DEALER MANAGER AGREEMENT
________ __, 1998
X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. OFFER TO EXCHANGE. The Washington Water Power Company, a
Washington corporation (the "Company"), plans to make an exchange offer to
exchange up to 20,000,000 shares of its outstanding Common Stock, no par
value (collectively, the "Original Securities") for Depositary Shares (the
"Return Enhanced Convertible Shares" or "RECONS"), each constituting a 1/10th
interest in one share of new series of Preferred Stock of the Company to be
designated the $12.40 Cumulative Preferred Stock, Convertible Series L (the
"New Preferred Stock") (the RECONS and the Preferred Stock are collectively
referred to in this Agreement as the "New Securities") on the terms and
subject to the conditions to be set forth in the Exchange Offer Prospectus
relating to the New Securities and the accompanying letters of transmittal
(each, a "Letter of Transmittal"). The RECONS will be evidenced by depositary
receipts ("Receipts") to be issued by The Bank of New York, as Depositary
(the "Depositary") under a Deposit Agreement, to be dated as of
[__________________], 1998 (the "Deposit Agreement"), between the Company and
the Depositary. The offer to exchange the Original Securities on the terms
and subject to the conditions set forth in the Exchange Offer Prospectus and
the related Letters of Transmittal (including the solicitation of tenders
with respect to the Original Securities) is referred to as the "Exchange
Offer".
The New Securities will be convertible into shares of common stock, no
par value, of the Company (the "Common Stock"), in accordance with the terms
of the Articles of Amendment (the "Articles") to the Company's Restated
Articles of Incorporation establishing the New Preferred Stock.
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Securities Act"), a registration
statement on Form S-4, including a prospectus relating to the New Securities.
The registration statement as amended at the time when it shall become
effective, or, if a post-effective amendment is filed with respect thereto,
as amended by such
post-effective amendment at the time of its effectiveness, is referred to in
this Agreement as the "Registration Statement", and the prospectus included
therein at the time the Registration Statement (or such post-effective
amendment) is declared effective is referred to in this Agreement as the
"Exchange Offer Prospectus." Any reference in this Agreement to the
Registration Statement, any preliminary exchange offer prospectus or the
Exchange Offer Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to the relevant
provisions of Form S-4 under the Securities Act, as of the effective date of
the Registration Statement or the date of such preliminary exchange offer
prospectus or the Exchange Offer Prospectus, as the case may be, and any
reference to "amend," "amendment" or "supplement" with respect to the
Registration Statement, any preliminary exchange offer prospectus or the
Exchange Offer Prospectus shall be deemed to refer to and include any
documents filed after such date under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act") that are deemed to be incorporated by
reference therein.
The Company has also prepared and filed with the Commission an Issuer
Tender Offer Statement on Schedule 13E-4 (as amended, supplemented or
modified at any time, and together with the exhibits thereto, the "Schedule
13E-4") pursuant to the Exchange Act.
2. APPOINTMENT OF DEALER MANAGER. The Company hereby appoints you as
exclusive Dealer Manager, and authorizes you to act as such, in connection
with the Exchange Offer. As Dealer Manager, you agree, in accordance with
your customary practice, to perform those services in connection with the
Exchange Offer as are customarily performed by investment banking concerns in
connection with exchange offers of like nature, including but not limited to
assisting the Company in communicating the terms of the Exchange Offer and
the mailing of the Exchange Offer Prospectus, the related Letters of
Transmittal and other related documents to the holders of the Original
Securities (the "Holders") in conjunction with Xxxxxx & Co. Inc. (the
"Information Agent") and The Bank of New York (the "Exchange Agent"). You
shall act as an independent contractor in connection with the Exchange Offer
with duties solely to the Company, and nothing herein contained shall
constitute you as an agent of the Company in connection with the solicitation
of Original Securities pursuant to and in accordance with the terms and
conditions of the Exchange Offer; PROVIDED that the Company hereby authorizes
you, and/or one or more registered brokers or dealers chosen by you, to act
as the Company's agent in making the Exchange Offer to residents of any
jurisdiction in which such agent's designation may be necessary to comply
with applicable law. Nothing in this Agreement shall constitute you as a
partner of or member of a joint venture with the Company or any of its
subsidiaries.
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3. COMPENSATION. The Company has previously agreed in an engagement
letter with you dated July 20, 1998 (the "Engagement Letter") to pay you
certain fees in connection with your providing certain financial advisory
services and the Dealer Manager services described herein, and the terms of
the Engagement Letter regarding compensation for such services are
incorporated by reference herein.
4. NO LIABILITY FOR ACTS OF DEALERS, BANKS AND TRUST COMPANIES. You
shall have no liability (in tort, contract or otherwise) to the Company or
any other person for any act or omission on the part of any broker or dealer
in securities (each, a "Dealer") (other than yourself) or any bank or trust
company or any other person. In soliciting or obtaining tenders, no Dealer,
bank or trust company is to be deemed to be acting as your agent or the agent
of the Company, and you, as Dealer Manager, are not deemed the agent of the
Company, any Dealer, bank or trust company or any other person.
5. EXPENSES. In addition to your compensation for your services as
Dealer Manager, the Company agrees to pay (i) all fees and expenses relating
to the preparation, filing, printing, mailing and publishing of the Exchange
Offer Material (as defined in Section 6), (ii) all fees and expenses incident
to the preparation, issuance, execution and delivery of the New Securities,
(iii) the cost of printing or producing any Blue Sky or Legal Investment
memorandum in connection with the offer and exchange of the New Securities
under state securities laws and all costs and expenses incurred in connection
with the registration or qualification of the New Securities under the laws
of such jurisdictions as you reasonably may designate, including filing fees
and the fees and disbursements of your counsel in connection with such
qualification and in connection with the preparation of any Blue Sky or Legal
Investment memorandum, (iv) the fees, if any, of the New York Stock Exchange,
Inc. or any other stock exchange in connection with the listing of the
RECONS, (v) all fees and expenses of the Depositary, the Information Agent
and the Exchange Agent appointed, or other persons rendering services, in
connection with the Exchange Offer, (vi) all advertising charges approved by
the Company, (vii) all customary mailing and handling fees and expenses of
any Dealers, banks and trust companies in forwarding the Exchange Offer
Material to their customers and (viii) all other fees and expenses in
connection with the Exchange Offer. The Company also agrees to reimburse you
for all reasonable fees and disbursements of your legal counsel as set forth
in the Engagement Letter, and the terms of the Engagement Letter regarding
reimbursement of expenses are incorporated by reference herein. All payments
to be made by the Company pursuant to this Section shall be due as such
expenses are incurred. The Company shall perform its obligations set forth
in this Section whether or not the Exchange Offer is
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commenced or any Original Securities are exchanged for New Securities
pursuant to the Exchange Offer.
6. GENERAL AGREEMENTS. The Company authorizes you to use, and agrees
to furnish you with as many copies as you may reasonably request of, each of
the Exchange Offer Prospectus and the related letter of the Dealer Manager to
brokers, dealers and other nominees, the letter to clients, the Letters of
Transmittal, the notice of guaranteed delivery, the Registration Statement,
the Schedule 13E-4, newspaper announcements, press releases and any other
offering documents or materials prepared by the Company for use in connection
with the Exchange Offer, and all exhibits, amendments or supplements thereto
(collectively, as amended or supplemented from time to time, the "Exchange
Offer Material"), without any responsibility for independent verification on
your part.
The Exchange Offer Material has been or will be prepared and approved
by, and is the sole responsibility of, the Company. The Company shall, to
the extent permitted by law, use its best efforts to disseminate the Exchange
Offer Material to each registered Holder as soon as practicable after the
Commencement Date (as defined in Section 7), pursuant to Rule 13e-4 under the
Exchange Act, and shall comply with its obligations thereunder. You shall
not have any obligation to cause any Exchange Offer Material to be
transmitted generally to the Holders. The Company agrees that any reference
to the Dealer Manager in any Exchange Offer Material or in any newspaper
announcement or press release or other document or communication is subject
to your prior consent.
Prior to and during the period of the Exchange Offer, the Company will
inform you promptly after any senior executive officer, senior accounting or
legal officer or treasurer of the Company receives notice or becomes aware of
the happening of any event, or the discovery of any fact, which such person
believes would require the making of any change in any Exchange Offer
Material then being used or would affect the truth or completeness of any
representation or warranty contained in this Agreement if such representation
or warranty were being made immediately after the happening of such event or
the discovery of such fact.
The Company will provide you with copies of the Company's records
showing the names and addresses of, and the numbers of Original Securities
held by, the Holders as of a recent date, and will use its reasonable efforts
to advise you from day to day during the period of the Exchange Offer as to
any transfers of record of the Original Securities. The Company will advise
you during each business day of all Original Securities tendered for exchange
or withdrawn during the preceding business day and the names and addresses
of, and the number of
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Original Securities so tendered for exchange or withdrawn by, each such
tendering or withdrawing Holder. The Company will advise you of any
defective tenders and of all tenders verified to be in proper form. Not
later than the opening of business on the day following the Expiration Time
(as defined in the Exchange Offer Prospectus), the Company will advise you of
all tendered Original Securities, including the number of Original Securities
either tendered in proper form, rejected for tender or being processed.
You are authorized to communicate directly with the Depositary, the
Information Agent and the Exchange Agent (and any other information agent or
exchange agent designated or retained by the Company) with respect to matters
relating to the Exchange Offer.
The Company will arrange for The Bank of New York to serve as Exchange
Agent in connection with the Offer and, as such, to advise you at least daily as
to such matters relating to the Exchange Offer as you may request.
You and your affiliates may continue at any time to own or trade securities
of the Company or its subsidiaries (including the Original Securities) for your
or their account or the account of others.
7. REPRESENTATIONS OF ISSUER. The Company represents and warrants to you
that at the date on which the Exchange Offer is commenced (the "Commencement
Date") and at all times on or prior to the date of acceptance for exchange of
Original Securities tendered in response to the Exchange Offer at the completion
of the Exchange Offer (the "Exchange Date"):
(a) the Registration Statement and the Exchange Offer Prospectus (as
amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) comply, or will comply, as the case may be, in all
material respects with the Securities Act and do not and will not, as of
the applicable effective date as to the Registration Statement and any
amendment thereto and as of the date of the Exchange Offer Prospectus and
any amendment or supplement thereto, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Exchange Offer Prospectus, as amended or supplemented, if applicable, will
not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; except that the
foregoing representations and warranties shall not apply to statements or
omissions in the Registration Statement or the Exchange Offer Prospectus
made in reliance
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upon and in conformity with information relating to you furnished to the
Company in writing by you expressly for use therein (it is being understood
and agreed by the Company and you that the only information that you will
furnish to the Company in writing expressly for use therein shall be a
description of your role as Dealer Manager for the Exchange Offer);
(b) any documents filed under the Exchange Act that are incorporated
or deemed to be incorporated by reference in the Exchange Offer Prospectus
prior to the Exchange Date or any preliminary exchange offer prospectus,
and the Schedule 13E-4 as filed under the Exchange Act, complied when so
filed in all material respects with the Exchange Act, and did not contain
an untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(c) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of the Company, threatened by the
Commission;
(d) since the respective dates as of which information is given in
the Registration Statement, the Exchange Offer Prospectus and the Schedule
13E-4, there has not been any change in the capital stock or long-term debt
of the Company or any of its subsidiaries, or any material adverse change
in or affecting the general affairs, business, prospects, management,
financial position, shareholders' equity or results of operations of the
Company and its subsidiaries, taken as a whole, otherwise than as set forth
or contemplated in the Exchange Offer Prospectus; and except as set forth
or contemplated in the Exchange Offer Prospectus neither the Company nor
any of its subsidiaries has entered into any transaction or agreement
(whether or not in the ordinary course of business) material to the Company
and its subsidiaries taken as a whole;
(e) the Company and each Significant Subsidiary of the Company (as
defined below) have been duly incorporated and are validly existing as
corporations in good standing under the laws of their respective
jurisdictions of incorporation, with power and authority (corporate and
other) to own their properties and conduct their business as described in
the Exchange Offer Prospectus, and have been duly qualified as foreign
corporations for the transaction of business and are in good standing under
the laws of each other jurisdiction in which they own or lease properties,
or conduct any business, so as to require such qualification, other than
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where the failure to be so qualified or in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole (as used herein, the term "Significant Subsidiary" shall mean each of
Avista Corp., Avista Energy, Xxxxxxx Corporation, Avista Laboratories,
Inc., Avista Advantage, Inc., WP International, Inc., Washington Irrigation
and Development Company, WP Finance Co., WWP Receivables Corp., WWP Fiber,
Altus Corporation and any other "significant subsidiary" of the Company as
defined in Rule 1-02 of Regulation S-X promulgated under the Securities
Act);
(f) the Company has an authorized capitalization as set forth in the
Exchange Offer Prospectus and such authorized capital stock conforms as to
legal matters to the description thereof set forth in the Exchange Offer
Prospectus; all the outstanding shares of capital stock of the Company
(including the Original Securities) and each Significant Subsidiary of the
Company have been duly authorized and validly issued, are fully-paid and
non-assessable; and all the outstanding shares of capital stock of each
Significant Subsidiary of the Company (except in the case of foreign
subsidiaries, for directors' qualifying shares and except as described in
the Exchange Offer Prospectus) are owned by the Company, directly or
indirectly, free and clear of all liens, encumbrances, security interests
and claims;
(g) each of the Engagement Letter and this Agreement has been duly
authorized, executed and delivered by the Company;
(h) the Preferred Stock has been duly authorized and, when issued in
exchange for the Original Securities pursuant to the Exchange Offer, will
be validly issued and fully paid and non-assessable; the issuance of the
Preferred Stock will not be subject to any pre-emptive or similar rights;
and the New Securities will conform to the description thereof in the
Exchange Offer Prospectus;
(i) upon issuance and delivery of the Preferred Stock in accordance
with the terms of Exchange Offer, the Preferred Stock will be convertible
into Common Stock in accordance with the Articles; the Common Stock
issuable upon conversion of Preferred Stock has been duly authorized and
reserved for issuance upon such conversion and such Common Stock, when
issued upon such conversion, will be validly issued and will be fully paid
and non-assessable; and the issuance of the Common Stock upon conversion of
the Preferred Stock is not subject to any preemptive or similar rights;
7
(j) the Deposit Agreement dated [_______________], 1998 between the
Company and the Depositary has been duly executed and delivered by the
Company and constitutes a valid and legally binding obligation of the
Company enforceable against the Company in accordance with its terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general equity principles;
(k) upon due issuance by the Depositary of the Receipts evidencing
the RECONS against the deposit of the Original Securities in respect
thereof in accordance with the provisions of the Deposit Agreement, such
Receipts will be duly and validly issued and persons in whose names such
Receipts are registered will be entitled to the rights specified therein
and in the Deposit Agreement;
(l) neither the Company nor any of its Significant Subsidiaries is,
or with the giving of notice or lapse of time or both would be, in
violation of or in default under, its Articles of Incorporation or By-Laws
or any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its Significant
Subsidiaries is a party or by which it or any of them or any of their
respective properties is bound, except for violations and defaults which
individually and in the aggregate are not material to the Company and its
subsidiaries taken as a whole; the issue and exchange of the New Securities
and the performance by the Company of all of the provisions of this
Agreement and the consummation of the transactions contemplated herein and
in the Exchange Offer Prospectus have been authorized by all necessary
corporate action and will not conflict with or result in a breach of any of
the terms or provisions of, or constitute a default under, or result in the
imposition of any lien, charge or encumbrance upon any assets of the
Company pursuant to, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
is bound or to which any of the property or assets of the Company or any of
its subsidiaries is subject; nor will any such action result in any
violation of the provisions of the Articles of Incorporation or the By-Laws
of the Company or any of its subsidiaries or any applicable law or statute
or any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company, its subsidiaries or any of their
respective properties;
(m) there are no existing or, to the best knowledge of the Company,
threatened lawsuits seeking to enjoin the Exchange Offer; other
8
than as set forth or contemplated in the Exchange Offer Prospectus,
there are no legal or governmental investigations, actions, suits or
proceedings pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries or any of
their respective properties or to which the Company or any of its
subsidiaries is or may be a party or to which any property of the
Company or any of its subsidiaries is or may be the subject which, if
determined adversely to the Company or any of its subsidiaries, could
individually or in the aggregate have, or reasonably be expected to
have, a material adverse effect on the general affairs, business,
management, financial position, shareholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole, and,
to the best of the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by
others; and there are no statutes, regulations, contracts or other
documents that are required to be filed as an exhibit to the
Registration Statement or required to be described in the Registration
Statement or the Exchange Offer Prospectus which are not filed or
described as required;
(n) the financial statements, and the related notes thereto, included
or incorporated by reference in the Registration Statement and the Exchange
Offer Prospectus present fairly the consolidated financial position of the
Company and its consolidated subsidiaries as of the dates indicated and the
results of their operations and the changes in their consolidated cash
flows for the periods specified; said financial statements have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis (except as noted therein), and the supporting
schedules included or incorporated by reference in the Registration
Statement present fairly the information required to be stated therein; and
the pro forma financial information, and the related notes thereto,
included or incorporated by reference in the Registration Statement and the
Exchange Offer Prospectus have been prepared in accordance with the
applicable requirements of the Securities Act and the Exchange Act, as
applicable, and are based upon good faith estimates and assumptions
believed by the Company to be reasonable;
(o) Deloitte & Touche LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Securities Act;
(p) there have been issued appropriate orders of the Washington
Utilities and Transportation Commission ("WUTC"), the California Public
Utilities Commission ("CPUC"), the Idaho Public Utilities Commission
("IPUC") and the Public Utility Commission of Oregon ("OPUC")
9
permitting the issuance and exchange of the New Securities on the terms
set forth or contemplated herein and in the Exchange Offer Prospectus;
other than such orders, no consent, approval, authorization, order,
license, registration or qualification of or with any court or
governmental agency or body having jurisdiction over the Company, its
subsidiaries or any of their respective properties is required for the
issue and exchange of the New Securities or the consummation by the
Company of the transactions contemplated by this Agreement, except such
consents, approvals, authorizations, orders, licenses, registrations or
qualifications as have been obtained under the Securities Act, the
Exchange Act and as may be required under state securities or Blue Sky
Laws in connection with the exchange of the Original Securities for the
New Securities by the Company;
(q) the Company is not, and after giving effect to the consummation
of the Exchange Offer will not be, an "investment company" or an entity
controlled by an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended;
(r) the Company and its subsidiaries are in compliance with any and
all applicable foreign, federal, state and local laws and regulations
applicable to it and them in connection with the Exchange Offer;
(s) the Original Securities have been duly authorized and validly
issued and are fully paid and non-assessable, are listed for trading on the
New York Stock Exchange, Inc. and are registered under Section 12(b) of the
Exchange Act;
(t) other than as disclosed in the Exchange Offer Prospectus,
(i) each of the Company and its Significant Subsidiaries owns, possesses or
has obtained all licenses, permits, certificates, consents, orders,
approvals and other authorizations from, and has made all declarations and
filings with, all federal, state, local and other governmental authorities
(including foreign regulatory agencies), all self-regulatory organizations
and all courts and other tribunals, domestic or foreign, necessary to own
or lease, as the case may be, and to operate its properties and to carry on
its business as conducted as of the date hereof, except where the failure
to possesses such authorizations would not, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken
as a whole; (ii) neither the Company nor any such Significant Subsidiary
has received any actual notice of any proceeding relating to revocation or
modification of any such license, permit, certificate, consent, order,
approval or other authorization that is material to the Company and its
10
subsidiaries taken as a whole; and (iii) each of the Company and its
Significant Subsidiaries is in compliance with all laws and regulations
relating to the conduct of its business as conducted as of the date hereof,
except where noncompliance with such laws and regulations would not, singly
or in the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(u) other than as disclosed in the Exchange Offer Prospectus, the
Company and its subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in
the aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(v) in the ordinary course of its business, the Company conducts a
periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the
course of which it identifies and evaluates associated costs and
liabilities (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties); and, on the basis of such review, other than as disclosed in the
Exchange Offer Prospectus, the Company has reasonably concluded that such
associated costs and liabilities would not, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken
as a whole; and
(w) in connection with the Exchange Offer, the Company has complied,
and will continue to comply, in all material respects with the Exchange Act
and the rules and regulations thereunder, including, without limitation,
Sections 10 and 13 of the Exchange Act and Rules 10b-5, 10b-18 and 13e-4
thereunder.
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8. COVENANTS OF ISSUER. The Company covenants and agrees with you as
follows:
(a) to use reasonable efforts to cause the Registration Statement to
become effective at the earliest possible time and remain effective, and,
if required, to file the final Exchange Offer Prospectus with the
Commission within the time period specified by Rule 424(b) under the
Securities Act; to file promptly the Schedule 13E-4; and to file promptly
all reports and any definitive proxy or information statements required to
be filed by the Company with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the
Exchange Offer Prospectus and for so long as the delivery of a prospectus
is required in connection with the offering of the New Securities or
exchange of the Original Securities for the New Securities;
(b) before filing any amendment or supplement to the Registration
Statement or the Exchange Offer Prospectus, whether before or after the
time the Registration Statement becomes effective, to furnish to you a copy
of the proposed amendment or supplement for review and not to file any such
proposed amendment or supplement to which you reasonably object in writing;
(c) to make generally available to its security holders and to you as
soon as practicable an earnings statement which will satisfy the provisions
of Section 11(a) of the Securities Act and Rule 158 of the Commission
promulgated thereunder covering a period of at least twelve months
beginning with the first fiscal quarter of the Company occurring after the
"effective date" (as defined in Rule 158) of the Registration Statement;
(d) to furnish copies of the Exchange Offer Prospectus to you in New
York City prior to 10:00 a.m., New York City time, on the business day next
succeeding the date of this Agreement in such quantities as you may
reasonably request and, during the period of time after the Commencement
Date and prior to the Exchange Date, if any event shall occur as a result
of which it is necessary to amend or supplement the Exchange Offer
Prospectus in order to make the statements therein, in the light of the
circumstances when the Exchange Offer Prospectus is delivered to a Holder,
not misleading, or if it is necessary to amend or supplement the Exchange
Offer Prospectus to comply with law, forthwith to prepare and furnish, at
the expense of the Company, to you and the Holders, such amendments or
supplements to the Exchange Offer Prospectus as may be necessary so that
the statements in the Exchange
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Offer Prospectus as so amended or supplemented will not, in the light of
the circumstances when the Exchange Offer Prospectus is delivered to the
Holders, be misleading or so that the Exchange Offer Prospectus will
comply with law;
(e) to deliver, at the expense of the Company, to you, two signed
copies of the Registration Statement (as originally filed) and each
amendment thereto, in each case including exhibits and documents
incorporated by reference therein;
(f) to endeavor to qualify the New Securities for offer and exchange
under the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request and to continue such qualification in effect so long as
reasonably required for distribution of the New Securities; PROVIDED,
however, that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process in any jurisdiction, or to comply with any other requirement under
this clause reasonably deemed by the Company to be unduly burdensome;
(g) to use reasonable efforts to list, subject to notice of issuance,
the RECONS on the New York Stock Exchange, Inc.;
(h) to advise you promptly of (i) the occurrence of any event which
could cause the Company to withdraw or terminate the Exchange Offer or
would permit the Company to exercise any right not to exchange Original
Securities tendered thereunder, (ii) any proposal or requirement to make,
amend, or supplement any Exchange Offer Materials, (iii) the issuance of
any comment or order or the taking of any other action by the Commission or
any other agency concerning the Exchange Offer (and, in writing, will
furnish you a copy thereof), and (iv) any other information relating to the
Exchange Offer which you may from time to time reasonably request; and
(i) to reserve and keep available at all times, free of preemptive or
similar rights, a sufficient number of shares of Common Stock for purposes
of enabling the Company to satisfy its obligations to issue Common Stock
upon conversion of the Preferred Stock.
9. CONDITIONS TO DEALER MANAGER'S OBLIGATIONS. Your obligations under
this Agreement are subject to the performance by the Company of its obligations
hereunder and to the following additional conditions:
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(a) Xxxxxx Xxxx & Priest LLP and Paine, Hamblen, Xxxxxx, Xxxxxx &
Xxxxxx LLP, counsel for the Company, shall have furnished to you their
written opinions, dated the Commencement Date and the Exchange Date,
addressing the matters set forth in Schedules Ia and Ib attached hereto;
(b) Xxxxx Xxxx & Xxxxxxxx, counsel for you, shall have furnished to
you its written opinion dated the Commencement Date and the Exchange Date,
addressing the matters set forth in Schedule II attached hereto;
(c) the representations and warranties of Section 7 shall continue to
be true and correct at all times up to and including the Exchange Date;
(d) there shall have been issued and there shall be in full force and
effect, appropriate orders of WUTC, CPUC, IPUC and OPUC permitting the
issuance and exchange of the New Securities on the terms set forth or
contemplated herein and in the Exchange Offer Prospectus;
(e) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceeding for that purpose has been
instituted or, to the knowledge of the Company, threatened by the
Commission;
(f) subsequent to the execution and delivery of this Agreement and
prior to the Exchange Date, there shall not have occurred any downgrading,
nor shall any notice have been given of (i) any downgrading,(ii) any
intended or potential downgrading or (iii) any review or possible change
that does not indicate an improvement, in the rating accorded any
securities of or guaranteed by the Company by any "nationally recognized
statistical rating organization", as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act;
(g) since the respective dates as of which information is given in
the Exchange Offer Prospectus and Schedule 13E-4 there shall not have been
any material change in the capital stock or long-term debt of the Company
or any of its subsidiaries or any material adverse change in or affecting
the general affairs, business, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or contemplated
in the Exchange Offer Prospectus and Schedule 13E-4, the effect of which in
your judgment makes it impracticable or inadvisable to proceed with the
Exchange Offer or the delivery of the New Securities on the Exchange
14
Date on the terms and in the manner contemplated in the Exchange Offer
Prospectus; and neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included in the Exchange Offer Prospectus any material loss or interference
with its business from fire, explosion, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or court or
governmental action, order or decree which could individually or in the
aggregate have, or reasonably be expected to have, a material adverse
effect on the general affairs, business, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole, otherwise than as set forth or contemplated
in the Exchange Offer Prospectus;
(h) on the effective date of the Registration Statement, the
effective date of the most recently filed post-effective amendment to the
Registration Statement, if any, and the Exchange Date, Deloitte & Touche
LLP shall have furnished to you letters, dated the respective dates of
delivery thereof, in form and substance satisfactory to you, containing
statements and information of the type customarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information contained in the Registration Statement
and the Exchange Offer Prospectus;
(i) on the effective date of the Registration Statement, the
effective date of the most recently filed post-effective amendment to the
Registration Statement, if any, and the Exchange Date, you shall have
received on and as of each such date a certificate of an executive officer
of the Company, with specific knowledge about the Company's financial
matters, satisfactory to you to the effect (i) set forth in Sections 9(c),
(d) and (e), (ii) that there has not occurred any material adverse change
in or affecting the general affairs, business, prospects, management,
financial position, shareholders' equity or results of operations of the
Company and its subsidiaries taken as a whole from that set forth or
contemplated in the Registration Statement and (iii) that the Company has
satisfied all the agreements and conditions required to be satisfied by it
on or prior to each such date;
(j) on the effective date of the Registration Statement, the
effective date of the most recently file post-effective amendment to the
Registration Statement, if any, and the Exchange Date, you shall have
received a certificate of _______________ of the Company, satisfactory to
you certifying (1) that he has specific knowledge relating to matters of
environmental compliance and liabilities of the Company and its
15
subsidiaries, (2) as to the matters set forth in Section 7(u) and (v)
hereof and (3) as to such others matters as you may reasonably request
pertaining to the Company's compliance with and liabilities under
Environmental Laws; and
(k) the Company shall have furnished to you on each of the
Commencement Date and the Exchange Date, such additional certificates or
other documents as are typically delivered in connection with a transaction
of this type and which you may reasonably request.
10. INDEMNIFICATION AND CONTRIBUTION. The Company and you have previously
agreed in Schedule I to the Engagement Letter to certain indemnification and
contribution provisions in connection with your financial advisory services and
Dealer Manager services and the transactions contemplated by this Agreement and
the Engagement Letter, and the terms of such Schedule I are incorporated by
reference herein.
11. TERMINATION. This Agreement may be terminated (i) by you, upon a
withdrawal by you as Dealer Manager pursuant to Section 9 if one or more of the
conditions provided for therein are not met and you have given the Company
notice thereof, or (ii) by you or the Company, (A) if the Company determines to
terminate or withdraw the Exchange Offer prior to consummation thereof or (B) if
there is a good faith disagreement between you and the Company with respect to
any term or condition of the Exchange Offer. This Agreement will otherwise
terminate if the Commencement Date shall not have occurred on or prior to
[December 31, 1998], or such later date as may be mutually agreed upon, or upon
the consummation of the Exchange Offer.
12. MISCELLANEOUS. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been duly given if delivered personally or sent by registered or
certified mail, return receipt requested, postage prepaid, to the parties hereto
as follows:
(a) If to you:
X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ______________
with a copy to:
16
X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxx
(b) If to the Company:
The Washington Water Power Company
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: ______________
with a copy to:
J. Xxxxxxx Xxxxxxx
Xxxxxx Xxxx & Priest LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York, without regard to principles of conflicts of law.
The indemnity and contribution agreements incorporated by reference in
Section 10, the expense reimbursement agreements contained in Section 5 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect regardless of (i) any failure to
commence, or the withdrawal, termination or consummation of, the Exchange Offer
or the termination or assignment of this Agreement, (ii) any investigation made
by or on behalf of any Indemnified Person (as defined in the Engagement Letter)
and (iii) the completion of your services hereunder.
This Agreement, including any right to indemnity or contribution hereunder,
shall inure to the benefit of and be binding upon the Company, you and the other
Indemnified Parties and their respective successors and assigns. Nothing in
this Agreement is intended, or shall be construed, to give to any other person
or entity any right hereunder or by virtue hereof.
17
This Agreement may be executed in one or more separate counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
Please indicate your willingness to act as Dealer Manager on the terms set
forth herein and your acceptance of the foregoing provisions by signing in the
space provided below for that purpose and returning to us a copy of this
Agreement, whereupon this Agreement and your acceptance shall constitute a
binding agreement between us.
Very truly yours,
THE WASHINGTON WATER POWER COMPANY
By:
--------------------------
Name:
Title:
Accepted as of the date
first set forth above:
X.X. XXXXXX SECURITIES INC.
By:
--------------------------
Name:
Title:
18
SCHEDULE Ia
FORM OF OPINION
of
XXXXXX XXXX & PRIEST LLP
__, 1998
X. X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
This opinion is being delivered to you at the request of The
Washington Water Power Company, a Washington corporation (the "Company"), as
contemplated by Section 9(a) of the Dealer Manager Agreement, dated October __,
1998 (the "Dealer Manager Agreement"), between you and the Company relating to
the proposed issuance by the Company of up to 2,000,000 shares of a new series
of the Company's Preferred Stock, no par value, to be designated Preferred
Stock, Convertible Series L (the "New Preferred Stocks"). As contemplated in
the Dealer Manager Agreement, (a) the New Preferred Stock is to be issued and
delivered to The Bank of New York, as depositary (the "Depositary") under a
deposit agreement, to be dated as of _________, 1998 (the "Deposit Agreement"),
(b) up to 20,000,000 depositary shares, each constituting a one-tenth interest
in one share of New Preferred Stock (the "Depositary Shares"), will be offered
to holders of the Company's Common Stock, no par value (the "Common Stock"), in
exchange for outstanding shares of Common Stock on a one-for-one basis (the
"Exchange Offer"), and depositary receipts ("Depositary Receipts") will be
delivered to tendering shareholders to evidence Depositary Shares, and (c) the
New Preferred Stock will be convertible into Common Stock, the Common Stock to
be issued and delivered upon such conversion being hereinafter called the "New
Common Stock". Capitalized terms used herein but
not otherwise defined herein shall have the meaning ascribed to them in the
Dealer Manager Agreement.
The Company has filed with the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "1933 Act"), a
registration statement on Form S-4 (Registration No. 333-61599) for the
registration under the 1933 Act of (a) the New Preferred Stock, (b) the
Depositary Shares and (c) the New Common Stock and the Rights (as hereinafter
defined) appurtenant thereto. Such registration statement, as amended at the
time it became effective (or at the time of effectiveness of any post-effective
amendment), is hereinafter called the "Registration Statement", and the
prospectus contained in the Registration Statement is hereinafter called the
"Prospectus". As used herein the term "Rights" means the preferred share
purchase rights issued and to be issued under the Rights Agreement, dated as of
February 16, 1990, between the Company and First Chicago Trust Company of New
York, as amended.
We have examined, or are generally familiar with, the following:
(a) the Restated Articles of Incorporation, as amended, and the Bylaws, as
amended, of the Company; (b) the Engagement Letter and the Dealer Manager
Agreement; (c) the Deposit Agreement; (d) the Registration Statement and (e) the
documents incorporated by reference into the Registration Statement. We have
also examined such other documents and satisfied ourselves as to such other
matters as we have deemed necessary in order to render this opinion. We have
not examined the certificates evidencing shares of the New Preferred Stock,
except a specimen thereof.
As to various questions of fact (but not as to the legal conclusions
contained therein) material to the opinions set forth below, in rendering such
opinions we have relied, with your permission, upon certificates of public
officials, certificates of officers or other employees of the Company,
representations of the Company in the Dealer Manager Agreement, and other oral
or written assurances by officers or other employees of the Company. We do not
serve as counsel to direct or indirect subsidiaries or affiliates of the
Company, and, as to various questions relating to the activities of such
subsidiaries and affiliates, we have further relied upon certificates of
officers thereof.
We have assumed, for the purposes of the opinions enumerated below,
the legal conclusions set forth in paragraphs (1)(a) and (b), (2), (3), (4),
(5), (6) and (7) of the opinion of even date herewith rendered to you by Paine,
Hamblen, Xxxxxx, Xxxxxx & Xxxxxx LLP. We have not been engaged by the Company
with respect to the matters so assumed; however, during the course of such
examinations as we have made for the purposes of the opinions enumerated
below, nothing came to our attention which leads us to believe that such
assumptions are not correct.
Based upon the foregoing, and subject to the qualifications set forth
herein, we are of the opinion that:
(1) the Deposit Agreement constitutes a valid and binding instrument,
enforceable against the Company in accordance with its terms, except to the
extent the enforcement of the Deposit Agreement may be limited by any
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other laws affecting creditors' rights generally, by general
principles of equity (whether asserted in an action in equity or at law)
and by rules of law governing specific performance, injunctive relief,
foreclosure, receivership and other equitable remedies;
(2) the Depositary Receipts, when duly executed and delivered by the
Depositary against the deposit of the New Preferred Stock in accordance
with the Deposit Agreement, will be validly issued and the registered
holders thereof will be entitled to the rights specified therein and in the
Deposit Agreement;
(3) the execution, delivery and performance by the Company of its
obligations under the Engagement Letter, the Dealer Manager Agreement and
the Deposit Agreement and the consummation by the Company of the
transactions contemplated therein and compliance by the Company with its
obligations thereunder will not (A) breach or violate the Company's
Restated Articles of Incorporation, as amended, or Bylaws, as amended, or
(B) breach or violate, or constitute a default under, (i) the Company's
Mortgage and Deed of Trust dated as of June 1, 1939, to Citibank, N.A., as
trustee, (ii) the Indenture, dated as of July 1, 1988, of the Company to
Chemical Bank, (iii) the Indenture, dated as of April 1, 1998, of the
Company to The Chase Manhattan Bank, (iv) the Lease Agreement, dated as of
December 15, 1986, between the Company and IRE-4 of New York, Inc. and all
agreements of the Company associated therewith, (v) the Loan Agreement,
dated as of October 1, 1989, between the Company and the City of Forsyth,
Rosebud County, Montana, and all agreements of the Company associated
therewith, (vi) the Indenture, dated as of January 1, 1997, of the Company
to Wilmington Trust Company, (vii) the Agreement for Lease and the Lease
Agreement, each dated as of February 26, 1993, between the Company and WP
Funding, Limited Partnership, and all agreements of the Company associated
therewith, (viii) the Amended and Restated Declaration of Trust of
Washington Water Power Capital I, dated as of January 23, 1997, or (ix) the
Amended and Restated Declaration of Trust of Washington Water Power Capital
II, dated as of June 3, 1997;
(4) no approval, authorization, consent or other order of, or filing
with, any governmental agency of the State of New York or of the United
States of America is required under the respective laws of such
jurisdictions in order for (i) the Engagement Letter, the Dealer Manager
Agreement or the Deposit Agreement to constitute valid and binding
obligations of the Company, (ii) the New Preferred Stock or the New Common
Stock to be validly issued, fully paid and non-assessable, (iii) the Rights
appurtenant to the New Common Stock to be validly issued or (iv) the
Depositary Receipts to be validly issued or otherwise in order for the
transactions contemplated by the Dealer Manager Agreement and the
Registration Statement to be consummated by the Company.
(5) the Company is not and, after giving effect to the offering and
sale of the New Preferred Stock, will not be, an "investment company" or an
entity "controlled" by an "investment company," as such terms are defined
in the Investment Company Act of 1940, as amended;
(6) the Registration Statement and Prospectus (except the financial
statements and other financial and statistical data contained therein, upon
which we do not pass) comply as to form in all material respects with the
applicable requirements of the 1933 Act and the applicable instructions,
rules and regulations promulgated thereunder; and the Registration
Statement has become effective under the 1933 Act and, to the best of our
knowledge, no proceedings for a stop order with respect thereto are pending
or threatened under Section 8(d) of the 1933 Act;
(7) the documents incorporated by reference into the Registration
Statement and the Prospectus, as amended or supplemented at the date of
this opinion, and the Schedule 13E-4 (except the financial statements and
other financial and statistical data contained therein, upon which we do
not pass), when they were filed with the SEC, complied as to form in all
material respects with the applicable requirements of the Securities
Exchange Act of 1934, as amended, and the applicable instructions, rules
and regulations promulgated thereunder; and
(8) the statements made in the Registration Statement under the
captions "Description of the RECONS", "Description of Capital Stock" and
"Certain Federal Income Tax Consequences" fairly presents the information
purported to be given.
We have acted as counsel to the Company primarily with respect to
general compliance with the federal securities laws and specific financing and
other corporate transactions. Our engagement regarding such compliance was
limited to advising the Company as to the requirements of such laws and the
rules
and regulations of the SEC thereunder, assisting the Company in the
assessment of the materiality of particular matters brought to our attention
and generally reviewing, with a view toward such compliance, drafts prepared
by the Company of the documents incorporated by reference into the
Registration Statement and the Prospectus. We have not acted as general
counsel to the Company and have not, except for specific purposes, attended
meetings of the Board of Directors of the Company, or committees thereof, or
of officers of the Company; nor have we otherwise been in a position to
become aware of matters not specifically brought to our attention by officers
or other employees of, or other counsel to, the Company.
Accordingly, in the course of the preparation by the Company of the
Registration Statement and the Prospectus, we participated in conferences with
certain officers and other employees of the Company, with other counsel for the
Company, with you and your counsel, and with Deloitte & Touche LLP, the
independent certified public accountants who examined the financial statements
included in the Registration Statement, but we made no independent verification
of the accuracy or completeness of the representations and statements made to us
by the Company or the information included by the Company in the Registration
Statement or the Prospectus, as amended or supplemented at the date of this
opinion, and we take no responsibility therefor, except insofar as such
information relates to us and as set forth in paragraphs (2) and (8) above. In
passing upon the forms of the Registration Statement and Prospectus in paragraph
(6) and in rendering the opinion expressed in paragraph (7) above, we have,
therefore, assumed the accuracy and completeness of such representations,
statements and information, except as aforesaid.
The nature and extent of our engagement by the Company and our
participation in the preparation of the Registration Statement and the
Prospectus, as so amended or supplemented, as described above, would not
necessarily be adequate to bring to our attention all matters which could be
deemed material or to enable us to make a valid assessment of the materiality of
such matters as were brought to our attention.
However, during the course of our examination of the Registration
Statement and the Prospectus, as so amended or supplemented, and our
participation in the above-mentioned conferences, nothing came to our attention
which gives us reason to believe that (A) when the Registration Statement became
effective, the Registration Statement contained an untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that, as of the
date of this opinion, the Prospectus, as so amended or supplemented, contains an
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made,
not misleading; provided, however, that we do not express any belief as to
any financial statements or other financial or statistical information, data
or computations contained in the Registration Statement or the Prospectus, as
so amended or supplemented; or (B) there exist any material contracts which
are required to be filed as exhibits to the Registration Statement which have
not been so filed.
The opinions enumerated above are limited to the laws of the State of
New York and the federal law of the United States of America (excluding
therefrom principles of conflicts of laws and state securities or blue sky
laws). To the extent that such opinions relate to or are dependent upon matters
governed by the laws of other States, they are based upon the assumptions set
forth above or otherwise upon the legal conclusions set forth in the aforesaid
opinions of Paine, Hamblen, Xxxxxx, Xxxxxx & Xxxxxx LLP. For purposes of the
opinion expressed in paragraph (3) above, we have assumed that any document
referred to therein which is not stated to be governed by the law of the State
of New York would be enforced as written.
This opinion is not being delivered for the benefit of, nor may it be
relied upon by, the holders of the New Preferred Stock, the New Common Stock or
the Depositary Receipts or any other party to which it is not specifically
addressed or to which reliance is not expressly permitted hereby.
Very truly yours,
XXXXXX XXXX & PRIEST LLP
SCHEDULE Ib
FORM OF OPINION
of
PAINE, HAMBLEN, XXXXXX, XXXXXX & XXXXXX LLP
________ __, 1998
X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Ladies and Gentlemen:
This opinion is being delivered to you at the request of the Washington
Water Power Company, a Washington corporation (the "Company") pursuant to
Section 9(a) of the Dealer Manager Agreement, dated October __, 1998 (the
"Dealer Manager Agreement"), between you and the Company relating to the
proposed issuance by the Company of up to 2,000,000 shares of a new series of
the Company's Preferred Stock, no par value, to be designated Preferred
Stock, Convertible Series L (the "New Preferred Stock"). As contemplated in
the Dealer Manager Agreement, (a) the New Preferred Stock is to be issued and
delivered to The Bank of New York, as depositary (the "Depositary") under a
deposit agreement, to be dated as of ___________, 1998 (the "Deposit
Agreement"), (b) up to 20,000,000 depositary shares, each constituting a
one-tenth interest in one share of New Preferred Stock (the "Depositary
Shares"), will be offered to holders of the company's Common Stock, no par
value (the "Common Stock"), in exchange for outstanding shares of Common
Stock on a one-for-one basis (the "Exchange Offer"), and depositary receipts
("Depositary Receipts") will be delivered to tendering shareholders to
evidence Depositary Shares, and (c) the New Preferred Stock will be
convertible into Common Stock, the Common Stock to be issued and delivered
upon such conversion being hereinafter called the "New Common Stock".
Capitalized terms used herein but not otherwise defined herein shall have the
meaning ascribed to them in the Dealer Manager Agreement.
The Company has filed with the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "1933 Act"), a
registration statement on Form S-4 (Registration No. 333-61599) for the
registration under the 1933 Act of (a) the New Preferred Stock, (b) the
Depositary Shares and (c) the New Common Stock and the Rights (as hereinafter
defined)
appurtenant thereto. Such registration statement, as amended at the time it
became effective or at the time of effectiveness of any post-effective
amendments thereto, is hereinafter called the "Registration Statement", and
the prospectus contained in the Registration Statement is hereinafter called
the "Prospectus". As used herein the term "Rights" means the preferred share
purchase rights issued and to be issued under the Rights Agreement, dated as
of February 16, 1990, between the Company and First Chicago Trust Company of
New York, as amended.
We have examined, or are generally familiar with, the following: (a) the
Restated Articles of Incorporation, as amended, and the Bylaws, as amended,
of the Company; (b) the Engagement Letter and the Dealer Manager Agreement;
(c) the Deposit Agreement; (d) a Certificate of Existence/Authorization
issued by the Secretary of State of the State of Washington, a Certificate of
Corporate Status issued by the Secretary of State of the State of Idaho, a
Certificate of Authorization issued by the Secretary of State of the State of
Montana, a Certificate of Authorization issued by the Secretary of State of
the State of Oregon, and a Certificate of Status of Foreign Corporation
issued by the Secretary of State of the State of California, (e) the relevant
orders of the Washington Utilities and Transportation Commission ("WUTC"),
the California Public Utilities Commission (the "CPUC"), the Idaho Public
Utilities Commission (the "IPUC") and the Public Utility Commission of Oregon
(the "OPUC"); (f) the Registration Statement); and (g) the documents
incorporated by reference in the Registration Statement, (the "Incorporated
Documents"). We have also examined such other documents and satisfied
ourselves as to such other matters as we have deemed necessary in order to
render this opinion. We have not examined the certificates evidencing the
shares of the New Preferred Stock, except a specimen thereof.
As to various questions of fact (but not as to the legal conclusions
contained therein) material to the opinions set forth below, in rendering
such opinions we have relied, with your permission, upon certificates of
public officials, certificates of officers or other employees of the Company,
representations contained in the Dealer Manager Agreement, and other oral or
written assurances by officers or other employees of the Company.
We have represented the Company in connection with the matters described
herein and we have acted as counsel to the following subsidiaries; Avista Corp.,
Avista Laboratories, Inc., Avista Advantage, Inc., WP International, Inc.,
Washington Irrigation and Development Company, and WP Finance Co.; Avista
Energy, Inc.; WWP Fiber, Inc.; and WWP Receivables Corp. In such capacity,
we represent the Company and such subsidiaries other than Avista Energy, Inc.
on various matters referred to us by them. We represent Avista Energy, Inc.
on certain specific matters referred to us by it (primarily with respect to
energy
purchase and sale transactions), but not on all matters. We do not act as
counsel to other direct or indirect subsidiaries and affiliates of the
Company.
We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as copies, and the due
authorization, execution and delivery of all documents by all parties thereto
other than the Company.
As used in this opinion, the expression "to the best of our knowledge
after reasonable inquiry with respect thereto" means that, after an
examination of the documents made available to us by the Company and after
inquiries of officers or employees of the Company, we find no reason to
believe that the opinions expressed herein are factually inaccurate; beyond
that, however, we have not made an independent factual investigation for the
purpose of rendering this opinion.
Based upon the foregoing, and subject to the qualifications set forth
herein, we are of the opinion that:
(1)(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Washington and
the Company has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, other than where the failure
to be so qualified or in good standing would not have a material adverse
effect on the Company and its subsidiaries taken as a whole. Each of the
Company's following subsidiaries; Avista Corp.; Avista Laboratories, Inc.;
Xxxxxxx Corporation; Avista Energy, Inc.; Avista Advantage, Inc.; WP
International, Inc.; WP Finance Co.; Washington Irrigation and Development
Company; WWP Fiber, Inc.; and WWP Receivables Corp. is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Washington; these subsidiaries, with the exception of Xxxxxxx
Corporation, will be referred to hereinafter as the "Designated
Subsidiaries" or as a "Designated Subsidiary."
Each Designated Subsidiary has been duly qualified as a
foreign corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such qualification,
other than where the failure to be so qualified or in good standing would
not have a material adverse effect upon such subsidiary.
(b) The outstanding shares of Common Stock of the Company have
been duly authorized and validly issued and are fully paid and
non-assessable; provided, however, that in passing upon the valid issuance
of and full payment for shares of Common Stock issued pursuant to offerings
specifically made to shareholders, directors or officers and other
employees of the Company, we have necessarily assumed that the certificates
therefor have been duly countersigned and registered by a transfer agent
and registrar and that upon, the issuance thereof, the Company received the
full consideration therefor authorized by the Board of Directors of the
Company.
(c) The Company has adequate corporate powers and has all
material required licenses, permits, approvals and authorizations to own,
lease and operate its properties and to transact its business in such
states as are described in the Registration Statement and the Incorporated
Documents and, to the best of our knowledge after reasonable inquiry with
respect thereto, is in material compliance with all laws and regulations
relating to the conduct of its business in such states as are described in
the Registration Statement and the Incorporated Documents. The Company has
adequate corporate powers to execute and deliver, and perform its
obligations under, the Engagement Letter, the Dealer Manager Agreement and
the Deposit Agreement and to consummate the transactions contemplated
thereby. The Company's Designated Subsidiaries have all material required
licenses, permits, approvals and authorizations to own, lease and operate
their properties and to transact their business as described in the
Registration Statement and the Incorporated Documents and, to the best of
our knowledge after reasonable inquiry with respect thereto, are in
material compliance with all laws and regulations relating to the conduct
of its business in such states as are described in the Registration
Statement and the Incorporated Documents. Except as described in the
Registration Statement and the Incorporated Documents, the Designated
Subsidiaries have not received any actual notice of any proceeding relating
to revocation or modification of any approval or authorization which would
have a material adverse impact upon the conduct of each such Designated
Subsidiary.
(d) The outstanding shares of the common stock of each of the
Company's Significant Subsidiaries have been duly authorized and validly
issued, are fully paid and non-assessable and are owned by the Company,
directly or indirectly, free of any liens, encumbrances or security
interests therein.
(2) The WUTC, CPUC, IPUC and OPUC have entered appropriate orders
(the "Commission Orders") authorizing (a) the issuance and delivery by the
Company of the New Preferred Stock pursuant to the Exchange Offer and
(b) the issuance and delivery by the Company of the New Common Stock and
the Rights appurtenant thereto upon the conversion of the New Preferred
Stock; each of the Commission Orders, to the best of our
knowledge after reasonable inquiry with respect thereto, remains in full
force and effect on the date of this opinion; and no further approval,
authorization, consent or other order of, or filing with, any
governmental agency of the States of Washington, California, Idaho,
Montana and Oregon is legally required for the authorization of the
execution, delivery or performance by the Company of the Dealer Manager
Agreement or the Deposit Agreement or in order for the Dealer Manager
Agreement or the Deposit Agreement to constitute valid and binding
obligations of the Company, the authorization of the issuance and
delivery by the Company of the New Preferred Stock or in order for the
New Preferred Stock to be validly issued and delivered fully paid and
non-assessable, the authorization of the issuance and delivery of the
New Common Stock and the Rights appurtenant thereto upon the conversion
of the New Preferred Stock, or in order for the New Common Stock to be
validly issued and delivered, or in order for such Rights to be validly
issued, or in order for the Depositary Receipts to be validly issued or
in order for the transaction contemplated by the Dealer Manager
Agreement and the Prospectus to be consummated by the Company.
(3) The Dealer Manager Agreement and the Deposit Agreement have been
duly authorized, executed and delivered by the Company.
(4) The issuance and delivery of the New Preferred Stock pursuant to
the Exchange Offer, and the issuance and delivery of the New Common Stock
and the Rights appurtenant thereto upon the conversion of the New Preferred
Stock, have been duly authorized by all necessary corporate action on the
part of the Company; the shareholders of the Company have no preemptive
rights to subscribe for any shares of such stock; and the Company's capital
stock and the Rights conform to the descriptions thereof in the
Registration Statement.
(5) When (a) the Articles of Amendment have been filed with the
Secretary of State of the State of Washington and (b) certificates
representing shares of the New Preferred Stock have been (i) countersigned
and registered by a transfer agent and registrar, (ii) issued pursuant to
the Exchange Offer as contemplated in the Registration Statement and
(iii) delivered under the Deposit Agreement, the New Preferred Stock will
be validly issued, fully paid and non-assessable.
(6) The New Preferred Stock is convertible into the Common Stock as
provided in the Articles of Amendment; 25,000,000 shares of the New Common
Stock have been reserved for issuance upon conversion, and, upon such
conversion, the New Common Stock will be validly issued, fully
paid and non-assessable and the Rights appurtenant thereto will be validly
issued.
(7) The execution, delivery and performance by the Company of its
obligations under the Engagement Letter, the Dealer Manager Agreement and
the Deposit Agreement, and the issuance and delivery by the Company of the
New Preferred Stock pursuant to the Exchange Offer, and the issuance and
delivery by the Company of the New Common Stock and the Rights appurtenant
thereto upon the conversion of the New Preferred Stock and the consummation
by the Company of the transactions contemplated therein and in the
Prospectus and compliance by the Company with its obligations thereunder
have been authorized by all necessary corporate action and will not
(A) breach or violate the Company's Restated Articles of Incorporation, as
amended, or Bylaws, as amended, or (B) breach or violate, or constitute a
default under, (i) any applicable law or statute or order of any court or
governmental agency of such States having jurisdiction over the Company or
any of its properties which is material to the Company or (ii) any
contract, indenture, mortgage, agreement or other instrument to which the
Company or any of the subsidiaries is a party or to which any of its
properties is subject and which is listed as an exhibit to any of the
Incorporated Documents, except that we express no opinion as to any such
contract, indenture, mortgage, agreement or other instrument which is
addressed in the separate opinion to you of Xxxxxx Xxxx & Priest LLP.
(8) To the best of our knowledge after reasonable inquiry with
respect thereto, except as described in the Registration Statement, the
Prospectus or the Incorporated Documents, there are no legal or
governmental investigations, actions, suits or proceedings, either pending
or threatened, which arise out of, threaten against or affect the
operations of the Company or any Designated Subsidiary in the States of
Washington, California, Idaho, Montana or Oregon to which the Company is a
party or to which the Company or any Designated Subsidiary or any of its
properties are subject and which are material to the Company, other than
ordinary, routine legal or governmental proceedings incidental to the kind
of business conducted by the Company, which if determined adversely to the
Company or any Designated Subsidiary could not individually or in the
aggregate have, or reasonably be expected to have, a material adverse
effect on the business of the Company and its subsidiaries, taken as a
whole. There are no existing or, to the best of our knowledge after
reasonable inquiry with respect thereto, threatened lawsuits seeking to
enjoin the Exchange offer.
(9) The descriptions of legal or governmental proceedings contained
in Item 8 (Note 17) of the Annual Report on Form 10-K for the year ended
December 31, 1997 and Note 5 of the Quarterly Report on Form 10-Q
for the quarterly periods ended March 31, 1998 and June 30, 1998 are fair
and accurate descriptions thereof in all material respects.
As noted above, and we represent the Company and the subsidiaries named
herein on specific matters referred to us. Our involvement in the
preparation of the Registration Statement, the Prospectus and the
Incorporated Documents was limited to generally reviewing drafts thereof
prepared by the Company or other counsel to the Company and to participating
in the conferences referred to below. However, we have not been engaged to
make the ultimate determination of materiality for purposes of, or to
determine the wording and degree of disclosure contained in, the Registration
Statement, the Prospectus or the Incorporated Documents; we have not been
engaged to advise the Company with respect to compliance with securities
laws; and we have not otherwise acted as securities law counsel to the
Company.
Accordingly, in such capacity during the course of the preparation by
the Company of the Registration Statement, the Prospectus and the
Incorporated Documents, we have participated in conferences with certain
officers and other employees of the Company, with other counsel for the
Company, with you and your counsel, and with Deloitte & Touche LLP, the
independent certified public accountants who examined the financial
statements included in the Registration Statement, the Prospectus and the
Incorporated Documents, but we have made no independent verification of the
accuracy or completeness of the representations and statements made to us by
the Company or the information included by the Company in the Registration
Statement, the Prospectus or the Incorporated Documents, and we take no
responsibility therefor, except as specifically set forth herein and insofar
as such information relates to us.
The nature and extent of our engagement by the Company and our
participation in the above-mentioned conferences, as described above, would
not necessarily be adequate to bring to our attention all matters which could
be deemed material or to enable us to make a valid assessment of the
materiality of such matters as were brought to our attention or of the
wording and degree of disclosure contained in the Registration Statement, the
Prospectus or the Incorporated Documents.
However, during the course of our examination of the Registration
Statement, the Prospectus and the Incorporated Documents and our
participation in the above-mentioned conferences, nothing came to our
attention which gives us reason to believe that, when the Registration
Statement became effective, the Registration Statement, the Prospectus and
the Incorporated Documents contained an untrue statement of a material fact
or omitted to state a material fact necessary to make the statements therein
not misleading, or that, as of the date of this opinion, the Prospectus, as
then amended or supplemented, and the Incorporated
Documents contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading; provided,
however, that we do not express any belief as to any financial statements or
other financial or statistical information, data or computations contained in
the Registration Statement, the Prospectus or the Incorporated Documents, or
as to any specific sections contained within the Registration Statement or
the Prospectus other than the sections entitled "The Company" and
"Description of Capital Stock" insofar as such descriptions relate to
Washington law and Part II of the Registration Statement.
The opinions expressed above are limited to the laws of the States of
Washington, California, Idaho, Montana and Oregon (excluding therefrom
principles of conflicts of laws, state securities or blue sky laws, laws of
political subdivisions of such States and the federal law of the United
States of America). For purposes of the opinion expressed in paragraph (7)
above, we have assumed that any document referred to therein which is not
stated to be governed by the laws of the States of Washington, California,
Idaho, Montana and Oregon would be enforced as written.
This opinion is limited to the opinions and confirmations expressed
above, and no additional opinions or confirmations are to be implied or
inferred. Without limiting the generality of the foregoing, it is
specifically understood that we express no opinion or confirmation as to
whether the Engagement Letter, the Dealer Manager Agreement, the Deposit
Agreement or related documents constitute legal, valid and binding
obligations, enforceable in accordance with their terms.
This opinion is being delivered as of this date solely in connection
with the Exchange offer for the benefit of the addressee hereof. Xxxxx Xxxx &
Xxxxxxxx is hereby also authorized to rely upon this opinion in connection
therewith as if it were addressed to them. This opinion is not being
delivered, nor may it be relied upon, for any other purpose; this opinion is
not being delivered for the benefit of, nor may it be relied upon by, the
holders of the New Preferred Stock, the New Common Stock or the Depositary
Receipts or any other party to which it is not specifically addressed or to
which reliance is not expressly permitted hereby; and this opinion is not to
be used, delivered, circulated, quoted or otherwise referred to except as
expressly permitted hereby.
This opinion is given as of the date hereof, without any obligation upon
us to update this opinion or to advise the addressees hereof or any other
party of any changes in circumstances or laws that may hereafter be brought
to our attention or occur which may affect this opinion.
Very truly yours,
PAINE, HAMBLEN, XXXXXX,
XXXXXX & XXXXXX LLP
SCHEDULE II
Capitalized terms used in this Schedule II and not defined herein shall
have the meanings ascribed thereto in the Dealer Manager Agreement to which
this Schedule II is appended.
OPINION OF COUNSEL TO DEALER MANAGER
(i) the Dealer Manager Agreement has been duly authorized, executed
and delivered by the Company;
(ii) the Deposit Agreement has been duly executed and delivered by the
Company and constitutes a valid and legally binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors'
rights and to general equity principles;
(iii) upon due issuance by the Depositary of the Receipts evidencing
the RECONS against the deposit of the Original Securities in respect thereof
in accordance with the provisions of the Deposit Agreement, such Receipts
will be duly and validly issued and persons in whose names such Receipts are
registered will be entitled to the rights specified therein and in the
Deposit Agreement; and
(iv) such counsel believes that the Registration Statement and the
Exchange Offer Prospectus and any amendments and supplements thereto (other
than the financial statements and related schedules or other financial or
statistical information data or computations therein, as to which such
counsel need express no belief) comply as to form in all material respects
with the requirements of the Securities Act and believes that (other than the
financial statements and related schedules or other financial or statistical
information data or computations therein, as to which such counsel need
express no belief) the Registration Statement and the Prospectus did not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and that the Exchange Offer Prospectus, as amended or
supplemented, if applicable, does not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
