
limitations on the rights of the Holder or Holders of such
Securities to transfer or exchange the same or to obtain the
registration of transfer thereof, (ii)
45
any limitations on the rights of the Holder or Holders
thereof to obtain certificates therefor in definitive form
in lieu of temporary form and (iii) any and all other
matters incidental to such Securities;
(r) if the Securities of such series, or any Tranche
thereof, are to be issuable as bearer securities, any and
all matters incidental thereto which are not specifically
addressed in a supplemental indenture as contemplated by
clause (f) of Section 1101;
(s) to the extent not established pursuant to clause
(q) of this paragraph, any limitations on the rights of the
Holders of the Securities of such Series, or any Tranche
thereof, to transfer or exchange such Securities or to
obtain the registration of transfer thereof; and if a
service charge will be made for the registration of transfer
or exchange of Securities of such series, or any Tranche
thereof, the amount or terms thereof;
(t) any exceptions to Section 113, or variation in the
definition of Business Day, with respect to the Securities
of such series, or any Tranche thereof; and
(u) any other terms of the Securities of such
series, or any Tranche thereof.
With respect to Securities of a series subject to a Periodic
Offering, the indenture supplemental hereto or the Board Resolution
which establishes such series, or the Officer's Certificate pursuant
to such supplemental indenture or Board Resolution, as the case may
be, may provide general terms or parameters for Securities of such
series and provide either that the specific terms of Securities of
such series, or any Tranche thereof, shall be specified in a Company
Order or that such terms shall be determined by the Company or its
agents in accordance with procedures specified in a Company Order as
contemplated by clause (b) of Section 303.
Anything herein to the contrary notwithstanding, the Trustee
shall be under no obligation to authenticate and deliver Securities of
any series the terms of which, established as contemplated by this
Section, would affect the rights, duties, obligations, liabilities or
immunities of the Trustee under this Indenture or otherwise.
SECTION 302. DENOMINATIONS.
Unless otherwise provided as contemplated by Section 301
with respect to any series of Securities, or any Tranche thereof, the
Securities of each series shall be issuable in
46
denominations of One Thousand Dollars ($1,000) and any integral
multiple thereof (in the case of securities issued to a Washington
Water Power Trust or a trustee of such trust in connection with the
issuance of Trust Securities by such Washington Water Power Trust, the
Securities of each series shall be issuable in denominations of
Twenty-Five Dollars ($25) and any integral multiple thereof).
SECTION 303. EXECUTION, DATING, CERTIFICATE OF AUTHENTICATION.
Unless otherwise provided as contemplated by Section 301
with respect to any series of Securities, or any Tranche thereof, the
Securities shall be executed on behalf of the Company by an Authorized
Officer, and may have the corporate seal of the Company affixed
thereto or reproduced thereon and attested by any other Authorized
Officer. The signature of any or all of these officers on the
Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at the time of execution Authorized Officers of
the Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior to
the authentication and delivery of such Securities or did not hold
such offices at the date of such Securities.
The Trustee shall authenticate and deliver Securities of a
series, for original issue, at one time or from time to time in
accordance with the Company Order referred to below, upon receipt by
the Trustee of:
(a) the instrument or instruments establishing
the form or forms and terms of such series, as provided
in Sections 201 and 301;
(b) a Company Order requesting the authentication and
delivery of such Securities and, to the extent that the
terms of such Securities shall not have been established in
an indenture supplemental hereto or in a Board Resolution,
or in an Officer's Certificate pursuant to a supplemental
indenture or Board Resolution, all as contemplated by
Sections 201 and 301, either (i) establishing such terms or
(ii) in the case of Securities of a series subject to a
Periodic Offering, specifying procedures, acceptable to the
Trustee, by which such terms are to be established (which
procedures may provide for authentication and delivery
pursuant to oral or electronic instructions from the Company
or any agent or agents thereof, which oral instructions are
to be promptly confirmed electronically or in writing), in
either case in accordance with the instrument or instruments
delivered pursuant to clause (a) above;
47
(c) the Securities of such series, executed on
behalf of the Company by an Authorized Officer;
(d) an Opinion of Counsel to the effect that:
(i) the form or forms of such Securities have been
duly authorized by the Company and have been
established in conformity with the provisions of this
Indenture;
(ii) the terms of such Securities have been duly
authorized by the Company and have been established in
conformity with the provisions of this Indenture; and
(iii) when such Securities shall have been
authenticated and delivered by the Trustee and issued
and delivered by the Company in the manner and subject
to any conditions specified in such Opinion of Counsel,
such Securities will constitute valid obligations of
the Company, entitled to the benefits provided by this
Indenture equally and ratably with all other Securities
then Outstanding;
provided, however, that, with respect to Securities of a
series subject to a Periodic Offering, the Trustee shall be
entitled to receive such Opinion of Counsel only once at or
prior to the time of the first authentication and delivery
of such Securities (provided that such Opinion of Counsel
addresses the authentication and delivery of all Securities
of such series) and that, in lieu of the opinions described
in clauses (ii) and (iii) above, Counsel may opine that:
(x) when the terms of such Securities shall have
been established pursuant to a Company Order or Orders
or pursuant to such procedures as may be specified from
time to time by a Company Order or Orders, all as
contemplated by and in accordance with the instrument
or instruments delivered pursuant to clause (a) above,
such terms will have been duly authorized by the
Company and will have been established in conformity
with the provisions of this Indenture; and
(y) when such Securities shall have been
authenticated and delivered by the Trustee in
accordance with this Indenture and the Company Order or
Orders or the specified procedures referred to in
paragraph (x) above and issued and delivered by the
Company in the manner and subject
48
to any conditions specified in such Opinion of
Counsel, such Securities will constitute valid
obligations of the Company, entitled to the
benefits provided by this Indenture equally and
ratably with all other Securities then
Outstanding.
With respect to Securities of a series subject to a Periodic
Offering, the Trustee may conclusively rely, as to the authorization
by the Company of any of such Securities, the forms and terms thereof,
the validity thereof and the compliance of the authentication and
delivery thereof with the terms and conditions of this Indenture, upon
the Opinion or Opinions of Counsel and the certificates and other
documents delivered pursuant to this Article at or prior to the time
of the first authentication and delivery of Securities of such series
until any of such opinions, certificates or other documents have been
superseded or revoked or expire by their terms. In connection with the
authentication and delivery of Securities of a series subject to a
Periodic Offering, the Trustee shall be entitled to assume that the
Company's instructions to authenticate and deliver such Securities do
not violate any applicable law or any applicable rule, regulation or
order of any Governmental Authority having jurisdiction over the
Company.
If the form of terms of the Securities of any series have
been established by or pursuant to a Board Resolution or an Officer's
Certificate as permitted by Sections 201 or 301, the Trustee shall not
be required to authenticate such Securities if the issuance of such
Securities pursuant to this Indenture will affect the Trustee's own
rights, duties or immunities under the Securities and this Indenture
or otherwise in a manner which is not reasonably acceptable to the
Trustee.
Unless otherwise specified as contemplated by Section 301
with respect to any series of Securities, or any Tranche thereof, each
Security shall be dated the date of its authentication.
Unless otherwise specified as contemplated by Section 301
with respect to any series of Securities, or any Tranche thereof, no
Security shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such
Security a certificate of authentication substantially in the form
provided for herein executed by the Trustee or an Authenticating Agent
by manual signature of an authorized officer thereof, and such
certificate upon any Security shall be conclusive evidence, and the
only evidence, that such Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
Notwithstanding the foregoing, if (a) any Security shall have been
authenticated and delivered hereunder to the Company, or any Person
acting on its behalf, but shall never have been issued and
49
sold by the Company, (b) the Company shall deliver such Security to
the Security Registrar for cancellation or shall cancel such Security
and deliver evidence of such cancellation to the Trustee, in each case
as provided in Section 309, and (c) the Company, at its election,
shall deliver to the Trustee a written statement (which need not
comply with Section 102 and need not be accompanied by an Officer's
Certificate or an Opinion of Counsel) stating that such Security has
never been issued and sold by the Company, then, for all purposes of
this Indenture, such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled to
the benefits hereof.
SECTION 304. TEMPORARY SECURITIES.
Pending the preparation of definitive Securities of any
series, or any Tranche thereof, the Company may execute, and upon
Company Order the Trustee shall authenticate and deliver, temporary
Securities which are printed, lithographed, typewritten, mimeographed,
photocopied or otherwise produced, in any authorized denomination,
substantially of the tenor of the definitive Securities in lieu of
which they are issued, with such appropriate insertions, omissions,
substitutions and other variations as the officers executing such
Securities may determine, as evidenced by their execution of such
Securities; provided, however, that temporary Securities need not
recite specific redemption, sinking fund, conversion or exchange
provisions.
Except as otherwise specified as contemplated by Section 301
with respect to the Securities of any series, or any Tranche thereof,
after the preparation of definitive Securities of such series or
Tranche, the temporary Securities of such series or Tranche shall be
exchangeable, without charge to the Holder thereof, for definitive
Securities of such series or Tranche upon surrender of such temporary
Securities at the office or agency of the Company maintained pursuant
to Section 502 in a Place of Payment for such Securities. Upon such
surrender of temporary Securities, the Company shall, except as
aforesaid, execute and the Trustee shall authenticate and deliver in
exchange therefor definitive Securities of the same series and
Tranche, of authorized denominations and of like tenor and aggregate
principal amount.
Until exchanged in full as hereinabove provided, temporary
Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities of the same series and
Tranche and of like tenor authenticated and delivered hereunder.
SECTION 305. REGISTRATION, REGISTRATION OF TRANSFER AND
EXCHANGE.
The Company shall cause to be kept in one of the
50
offices designated pursuant to Section 502, with respect to the
Securities of each series, or any Tranche thereof, a register (the
"SECURITY REGISTER") in which, subject to such reasonable regulations
as it may prescribe, the Company shall provide for the registration of
Securities of such series or Tranche and the registration of transfer
thereof. The Company shall designate one Person to maintain the
Security Register for the Securities of each series and such Person is
referred to herein, with respect to such series, as the "SECURITY
REGISTRAR". Anything herein to the contrary notwithstanding, the
Company may designate one or more of its offices as an office in which
a register with respect to the Securities of one or more series, or
any Tranche or Tranches thereof, shall be maintained, and the Company
may designate itself the Security Registrar with respect to one or
more of such series. The Security Register shall be open for
inspection by the Trustee and the Company at all reasonable times.
Except as otherwise specified as contemplated by Section 301
with respect to the Securities of any series, or any Tranche thereof,
upon surrender for registration of transfer of any Security of such
series or Tranche at the office or agency of the Company maintained
pursuant to Section 502 in a Place of Payment for such series or
Tranche, the Company shall execute, and the Trustee shall authenticate
and deliver, in the name of the designated transferee or transferees,
one or more new Securities of the same series and Tranche, of
authorized denominations and of like tenor and aggregate principal
amount.
Except as otherwise specified as contemplated by Section 301
with respect to the Securities of any series, or any Tranche thereof,
any Security of such series or Tranche may be exchanged at the option
of the Holder, for one or more new Securities of the same series and
Tranche, of authorized denominations and of like tenor and aggregate
principal amount, upon surrender of the Securities to be exchanged at
any such office or agency. Whenever any Securities are so surrendered
for exchange, the Company shall execute, and the Trustee shall
authenticate and deliver, the Securities which the Holder making the
exchange is entitled to receive.
All Securities delivered upon any registration of transfer
or exchange of Securities shall be valid obligations of the Company,
evidencing the same debt, and entitled to the same benefits under this
Indenture, as the Securities surrendered upon such registration of
transfer or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company, the
Trustee or the Security Registrar) be duly endorsed or shall be
accompanied by a written instrument of transfer in form satisfactory
to the Company, the Trustee or the Security Registrar, as the case may
be, duly executed by the
51
Holder thereof or his attorney duly authorized in writing.
Unless otherwise specified as contemplated by Section 301
with respect to Securities of any series, or any Tranche thereof, no
service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may be
imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 406 or 1106
not involving any transfer.
The Company shall not be required to execute or to provide
for the registration of transfer of or the exchange of (a) Securities
of any series, or any Tranche thereof, during a period of fifteen (15)
days immediately preceding the date notice is to be given identifying
the serial numbers of the Securities of such series or Tranche called
for redemption or (b) any Security so selected for redemption in whole
or in part, except the unredeemed portion of any Security being
redeemed in part.
SECTION 306. MUTILATED, DESTROYED, LOST AND STOLEN SECURITIES.
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver
in exchange therefor a new Security of the same series and Tranche,
and of like tenor and principal amount and bearing a number not
contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee
(a) evidence to their satisfaction of the ownership of and the
destruction, loss or theft of any Security and (b) such security or
indemnity as may be reasonably required by them to save each of them
and any agent of either of them harmless, then, in the absence of
notice to the Company or the Trustee that such Security is held by a
Person purporting to be the owner of such Security, the Company shall
execute and the Trustee shall authenticate and deliver, in lieu of any
such destroyed, lost or stolen Security, a new Security of the same
series and Tranche, and of like tenor and principal amount and bearing
a number not contemporaneously outstanding.
Notwithstanding the foregoing, in case any such mutilated,
destroyed, lost or stolen Security has become or is about to become
due and payable, the Company in its discretion may, but subject to
compliance with the foregoing conditions, instead of issuing a new
Security, pay such Security.
Upon the issuance of any new Security under this Section,
the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and
expenses of the Trustee) connected therewith.
52
Every new Security of any series issued pursuant to this
Section in lieu of any destroyed, lost or stolen Security shall
constitute an additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Security shall be at any
time enforceable by anyone other than the Holder of such new Security,
and any such new Security shall be entitled to all the benefits of
this Indenture equally and proportionately with any and all other
Securities of such series duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or
stolen Securities.
SECTION 307. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.
Unless otherwise specified as contemplated by Section 301
with respect to the Securities of any series, or any Tranche thereof,
interest on any Security which is payable, and is punctually paid or
duly provided for, on any Interest Payment Date shall be paid to the
Person in whose name that Security (or one or more Predecessor
Securities) is registered at the close of business on the Regular
Record Date for such interest.
Any interest on any Security of any series which is payable,
but is not punctually paid or duly provided for, on any Interest
Payment Date, including without limitation interest the payment period
for which has been extended as specified with respect to such series
as contemplated by Section 301 (herein called "UNPAID INTEREST"),
shall forthwith cease to be payable to the Holder on the related
Regular Record Date by virtue of having been such Holder, and such
Unpaid Interest may be paid by the Company, at its election in each
case, as provided in clause (a) or (b) below:
(a) The Company may elect to make payment of any Unpaid
Interest to the Persons in whose names the Securities of
such series (or their respective Predecessor Securities) are
registered at the close of business on a date (herein called
a "SPECIAL RECORD DATE") for the payment of such Unpaid
Interest, which shall be fixed in the following manner. The
Company shall notify the Trustee in writing of the amount of
Unpaid Interest proposed to be paid on each Security of such
series and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of
money equal to the aggregate amount proposed to be paid in
respect of such Unpaid Interest or shall make arrangements
satisfactory to the Trustee for such deposit prior to the
date of the proposed payment, such money when deposited to
be held in trust for the
53
benefit of the Persons entitled to such Unpaid Interest as
in this clause provided. Thereupon the Trustee shall fix a
Special Record Date for the payment of such Unpaid Interest
which shall be not more than thirty (30) days and not less
than ten (10) days prior to the date of the proposed payment
and not less than twenty-five (25) days after the receipt by
the Trustee of the notice of the proposed payment. The
Trustee shall promptly notify the Company of such Special
Record Date and, in the name and at the expense of the
Company, shall, not less than fifteen (15) days prior to
such Special Record Date, cause notice of the proposed
payment of such Unpaid Interest and the Special Record Date
therefor to be mailed, first-class postage prepaid, to each
Holder of Securities of such series at the address of such
Holder as it appears in the Security Register. Notice of the
proposed payment of such Unpaid Interest and the Special
Record Date therefor having been so mailed, such Unpaid
Interest shall be paid to the Persons in whose names the
Securities of such series (or their respective Predecessor
Securities) are registered at the close of business on such
Special Record Date.
(b) The Company may make payment of any Unpaid Interest
on the Securities of any series in any other lawful manner
not inconsistent with the requirements of any securities
exchange on which such Securities may be listed, and upon
such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee of the proposed
payment pursuant to this clause, such manner of payment
shall be deemed practicable by the Trustee.
Subject to the foregoing provisions of this Section and
Section 305, each Security delivered under this Indenture upon
registration of transfer of or in exchange for or in lieu of any other
Security shall carry the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Security.
SECTION 308. PERSONS DEEMED OWNERS.
The Company, the Trustee and any agent of the Company or the
Trustee may treat the Person in whose name any Security is registered
as the absolute owner of such Security for the purpose of receiving
payment of principal of and premium, if any, and (subject to Sections
305 and 307) interest, if any, on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and
neither the Company, the Trustee nor any agent of the Company or the
Trustee shall be affected by notice to the contrary.
SECTION 309. CANCELLATION BY SECURITY REGISTRAR.
54
All Securities surrendered for payment, redemption,
registration of transfer or exchange shall, if surrendered to any
Person other than the Security Registrar, be delivered to the Security
Registrar and, if not theretofore canceled, shall be promptly canceled
by the Security Registrar. The Company may at any time deliver to the
Security Registrar for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have
acquired in any manner whatsoever or which the Company shall not have
issued and sold, and all Securities so delivered shall be promptly
canceled by the Security Registrar. All canceled Securities held by
the Security Registrar shall be disposed of in accordance with a
Company Order delivered to the Security Registrar and the Trustee, and
the Security Registrar shall promptly deliver a certificate of
disposition to the Trustee and the Company unless, by a Company Order,
similarly delivered, the Company shall direct that canceled Securities
be returned to it. The Security Registrar shall promptly deliver
evidence of any cancellation of a Security in accordance with this
Section 309 to the Trustee and the Company.
SECTION 310. COMPUTATION OF INTEREST.
Except as otherwise specified as contemplated by Section 301
for Securities of any series, or any Tranche thereof, interest on the
Securities of each series shall be computed on the basis of a three
hundred sixty (360) day year consisting of twelve (12) thirty (30) day
months and, with respect to any period less than a full calendar
month, on the basis of the actual number of days elapsed during such
period.
SECTION 311. PAYMENT TO BE IN PROPER CURRENCY.
In the case of the Securities of any series, or any Tranche
thereof, denominated in any currency other than Dollars or in a
composite currency (the "REQUIRED CURRENCY"), except as otherwise
specified with respect to such Securities as contemplated by Section
301, the obligation of the Company to make any payment of the
principal thereof, or the premium, if any, or interest, if any,
thereon, shall not be discharged or satisfied by any tender by the
Company, or recovery by the Trustee, in any currency other than the
Required Currency, except to the extent that such tender or recovery
shall result in the Trustee timely holding the full amount of the
Required Currency then due and payable. If any such tender or recovery
is in a currency other than the Required Currency, the Trustee may
take such actions as it considers appropriate to exchange such
currency for the Required Currency. The costs and risks of any such
exchange, including without limitation the risks of delay and exchange
rate fluctuation, shall be borne by the Company, the Company shall
remain fully liable for any shortfall or delinquency in the full
amount of Required Currency then due and payable, and in no
circumstances shall the Trustee be liable
55
therefor except in the case of its negligence or willful misconduct.
ARTICLE FOUR
REDEMPTION OF SECURITIES
SECTION 401. APPLICABILITY OF ARTICLE.
Securities of any series, or any Tranche thereof, which are
redeemable before their Stated Maturity shall be redeemable in
accordance with their terms and (except as otherwise specified as
contemplated by Section 301 for Securities of such series or Tranche)
in accordance with this Article.
SECTION 402. ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Securities shall
be evidenced by a Board Resolution or an Officer's Certificate. The
Company shall, at least forty-five (45) days prior to the Redemption
Date fixed by the Company (unless a shorter notice shall be
satisfactory to the Trustee), notify the Trustee in writing of such
Redemption Date and of the principal amount of such Securities to be
redeemed. In the case of any redemption of Securities (a) prior to the
expiration of any restriction on such redemption provided in the terms
of such Securities or elsewhere in this Indenture or (b) pursuant to
an election of the Company which is subject to a condition specified
in the terms of such Securities, the Company shall furnish the Trustee
with an Officer's Certificate evidencing compliance with such
restriction or condition.
SECTION 403. SELECTION OF SECURITIES TO BE REDEEMED.
If less than all the Securities of any series, or any
Tranche thereof, are to be redeemed, the particular Securities to be
redeemed shall be selected by the Security Registrar from the
Outstanding Securities of such series or Tranche not previously called
for redemption, by such method as shall be provided for any particular
series or Tranche, or, in the absence of any such provision, by such
method of random selection as the Security Registrar shall deem fair
and appropriate and which may, in any case, provide for the selection
for redemption of portions (equal to the minimum authorized
denomination for Securities of such series or Tranche or any integral
multiple thereof) of the principal amount of Securities of such series
or Tranche having a denomination larger than the minimum authorized
denomination for Securities of such series or Tranche; provided,
however, that if, as indicated in an Officer's Certificate, the
Company shall have offered to purchase all or any principal amount of
the Securities then Outstanding of any series, or any Tranche thereof,
and less than all of such Securities as to which such offer was made
shall
56
have been tendered to the Company for such purchase, the Security
Registrar, if so directed by Company Order, shall select for
redemption all or any principal amount of such Securities which have
not been so tendered.
The Security Registrar shall promptly notify the Company and
the Trustee in writing of the Securities selected for redemption and,
in the case of any Securities selected to be redeemed in part, the
principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to the redemption of
Securities shall relate, in the case of any Securities redeemed or to
be redeemed only in part, to the portion of the principal amount of
such Securities which has been or is to be redeemed.
SECTION 404. NOTICE OF REDEMPTION.
Notice of redemption shall be given in the manner provided
in Section 106 to the Holders of the Securities to be redeemed not
less than thirty (30) nor more than sixty (60) days prior to the
Redemption Date.
All notices of redemption shall state:
(a) the Redemption Date,
(b) the Redemption Price,
(c) if less than all the Securities of any series or
Tranche are to be redeemed, the identification of the
particular Securities to be redeemed and the portion of the
principal amount of any Security to be redeemed in part,
(d) that on the Redemption Date the Redemption Price,
together with accrued interest, if any, to the Redemption
Date, will become due and payable upon each such Security to
be redeemed and, if applicable, that interest thereon will
cease to accrue on and after said date,
(e) the place or places where such Securities are to be
surrendered for payment of the Redemption Price and accrued
interest, if any, unless it shall have been specified as
contemplated by Section 301 with respect to such Securities
that such surrender shall not be required,
(f) that the redemption is for a sinking or other
fund, if such is the case, and
(g) such other matters as the Company shall deem
57
desirable or appropriate.
With respect to any notice of redemption of Securities at
the election of the Company, unless, upon the giving of such notice,
such Securities shall be deemed to have been paid in accordance with
Section 601, such notice may state that such redemption shall be
conditional upon the receipt by the Paying Agent or Agents for such
Securities, on or prior to the date fixed for such redemption, of
money sufficient to pay the principal of and premium, if any, and
interest, if any, on such Securities and that if such money shall not
have been so received such notice shall be of no force or effect and
the Company shall not be required to redeem such Securities. In the
event that such notice of redemption contains such a condition and
such money is not so received, the redemption shall not be made and
within a reasonable time thereafter notice shall be given, in the
manner in which the notice of redemption was given, that such money
was not so received and such redemption was not required to be made,
and the Paying Agent or Agents for the Securities otherwise to have
been redeemed shall promptly return to the Holders thereof any of such
Securities which had been surrendered for payment upon such
redemption.
Notice of redemption of Securities to be redeemed at the
election of the Company, and any notice of non-satisfaction of a
condition for redemption as aforesaid, shall be given by the Company
or, at the Company's request, by the Security Registrar in the name
and at the expense of the Company. Notice of mandatory redemption of
Securities shall be given by the Security Registrar in the name and at
the expense of the Company.
SECTION 405. SECURITIES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, and the
conditions, if any, set forth in such notice having been satisfied,
the Securities or portions thereof so to be redeemed shall, on the
Redemption Date, become due and payable at the Redemption Price
therein specified, and from and after such date (unless, in the case
of an unconditional notice of redemption, the Company shall default in
the payment of the Redemption Price and accrued interest, if any) such
Securities or portions thereof, if interest-bearing, shall cease to
bear interest. Upon surrender of any such Security for redemption in
accordance with such notice, such Security or portion thereof shall be
paid by the Company at the Redemption Price, together with accrued
interest, if any, to the Redemption Date; provided, however, that no
such surrender shall be a condition to such payment if so specified as
contemplated by Section 301 with respect to such Security; and
provided, further, that, except as otherwise specified as contemplated
by Section 301 with respect to such Security, any installment of
interest on any Security the Stated Maturity of which installment is
on or prior to the Redemption Date shall be payable to the Holder of
such Security, or one or
58
more Predecessor Securities, registered as such at the close of
business on the related Regular Record Date according to the terms of
such Security and subject to the provisions of Section 307.
SECTION 406. SECURITIES REDEEMED IN PART.
Upon the surrender of any Security which is to be redeemed
only in part at a Place of Payment therefor (with, if the Company or
the Trustee so requires, due endorsement by, or a written instrument
of transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in
writing), the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security, without
service charge, a new Security or Securities of the same series and
Tranche, of any authorized denomination requested by such Holder and
of like tenor and in aggregate principal amount equal to and in
exchange for the unredeemed portion of the principal of the Security
so surrendered.
ARTICLE FIVE
COVENANTS
SECTION 501. PAYMENT OF SECURITIES.
The Company shall pay the principal of and premium, if any,
and interest, if any, on the Securities of each series in accordance
with the terms of such Securities and this Indenture.
SECTION 502. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in each Place of Payment for the
Securities of each series, or any Tranche thereof, an office or agency
where payment of such Securities shall be made, where the registration
of transfer or exchange of such Securities may be effected and where
notices and demands to or upon the Company in respect of such
Securities and this Indenture may be served. The Company shall give
prompt written notice to the Trustee of the location, and any change
in the location, of each such office or agency and prompt notice to
the Holders of any such change in the manner specified in Section 106.
If at any time the Company shall fail to maintain any such required
office or agency in respect of Securities of any series, or any
Tranche thereof, or shall fail to furnish the Trustee with the address
thereof, payment of such Securities shall be made, registration of
transfer or exchange thereof may be effected and notices and demands
in respect thereof may be served at the Corporate Trust Office of the
Trustee, and the Company hereby appoints the Trustee as its agent for
all such purposes in any such event.
The Company may also from time to time designate one or
59
more other offices or agencies with respect to the Securities of one
or more series, or any Tranche thereof, for any or all of the
foregoing purposes and may from time to time rescind such
designations; provided, however, that, unless otherwise specified as
contemplated by Section 301 with respect to the Securities of such
series or Tranche, no such designation or rescission shall in any
manner relieve the Company of its obligation to maintain an office or
agency for such purposes in each Place of Payment for such Securities
in accordance with the requirements set forth above. The Company shall
give prompt written notice to the Trustee, and prompt notice to the
Holders in the manner specified in Section 106, of any such
designation or rescission and of any change in the location of any
such other office or agency.
Anything herein to the contrary notwithstanding, any office
or agency required by this Section may be maintained at an office of
the Company, in which event the Company shall perform all functions to
be performed at such office or agency.
SECTION 503. MONEY FOR SECURITIES PAYMENTS TO BE HELD IN TRUST.
If the Company shall at any time act as its own Paying Agent
with respect to the Securities of any series, or any Tranche thereof,
it shall, on or before each due date of the principal of and premium,
if any, and interest, if any, on any of such Securities, segregate and
hold in trust for the benefit of the Persons entitled thereto a sum
sufficient to pay the principal and premium or interest so becoming
due until such sums shall be paid to such Persons or otherwise
disposed of as herein provided. The Company shall promptly notify the
Trustee of any failure by the Company (or any other obligor on such
Securities) to make any payment of principal of or premium, if any, or
interest, if any, on such Securities.
Whenever the Company shall have one or more Paying Agents
for the Securities of any series, or any Tranche thereof, it shall, on
or before each due date of the principal of and premium, if any, and
interest, if any, on such Securities, deposit with such Paying Agents
sums sufficient (without duplication) to pay the principal and premium
or interest so becoming due, such sums to be held in trust for the
benefit of the Persons entitled to such principal, premium or
interest, and (unless such Paying Agent is the Trustee) the Company
shall promptly notify the Trustee of any failure by it so to act.
The Company shall cause each Paying Agent for the Securities
of any series, or any Tranche thereof, other than the Company or the
Trustee, to execute and deliver to the Trustee an instrument in which
such Paying Agent shall agree with the Trustee, subject to the
provisions of this Section, that such Paying Agent shall:
(a) hold all sums held by it for the payment of
60
the principal of and premium, if any, or interest, if any,
on such Securities in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(b) give the Trustee notice of any failure by the
Company (or any other obligor upon such Securities) to make
any payment of principal of or premium, if any, or interest,
if any, on such Securities; and
(c) at any time during the continuance of any such
failure, upon the written request of the Trustee, forthwith
pay to the Trustee all sums so held in trust by such Paying
Agent and furnish to the Trustee such information as it
possesses regarding the names and addresses of the Persons
entitled to such sums.
The Company may at any time pay, or by Company Order direct
any Paying Agent to pay, to the Trustee all sums held in trust by the
Company or such Paying Agent, such sums to be held by the Trustee upon
the same trusts as those upon which such sums were held by the Company
or such Paying Agent and, if so stated in a Company Order delivered to
the Trustee, in accordance with the provisions of Article Six; and,
upon such payment by any Paying Agent to the Trustee, such Paying
Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or
then held by the Company, in trust for the payment of the principal of
and premium, if any, or interest, if any, on any Security and
remaining unclaimed for two years after such principal and premium, if
any, or interest, if any, has become due and payable shall be paid to
the Company on Company Request, or, if then held by the Company, shall
be discharged from such trust; and, upon such payment or discharge,
the Holder of such Security shall, as an unsecured general creditor
and not as the Holder of an Outstanding Security, look only to the
Company for payment of the amount so due and payable and remaining
unpaid (subject, however, to the provisions of Article Fourteen), and
all liability of the Trustee or such Paying Agent with respect to such
trust money, and all liability of the Company as trustee thereof,
shall thereupon cease; provided, however, that the Trustee or such
Paying Agent, before being required to make any such payment to the
Company, may at the expense of the Company cause to be mailed, on one
occasion only, notice to such Holder that such money remains unclaimed
and that, after a date specified therein, which shall not be less than
thirty (30) days from the date of such mailing, any unclaimed balance
of such money then remaining will be paid to the Company.
SECTION 504. CORPORATE EXISTENCE.
61
Subject to the rights of the Company under Article Ten, the
Company shall do or cause to be done all things necessary to preserve
and keep its corporate existence in full force and effect.
SECTION 505. MAINTENANCE OF PROPERTIES.
The Company shall cause (or, with respect to property owned
in common with others, make reasonable effort to cause) all its
properties used or useful in the conduct of its businesses, considered
as a whole, to be maintained and kept in good condition, repair and
working order and shall cause (or, with respect to property owned in
common with others, make reasonable effort to cause) to be made such
repairs, renewals, replacements, betterments and improvements thereof,
as, in the judgment of the Company, may be necessary in order that the
operation of such properties, considered as a whole, may be conducted
in accordance with common industry practice; provided, however, that
nothing in this Section shall prevent the Company from discontinuing,
or causing the discontinuance of, the operation and maintenance of any
of its properties; and provided, further, that nothing in this Section
shall prevent the Company from selling, transferring or otherwise
disposing of, or causing the sale, transfer or other disposition of,
any of its properties.
SECTION 506. WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to
comply with any term, provision or condition set forth in
(a) any covenant or restriction specified with respect
to the Securities of any series, or any Tranche thereof, as
contemplated by Section 301 if before the time for such
compliance the Holders of a majority in aggregate principal
amount of the Outstanding Securities of all series and
Tranches with respect to which compliance with such covenant
or restriction is to be omitted, considered as one class,
shall, by Act of such Holders, either waive such compliance
in such instance or generally waive compliance with such
term, provision or condition; provided, however, that no
such waiver shall be effective as to any matters
contemplated in clause (a), (b) or (c) in Section 1102
without consent of the Holders specified in such Section;
and
(b) Section 504 or 505 or Article Ten if before the
time for such compliance the Holders of a majority in
principal amount of Securities Outstanding under this
Indenture shall, by Act of such Holders, either waive such
compliance in such instance or generally waive compliance
with such term, provision or condition;
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but, in either case, no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the
Company and the duties of the Trustee in respect of any such term,
provision or condition shall remain in full force and effect;
provided, however, so long as a Washington Water Power Trust holds
Securities of any series, such trust may not waive compliance or waive
any default in compliance by the Company with any covenant or other
term contained in this Indenture or the Securities of such series
without the approval of the holders of a majority in aggregate
liquidation amount of the outstanding Trust Securities issued by such
trust (other than Trust Securities initially issued and sold to the
Company), obtained as provided in the Declaration establishing such
trust.
SECTION 507. ANNUAL OFFICER'S CERTIFICATE AS TO COMPLIANCE.
Not later than December 1 in each year, commencing December
1, 1997, the Company shall deliver to the Trustee an Officer's
Certificate which need not comply with Section 102, executed by the
principal executive officer, the principal financial officer or the
principal accounting officer of the Company, as to such officer's
knowledge of the Company's compliance with all conditions and
covenants under this Indenture, such compliance to be determined
without regard to any period of grace or requirement of notice under
this Indenture.
SECTION 508. RESTRICTION ON PAYMENT OF DIVIDENDS, ETC.
If, at any time (a) there shall have occurred and be
continuing an Event of Default described in clause (a) or (b) of
Section 701 with respect to the Securities of any series, (b) the
Company shall have elected to extend any interest payment period as
specified with respect to the Securities of any series, or any Tranche
thereof, as contemplated by Section 301 and any such period, as so
extended, shall be continuing, or (c) the Company shall be in default
in respect of its payment or other obligations under the Guarantee
relating to any Trust Securities (other than Trust Securities
initially issued and sold to the Company), then the Company shall not
(x) declare or pay any dividend on, make any distribution or
liquidation payment with respect to, or redeem or purchase any of its
capital stock, (y) make any payment of principal, premium, if any, or
interest, if any, on or repay, repurchase or redeem any debt
securities (including other Securities) that rank pari passu with or
junior in right of payment to the Securities and (z) make any
guarantee payments with respect to any of the foregoing (other than
payments under the Guarantee relating to any of such Trust
Securities); provided, however, that nothing in this Section shall be
deemed to prohibit (i) dividends or distributions payable in shares of
the Company's capital stock, (ii) reclassification of the Company's
capital stock or exchange or
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conversion of shares of one class or series of the Company's capital
stock into shares of another class or series of the Company's capital
stock, (iii) purchases or other acquisitions of fractional interests in
shares of the Company's capital stock and (iv) redemption, purchases or
other acquisitions of the Company's capital stock in connection with
the satisfaction by the Company of its obligations, under provisions of
the Company's Restated Articles of Incorporation, as amended, under any
direct purchase, dividend reinvestment, customer purchase or employee
benefit plans or under any contract or security requiring the Company
to purchase shares of its capital stock.
SECTION 509. WASHINGTON WATER POWER TRUSTS.
If Securities of any series are issued and delivered to a
Washington Water Power Trust (or a trustee thereof) in connection with
the issuance by such trust of Trust Securities, so long as such Trust
Securities remain outstanding the Company shall (a) maintain 100%
direct ownership, by the Company or any Affiliate thereof, of the
Trust Securities initially issued and sold to the Company by such
Washington Water Power Trust, except as otherwise provided in Section
1005, and (b) use all reasonable efforts to cause such Washington
Water Power Trust (i) to maintain its existence as a business trust,
except in connection with a distribution of Securities, with the
redemption, purchase or other acquisition and retirement of all Trust
Securities of such trust or with certain mergers, consolidations or
other business combinations, in each case as permitted by the
Declaration establishing such Washington Water Power Trust, and (ii)
to otherwise continue not to be treated as an association taxable as a
corporation for United States federal income tax purposes.
ARTICLE SIX
SATISFACTION AND DISCHARGE
SECTION 601. SATISFACTION AND DISCHARGE OF SECURITIES.
Any Security or Securities, or any portion of the principal
amount thereof, shall be deemed to have been paid for all purposes of
this Indenture, and the entire indebtedness of the Company in respect
thereof shall be satisfied and discharged, if there shall have been
irrevocably deposited with the Trustee or any Paying Agent (other than
the Company), in trust:
(a) money in an amount which shall be sufficient,
or
(b) in the case of a deposit made prior to the Maturity
of such Securities or portions thereof, Eligible
Obligations, which shall not contain provisions permitting
the redemption or other
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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, shall be sufficient, or
(c) a combination of (a) or (b) which shall be
sufficient,
to pay when due the principal of and premium, if any, and interest, if
any, due and to become due on such Securities or portions thereof;
provided, however, that in the case of the provision for payment or
redemption of less than all the Securities of any series or Tranche,
such Securities or portions thereof shall have been selected by the
Security Registrar as provided herein and, in the case of a
redemption, the notice requisite to the validity of such redemption
shall have been given or irrevocable authority shall have been given
by the Company to the Trustee to give such notice, under arrangements
satisfactory to the Trustee; and provided, further, that the Company
shall have delivered to the Trustee and such Paying Agent:
(x) if such deposit shall have been made prior to the
Maturity of such Securities, a Company Order stating that
the money and Eligible Obligations deposited in accordance
with this Section shall be held in trust, as provided in
Section 603;
(y) if Eligible Obligations shall have been deposited,
an Opinion of Counsel to the effect that such obligations
constitute Eligible Obligations and do not contain
provisions permitting the redemption or other prepayment
thereof at the option of the issuer thereof, and an opinion
of an independent public accountant of nationally recognized
standing, selected by the Company, to the effect that the
other requirements set forth in clause (b) above have been
satisfied; and
(z) if such deposit shall have been made prior to the
Maturity of such Securities, an Officer's Certificate
stating the Company's intention that, upon delivery of such
Officer's Certificate, its indebtedness in respect of such
Securities or portions thereof will have been satisfied and
discharged as contemplated in this Section.
Upon the deposit of money or Eligible Obligations, or both,
in accordance with this Section, together with the documents required
by clauses (x), (y) and (z) above, the Trustee shall, upon Company
Request, acknowledge in writing that such
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Securities or portions thereof are deemed to have been paid for all
purposes of this Indenture and that the entire indebtedness of the
Company in respect thereof has been satisfied and discharged as
contemplated in this Section. In the event that all of the conditions
set forth in the preceding paragraph shall have been satisfied in
respect of any Securities or portions thereof except that, for any
reason, the Officer's Certificate specified in clause (z) (if otherwise
required) shall not have been delivered, such Securities or portions
thereof shall nevertheless be deemed to have been paid for all purposes
of this Indenture, and the Holders of such Securities or portions
thereof shall nevertheless be no longer entitled to the benefits
provided by this Indenture or of any of the covenants of the Company
under Article Five (except the covenants contained in Sections 502 and
503) or any other covenants made in respect of such Securities or
portions thereof as contemplated by Section 301, but the indebtedness
of the Company in respect of such Securities or portions thereof shall
not be deemed to have been satisfied and discharged prior to Maturity
for any other purpose; and, upon Company Request, the Trustee shall
acknowledge in writing that such Securities or portions thereof are
deemed to have been paid for all purposes of this Indenture.
If payment at Stated Maturity of less than all of the
Securities of any series, or any Tranche thereof, is to be provided
for in the manner and with the effect provided in this Section, the
Security Registrar shall select such Securities, or portions of
principal amount thereof, in the manner specified by Section 403 for
selection for redemption of less than all the Securities of a series
or Tranche.
In the event that Securities which shall be deemed to have
been paid for purposes of this Indenture, and, if such is the case, in
respect of which the Company's indebtedness shall have been satisfied
and discharged, all as provided in this Section, do not mature and are
not to be redeemed within the sixty (60) day period commencing with
the date of the deposit of moneys or Eligible Obligations, as
aforesaid, the Company shall, as promptly as practicable, give a
notice, in the same manner as a notice of redemption with respect to
such Securities, to the Holders of such Securities to the effect that
such deposit has been made and the effect thereof.
Notwithstanding that any Securities shall be deemed to have
been paid for purposes of this Indenture, as aforesaid, the
obligations of the Company and the Trustee in respect of such
Securities under Sections 304, 305, 306, 404, 502, 503, 807 and 814
and this Article shall survive.
The Company shall pay, and shall indemnify the Trustee or
any Paying Agent with which Eligible Obligations shall have been
deposited as provided in this Section against, any tax, fee or other
charge imposed on or assessed against such Eligible
66
Obligations or the principal or interest received in respect of such
Eligible Obligations, including, but not limited to, any such tax
payable by any entity deemed, for tax purposes, to have been created as
a result of such deposit.
Anything herein to the contrary notwithstanding, (a) if, at
any time after a Security would be deemed to have been paid for
purposes of this Indenture, and, if such is the case, the Company's
indebtedness in respect thereof would be deemed to have been satisfied
and discharged, pursuant to this Section (without regard to the
provisions of this paragraph), the Trustee or any Paying Agent, as the
case may be, shall be required to return the money or Eligible
Obligations, or combination thereof, deposited with it as aforesaid to
the Company or its representative under any applicable Federal or
State bankruptcy, insolvency or other similar law, such Security shall
thereupon be deemed retroactively not to have been paid and any
satisfaction and discharge of the Company's indebtedness in respect
thereof shall retroactively be deemed not to have been effected, and
such Security shall be deemed to remain Outstanding and (b) any
satisfaction and discharge of the Company's indebtedness in respect of
any Security shall be subject to the provisions of the last paragraph
of Section 503.
SECTION 602. SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture shall upon Company Request cease to be of
further effect (except as hereinafter expressly provided), and the
Trustee, at the expense of the Company, shall execute such instruments
as the Company shall reasonably request to evidence and acknowledge
the satisfaction and discharge of this Indenture, when:
(a) no Securities remain Outstanding hereunder;
and
(b) the Company has paid or caused to be paid all
other sums payable hereunder by the Company;
provided, however, that if, in accordance with the last paragraph of
Section 601, any Security, previously deemed to have been paid for
purposes of this Indenture, shall be deemed retroactively not to have
been so paid, this Indenture shall thereupon be deemed retroactively
not to have been satisfied and discharged, as aforesaid, and to remain
in full force and effect, and the Company shall execute and deliver
such instruments as the Trustee shall reasonably request to evidence
and acknowledge the same.
Notwithstanding the satisfaction and discharge of this
Indenture as aforesaid, the obligations of the Company and the Trustee
under Sections 304, 305, 306, 404, 502, 503, 807 and 814 and this
Article shall survive.
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Upon satisfaction and discharge of this Indenture as
provided in this Section, the Trustee shall turn over to the Company
any and all money, securities and other property then held by the
Trustee for the benefit of the Holders of the Securities (other than
money and Eligible Obligations held by the Trustee pursuant to Section
603) and shall execute and deliver to the Company such instruments as,
in the judgment of the Company, shall be necessary, desirable or
appropriate to effect or evidence the satisfaction and discharge of
this Indenture.
SECTION 603. APPLICATION OF TRUST MONEY.
Neither the Eligible Obligations nor the money deposited
pursuant to Section 601, nor the principal or interest payments on any
such Eligible Obligations, shall be withdrawn or used for any purpose
other than, and shall be held in trust for, the payment of the
principal of and premium, if any, and interest, if any, on the
Securities or portions of principal amount thereof in respect of which
such deposit was made, all subject, however, to the provisions of
Section 503; provided, however, that any cash received from such
principal or interest payments on such Eligible Obligations, if not
then needed for such purpose, shall, to the extent practicable and
upon Company Request and delivery to the Trustee of the documents
referred to in clause (y) in the first paragraph of Section 601, be
invested in Eligible Obligations of the type described in clause (b)
in the first paragraph of Section 601 maturing at such times and in
such amounts as shall be sufficient, together with any other moneys
and the proceeds of any other Eligible Obligations then held by the
Trustee, to pay when due the principal of and premium, if any, and
interest, if any, due and to become due on such Securities or portions
thereof on and prior to the Maturity thereof, and interest earned from
such reinvestment shall be paid over to the Company as received, free
and clear of any trust, lien or pledge under this Indenture; and
provided, further, that any moneys held in accordance with this
Section on the Maturity of all such Securities in excess of the amount
required to pay the principal of and premium, if any, and interest, if
any, then due on such Securities shall be paid over to the Company
free and clear of any trust, lien or pledge under this Indenture; and
provided, further, that if an Event of Default shall have occurred and
be continuing, moneys to be paid over to the Company pursuant to this
Section shall be held until such Event of Default shall have been
waived or cured.
ARTICLE SEVEN
EVENTS OF DEFAULT; REMEDIES
SECTION 701. EVENTS OF DEFAULT.
"EVENT OF DEFAULT", wherever used herein with respect
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to the Securities of any series, means any of the following events
which shall have occurred and be continuing:
(a) failure to pay interest, if any, on any Security of such
series within sixty (60) days after the same becomes due and
payable (whether or not payment is prohibited by the provisions
of Article Fourteen); provided, however, that no such failure
shall constitute an "Event of Default" if the Company shall have
made a valid extension of the interest payment period with
respect to the Securities of such series if so provided with
respect to such series as contemplated by Section 301; or
(b) failure to pay the principal of or premium, if any, on
any Security of such series within three (3) Business Days after
its Maturity (whether or not payment is prohibited by the
provisions of Article Fourteen); provided, however, that no such
failure shall constitute an "Event of Default" if the Company
shall have made a valid extension of the Maturity of the
Securities of such series if so provided with respect to such
series as contemplated by Section 301; or
(c) failure to perform or breach of any covenant or warranty
of the Company in this Indenture (other than a covenant or
warranty a default in the performance of which or breach of which
is elsewhere in this Section specifically dealt with or which has
expressly been included in this Indenture solely for the benefit
of one or more series of Securities other than such series) for a
period of ninety (90) days after there has been given, by
registered or certified mail, to the Company by the Trustee, or
to the Company and the Trustee by the Holders of at least
thirty-three per centum (33%) in principal amount of the
Outstanding Securities of such series, a written notice
specifying such default or breach and requiring it to be remedied
and stating that such notice is a "NOTICE OF DEFAULT" hereunder,
unless the Trustee, or the Trustee and the Holders of a principal
amount of Securities of such series not less than the principal
amount of Securities the Holders of which gave such notice, as
the case may be, shall agree in writing to an extension of such
period prior to its expiration; provided, however, that the
Trustee, or the Trustee and the Holders of such principal amount
of Securities of such series, as the case may be, shall be deemed
to have agreed to an extension of such period if corrective
action is initiated by the Company within such period and is
being diligently pursued; or
(d) the entry by a court having jurisdiction in the premises
of (i) a decree or order for relief in respect of the Company in
an involuntary case or proceeding under any applicable Federal or
State bankruptcy, insolvency,
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reorganization or other similar law or (ii) a decree or order
adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition by one or more Persons other than
the Company seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company under any
applicable Federal or State law, or appointing a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other
similar official for the Company or for any substantial part
of its property, or ordering the winding-up or liquidation of
its affairs, and any such decree or order for relief or any
such other decree or order shall have remained unstayed and in
effect for a period of ninety (90) consecutive days; or
(e) the commencement by the Company of a voluntary
case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or
of any other case or proceeding to be adjudicated a bankrupt
or insolvent, or the consent by it to the entry of a decree or
order for relief in respect of the Company in a case or
proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or
proceeding against it, or the filing by it of a petition or
answer or consent seeking reorganization or relief under any
applicable Federal or State law, or the consent by it to the
filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee,
trustee, sequestrator or similar official of the Company or of
any substantial part of its property, or the making by it of
an assignment for the benefit of creditors, or the admission
by it in writing of its inability to pay its debts generally
as they become due, or the authorization of such action by the
Board of Directors; or
(f) If such Securities shall have been issued and
delivered to a Washington Water Power Trust (or a trustee
thereof) in connection with the issuance by such trust of
Trust Securities and so long as such Trust Securities remain
outstanding, such Washington Water Power Trust shall have
voluntarily or involuntarily dissolved, wound-up its business
or otherwise terminated its existence except in connection
with (i) the distribution of Securities to holders of Trust
Securities in liquidation of their interests in such trust,
(ii) the redemption of all or the outstanding Trust Securities
of such trust or (iii) certain mergers, consolidations or
other business combinations, each as permitted by the
Declaration establishing such trust.
SECTION 702. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If an Event of Default shall have occurred and be continuing
with respect to Securities of any series at the time
70
Outstanding, then in every such case the Trustee or the Holders of not
less than thirty-three per centum (33%) in principal amount of the
Outstanding Securities of such series may declare the principal amount
(or, if any of the Securities of such series are Discount Securities,
such portion of the principal amount of such Securities as may be
specified in the terms thereof as contemplated by Section 301) of all
of the Outstanding Securities of such series to be due and payable
immediately, by a notice in writing to the Company (and to the Trustee
if given by Holders), and upon such declaration such principal amount
(or specified amount), together with premium, if any, and accrued
interest, if any, thereon, shall become immediately due and payable;
provided, however, that if an Event of Default shall have occurred and
be continuing with respect to more than one series of Securities, the
Trustee or the Holders of not less than thirty-three per centum (33%)
in aggregate principal amount of the Outstanding Securities of all such
series, considered as one class, may make such declaration of
acceleration, and not the Holders of the Securities of any one of such
series.
At any time after such a declaration of acceleration with
respect to Securities of any series shall have been made, but before a
judgment or decree for payment of the money due shall have been
obtained by the Trustee as provided in this Article, the Event or
Events of Default giving rise to such declaration of acceleration
shall, without further act, be deemed to have been cured, and such
declaration and its consequences shall, without further act, be deemed
to have been rescinded and annulled, if
(a) the Company shall have paid or deposited with the
Trustee a sum sufficient to pay
(i) all overdue interest, if any, on all
Securities of such series then Outstanding;
(ii) the principal of and premium, if any,
on any Securities of such series then Outstanding
which have become due otherwise than by such
declaration of acceleration and interest thereon at
the rate or rates prescribed therefor in such
Securities;
(iii) interest upon overdue interest at the
rate or rates prescribed therefor in such Securities,
to the extent that payment of such interest is
lawful; and
(iv) all amounts due to the Trustee under
Section 807; and
(b) any other Event or Events of Default with respect
to Securities of such series, other than the
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non-payment of the principal of Securities of such series
which shall have become due solely by such declaration of
acceleration, shall have been cured or waived as provided in
Section 713.
No such rescission shall affect any subsequent Event of Default or
impair any right consequent thereon.
SECTION 703. COLLECTION OF INDEBTEDNESS AND SUITS FOR
ENFORCEMENT BY TRUSTEE.
If an Event of Default described in clause (a) or (b) of
Section 701 shall have occurred and be continuing, the Company shall,
upon demand of the Trustee, pay to it, for the benefit of the Holders
of the Securities of the series with respect to which such Event of
Default shall have occurred, the whole amount then due and payable on
such Securities for principal and premium, if any, and interest, if
any, and, in addition thereto, such further amount as shall be
sufficient to cover any amounts due to the Trustee under Section 807.
If the Company shall fail to pay such amounts forthwith upon
such demand, the Trustee, in its own name and as trustee of an express
trust, may institute a judicial proceeding for the collection of the
sums so due and unpaid, may prosecute such proceeding to judgment or
final decree and may enforce the same against the Company or any other
obligor upon such Securities and collect the moneys adjudged or
decreed to be payable in the manner provided by law out of the
property of the Company or any other obligor upon such Securities,
wherever situated.
If an Event of Default with respect to Securities of any
series shall have occurred and be continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of
the Holders of Securities of such series by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and
enforce any such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of
any power granted herein, or to enforce any other proper remedy.
SECTION 704. APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article
shall be applied in the following order, to the extent permitted by
law, at the date or dates fixed by the Trustee and, in case of the
distribution of such money on account of principal or premium, if any,
or interest, if any, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee
under Section 807;
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SECOND: To the payment of the whole amount then due and
unpaid upon the Outstanding Securities for principal and premium,
if any, and interest, if any, in respect of which or for the
benefit of which such money has been collected; and in case such
proceeds shall be insufficient to pay in full the whole amount so
due and unpaid upon such Securities, then to the payment of such
principal and interest, if any, thereon without any preference or
priority, ratably according to the aggregate amount so due and
unpaid, with any balance then remaining to the payment of
premium, if any, and, if so specified as contemplated by Section
301 with respect to the Securities of any series, or any Tranche
thereof, interest, if any, on overdue premium, if any, and
overdue interest, if any, ratably as aforesaid, all to the extent
permitted by applicable law;
THIRD: To the payment of the remainder, if any, to
the Company or to whomsoever may be lawfully entitled to
receive the same or as a court of competent jurisdiction may
direct.
SECTION 705. TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment,
composition or other judicial proceeding relative to the Company or
any other obligor upon the Securities or the property of the Company
or of such other obligor or their creditors, the Trustee (irrespective
of whether the principal of the Securities shall then be due and
payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the
Company for the payment of overdue principal or interest) shall be
entitled and empowered, by intervention in such proceeding or
otherwise,
(a) to file and prove a claim for the whole amount of
principal, premium, if any, and interest, if any, owing and
unpaid in respect of the Securities and to file such other papers
or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for amounts due to
the Trustee under Section 807) and of the Holders allowed in such
judicial proceeding, and
(b) to collect and receive any moneys or other
property payable or deliverable on any such claims and to
distribute the same;
and any custodian, receiver, assignee, trustee, liquidator,
sequestrator or other similar official in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the
Trustee and, in the event that the Trustee shall consent to the making
of such payments directly to the Holders,
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to pay to the Trustee any amounts due it under Section 807.
Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any
Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the claim of
any Holder in any such proceeding.
SECTION 706. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
SECURITIES.
All rights of action and claims under this Indenture or on
the Securities may be prosecuted and enforced by the Trustee without
the possession of any of the Securities or the production thereof in
any proceeding relating thereto, and any such proceeding instituted by
the Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment shall, after provision for the
payment of the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, be for the ratable
benefit of the Holders in respect of which such judgment has been
recovered.
SECTION 707. LIMITATION ON SUITS.
No Holder shall have any right to institute any proceeding,
judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy
hereunder, unless:
(a) such Holder shall have previously given written notice
to the Trustee of a continuing Event of Default with respect to
the Securities of such series;
(b) the Holders of a majority in aggregate principal amount
of the Outstanding Securities of all series in respect of which
an Event of Default shall have occurred and be continuing,
considered as one class, shall have made written request to the
Trustee to institute proceedings in respect of such Event of
Default in its own name as Trustee hereunder;
(c) such Holder or Holders shall have offered to the Trustee
reasonable indemnity against the costs, expenses and liabilities
to be incurred in compliance with such request;
(d) the Trustee for sixty (60) days after its receipt of
such notice, request and offer of indemnity shall have failed to
institute any such proceeding; and
(e) no direction inconsistent with such written request
shall have been given to the Trustee during such sixty (60) day
period by the Holders of a majority in
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aggregate principal amount of the Outstanding Securities of
all series in respect of which an Event of Default shall have
occurred and be continuing, considered as one class.
it being understood and intended that no one or more of such Holders
shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this Indenture to affect, disturb or
prejudice the rights of any other of such Holders or to obtain or to
seek to obtain priority or preference over any other of such Holders
or to enforce any right under this Indenture, except in the manner
herein provided and for the equal and ratable benefit of all of such
Holders.
SECTION 708. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE
PRINCIPAL, PREMIUM AND INTEREST.
Notwithstanding any other provision in this Indenture, the
Holder of any Security shall have the right, which is absolute and
unconditional, to receive payment of the principal of and premium, if
any, and (subject to Section 307) interest, if any, on such Security
on the Stated Maturity or Maturities expressed in such Security (or,
in the case of redemption, on the Redemption Date) and to institute
suit for the enforcement of any such payment, and such rights shall
not be impaired without the consent of such Holder.
SECTION 709. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding
to enforce any right or remedy under this Indenture and such
proceeding shall have been discontinued or abandoned for any reason,
or shall have been determined adversely to the Trustee or to such
Holder, then and in every such case, subject to any determination in
such proceeding, the Company, the Trustee and such Holder shall be
restored severally and respectively to their former positions
hereunder and thereafter all rights and remedies of the Trustee and
such Holder shall continue as though no such proceeding had been
instituted.
SECTION 710. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided in the last paragraph of
Section 306, no right or remedy herein conferred upon or reserved to
the Trustee or to the Holders is intended to be exclusive of any other
right or remedy, and every right and remedy shall, to the extent
permitted by law, be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in
equity or otherwise. The assertion or employment of any right or
remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 711. DELAY OR OMISSION NOT WAIVER.
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No delay or omission of the Trustee or of any Holder to
exercise any right or remedy accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such
Event of Default or an acquiescence therein. Every right and remedy
given by this Article or by law to the Trustee or to the Holders may
be exercised from time to time, and as often as may be deemed
expedient, by the Trustee or by the Holders, as the case may be.
SECTION 712. CONTROL BY HOLDERS OF SECURITIES.
If an Event of Default shall have occurred and be continuing
in respect of a series of Securities, the Holders of a majority in
principal amount of the Outstanding Securities of such series shall
have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred on the Trustee with respect to the Securities
of such series; provided, however, that if an Event of Default shall
have occurred and be continuing with respect to more than one series
of Securities, the Holders of a majority in aggregate principal amount
of the Outstanding Securities of all such series, considered as one
class, shall have the right to make such direction, and not the
Holders of the Securities of any one of such series; and provided,
further, that
(a) such direction shall not be in conflict with any rule of
law or with this Indenture, and could not involve the Trustee in
personal liability in circumstances where indemnity would not, in
the Trustee's sole discretion, be adequate, and
(b) the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction.
SECTION 713. WAIVER OF PAST DEFAULTS.
The Holders of a majority in principal amount of the
Outstanding Securities of any series may on behalf of the Holders of
all the Securities of such series waive any past default with respect
to such series hereunder and its consequences, except a default
(a) in the payment of the principal of or premium, if
any, or interest, if any, on any Security of such series, or
(b) in respect of a covenant or provision hereof which under
Section 1102 cannot be modified or amended without the consent of
the Holder of each Outstanding Security of such series affected;
provided, however, that so long as a Washington Water Power Trust
holds the Securities of any
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series, such trust may not waive any past default without the
consent of a majority in aggregate liquidation amount of the
outstanding Trust Securities issued by such trust (other than
Trust Securities initially issued and sold to the Company)
obtained as provided in the Declaration establishing such
trust.
Upon any such waiver, such default shall cease to exist, and
any and all Events of Default arising therefrom shall be deemed to
have been cured, for every purpose of this Indenture; but no such
waiver shall extend to any subsequent or other default or impair any
right consequent thereon.
SECTION 714. UNDERTAKING FOR COSTS.
The Company and the Trustee agree, and each Holder by its
acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any
right or remedy under this Indenture, or in any suit against the
Trustee for any action taken, suffered or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay
the costs of such suit, and that such court may in its discretion
assess reasonable costs, including reasonable attorneys' fees, against
any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but
the provisions of this Section shall not apply to any suit instituted
by the Company, to any suit instituted by the Trustee, to any suit
instituted by any Holder, or group of Holders, holding in the
aggregate more than ten per centum (10%) in aggregate principal amount
of the Outstanding Securities of all series in respect of which such
suit may be brought, considered as one class, or to any suit
instituted by any Holder for the enforcement of the payment of the
principal of or premium, if any, or interest, if any, on any Security
on or after the Stated Maturity or Maturities expressed in such
Security (or, in the case of redemption, on or after the Redemption
Date).
SECTION 715. WAIVER OF STAY OR EXTENSION LAWS.
To the full extent that it may lawfully so agree, the
Company shall not at any time set up, claim or otherwise seek to take
the benefit or advantage of any stay or extension law, now or
hereafter in effect, in order to prevent or hinder the enforcement of
this Indenture; and the Company, for itself and all who may claim
under it, so far as it or they now or hereafter may lawfully do so,
hereby waives the benefit of all such laws.
SECTION 716. ACTION BY HOLDERS OF CERTAIN TRUST SECURITIES.
If the Securities of any series shall be held by the
Institutional Trustee of a Washington Water Power Trust and if such
Institutional Trustee, as such Holder, shall have failed to
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exercise any of the rights and remedies available under this Indenture
to the Holders of such Securities, the holders of the Trust Securities
issued by such trust (other than Trust Securities initially issued and
sold to the Company) shall have and may exercise all such rights and
remedies, to the same extent as if such holders of such Trust
Securities held a principal amount of Securities of such series equal
to the liquidation amount of such Trust Securities, without first
proceeding against such trustee or trust. Notwithstanding the
foregoing, in the case of an Event of Default described in clause (a)
or (b) of Section 701, each holder of such Trust Securities shall have
and may exercise all rights available to the Institutional Trustee
under Section 708 as the Holder of the Securities of such series.
If action shall have been taken by both the Holders and the
holders of Trust Securities (other than Trust Securities initially
issued and sold to the Company) to exercise such rights as
contemplated in the preceding paragraph, the action taken by holders
of Trust Securities shall control. Any such action taken by registered
holders of Trust Securities shall be evidenced to the Trustee in the
same manner as an Act of Holders, as provided in Section 104(a). The
Trustee shall be entitled to rely on the books and records of the
related Washington Water Power Trust in determining the identities of
the holders of Trust Securities (and, upon the reasonable request of
the Trustee, the Company, as the sponsor of such trust, shall, at its
own expense, promptly provide copies of applicable portions of such
books and records to the Trustee to the extent reasonably necessary to
enable the Trustee to make such determination).
ARTICLE EIGHT
THE TRUSTEE
SECTION 801. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Except during the continuance of an Event of
Default with respect to Securities of any series,
(i) the Trustee undertakes to perform, with respect to
Securities of such series, such duties and only such duties
as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the
Trustee may, with respect to Securities of such series,
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture;
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but in the case of any such certificates or opinions which by
any provisions hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to
the requirements of this Indenture.
(b) In case an Event of Default with respect to Securities of
any series shall have occurred and be continuing, the Trustee shall
exercise, with respect to Securities of such series, such of the rights
and powers vested in it by this Indenture, and use the same degree of
care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except
that:
(i) this subsection shall not be construed to
limit the effect of subsection (a) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless
it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of a majority in
principal amount of the Outstanding Securities of any one or
more series, as provided herein, relating to the time, method
and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Indenture with respect
to the Securities of such series; and
(iv) no provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers,
if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to it.
(d) Whether or not therein expressly so provided, every
provision of this Indenture relating to the conduct or affecting the
liability of or affording protection to the Trustee shall be subject to
the provisions of this Section.
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SECTION 802. NOTICE OF DEFAULTS.
The Trustee shall give notice of any default hereunder with
respect to the Securities of any series to the Holders of Securities
of such series in the manner and to the extent required to do so by
the Trust Indenture Act, unless such default shall have been cured or
waived; provided, however, that in the case of any default of the
character specified in Section 701(c), no such notice to Holders shall
be given until at least seventy-five (75) days after the occurrence
thereof; and provided, further, that, subject to the provisions of
Section 801, the Trustee shall not be deemed to have knowledge of such
default unless either (i) a Responsible Officer of the Trustee shall
have actual knowledge of such default or (ii) the Trustee shall have
received written notice thereof from the Company or any Holder. For
the purpose of this Section, the term "DEFAULT" means any event which
is, or after notice or lapse of time, or both, would become, an Event
of Default.
SECTION 803. CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 801 and to the
applicable provisions of the Trust Indenture Act:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence
of indebtedness or other paper or document believed by it to be
genuine and to have been signed, sent or presented by the proper
party or parties;
(b) any request, direction or act of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or
Company Order, or as otherwise expressly provided herein, and any
resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the
Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action
hereunder, the Trustee (unless other evidence is specifically
prescribed herein) may, in the absence of bad faith on its part,
rely upon an Officer's Certificate;
(d) the Trustee may consult with counsel and the written
advice of such counsel or any Opinion of Counsel shall be full
and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this
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Indenture at the request or direction of any Holder pursuant
to this Indenture, unless such Holder shall have offered to
the Trustee reasonable security or indemnity against the
costs, expenses and liabilities which might be incurred by it
complying with such request or direction;
(f) the Trustee shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper
or document, but the Trustee, in its discretion, may make such
further inquiry or investigation into such facts or matters as
it may see fit, and, if the Trustee shall determine to make
such further inquiry or investigation, it shall (subject to
applicable legal requirements) be entitled to examine, during
normal business hours, the books, records and premises of the
Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either
directly or by or through agents or attorneys and the Trustee
shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by
it hereunder; and
(h) the Trustee shall not be charged with knowledge
of any Event of Default with respect to the Securities of any
series for which it is acting as Trustee unless either (i) a
Responsible Officer of the Trustee shall have actual knowledge
of the Event of Default or (ii) written notice of such Event
of Default shall have been given to the Trustee by the
Company, any other obligor on such Securities or by any Holder
of such Securities.
SECTION 804. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES.
The recitals contained herein and in the Securities (except
the Trustee's certificates of authentication) shall be taken as the
statements of the Company, and neither the Trustee nor any
Authenticating Agent assumes any responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency
of this Indenture or of the Securities. Neither the Trustee nor any
Authenticating Agent shall be accountable for the use or application by
the Company of Securities or the proceeds thereof.
SECTION 805. MAY HOLD SECURITIES.
Each of the Trustee, any Authenticating Agent, any Paying
Agent, any Security Registrar or any other agent of the
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Company or the Trustee, in its individual or any other capacity, may
become the owner or pledgee of Securities and, subject to Sections 808
and 813, may otherwise deal with the Company with the same rights it
would have if it were not such Trustee, Authenticating Agent, Paying
Agent, Security Registrar or other agent.
SECTION 806. MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be
segregated from other funds, except to the extent required by law. The
Trustee shall be under no liability for interest on or investment of
any money received by it hereunder except as expressly provided herein
or otherwise agreed with, and for the sole benefit of, the Company.
SECTION 807. COMPENSATION AND REIMBURSEMENT.
The Company shall
(a) pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard
to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, reimburse
the Trustee upon its request for all reasonable expenses,
disbursements and advances reasonably incurred or made by the
Trustee in accordance with any provision of this Indenture
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except to the extent that
any such expense, disbursement or advance may be attributable to
its negligence, wilful misconduct or bad faith; and
(c) indemnify the Trustee and hold it harmless from and
against any loss, liability or expense reasonably incurred by it
arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder or the performance
of its duties hereunder, including the reasonable costs and
expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or
duties hereunder, except to the extent any such loss, liability or
expense may be attributable to its negligence, wilful misconduct or
bad faith.
As security for the performance of the obligations of the
Company under this Section, the Trustee shall have a lien prior to the
Securities upon all property and funds held or collected by the Trustee
as such other than property and funds held in trust under Section 603
(except moneys payable to the
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Company as provided in Section 603). "TRUSTEE" for purposes of this
Section shall include any predecessor Trustee; provided, however, that
the negligence, wilful misconduct or bad faith of any Trustee hereunder
shall not affect the rights of any other Trustee hereunder.
SECTION 808. DISQUALIFICATION; CONFLICTING INTERESTS.
If the Trustee shall have or acquire any conflicting interest
within the meaning of the Trust Indenture Act, it shall either
eliminate such conflicting interest or resign to the extent, in the
manner and with the effect, and subject to the conditions, provided in
the Trust Indenture Act and this Indenture. For purposes of Section
310(b)(1) of the Trust Indenture Act and to the extent permitted
thereby, the Trustee, in its capacity as trustee in respect of the
Securities of any series, shall not be deemed to have a conflicting
interest arising from its capacity as trustee in respect of the
Securities of any other series.
SECTION 809. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.
There shall at all times be a Trustee hereunder which shall be
(a) a corporation organized and doing business under the laws
of the United States, any State or Territory thereof or the
District of Columbia, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least Fifty Million Dollars ($50,000,000) and subject to
supervision or examination by Federal, State, Territorial or
District of Columbia authority, or
(b) if and to the extent permitted by the Commission by rule,
regulation or order upon application, a corporation or other Person
organized and doing business under the laws of a foreign
government, authorized under such laws to exercise corporate trust
powers, having a combined capital and surplus of at least Fifty
Million Dollars ($50,000,000) or the Dollar equivalent of the
applicable foreign currency and subject to supervision or
examination by authority of such foreign government or a political
subdivision thereof substantially equivalent to supervision or
examination applicable to United States institutional trustees,
and, in either case, qualified and eligible under this Article and the
Trust Indenture Act. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of such
supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most
recent report of condition so