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to
Registration Statement
under
the Securities Act of 1933
Washington (State or other jurisdiction of incorporation or organization) | 4931 (Primary Standard Industrial Classification Code Number) | 20-4296099 (I.R.S. Employer Identification No.) | ||
1411 East Mission Avenue Spokane, Washington 99202 (509) 489-0500 (Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices) | ||||
MARIAN M. DURKIN Senior Vice President and General Counsel Avista Corporation 1411 East Mission Avenue Spokane, Washington 99202 (509) 489-0500 | J. ANTHONY TERRELL Dewey Ballantine LLP 1301 Avenue of the Americas New York, New York 10019 (212) 259-8000 |
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Your immediate attention is appreciated.
Date: | Thursday Morning, May 11, 2006 | Place: | Avista Main Office Building | |||
Time: | 9:15 a.m. Doors Open | Auditorium | ||||
9:30 a.m. Refreshments | 1411 E. Mission Avenue | |||||
10:00 a.m. Annual Meeting Convenes | Spokane, Washington |
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President & Chief Executive Officer
Investor Relations—(509) 495-4203
Investor Relations Department by April 21.
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1411 East Mission Avenue
Spokane, Washington 99202
Date: | Thursday, May 11, 2006 | |||||
Time: | 10:00 a.m., Pacific Time | |||||
Place: | Avista Main Office Building—Auditorium | |||||
1411 E. Mission Avenue | ||||||
Spokane, Washington | ||||||
Record Date: | March 10, 2006 | |||||
Meeting Agenda: | 1 | ) | Election of four (4) directors; | |||
2 | ) | Approval of the formation of a holding company by means of a statutory share exchange whereby each outstanding share of Avista Corporation common stock would be exchanged for one share of common stock of a new corporation, currently named AVA Formation Corp.¾ as a result, holders of Avista common stock would become holders of AVA common stock and Avista would become a subsidiary of AVA; | ||||
3 | ) | Ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2006; | ||||
4 | ) | Transaction of other business that may come before the meeting or any adjournment(s). |
Senior Vice President, Human Resources &
Corporate Secretary
March ___, 2006
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EXHIBIT 23(B) | ||||||||
EXHIBIT 99(A) | ||||||||
EXHIBIT 99(B) |
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(1) | Avista Utilities is a business segment of Avista Corporation. | |
(2) | Avista Energy and Avista Power comprise the Energy Trading and Resource Management business segment of Avista Corporation. | |
(3) | Avista Advantage is a business segment of Avista Corporation. | |
(4) | “Other” is a business segment of Avista Corporation. |
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(1) | Avista Utilities will be a business segment of Avista Corporation. | |
(2) | Avista Energy and Avista Power will comprise the Energy Trading and Resource Management business segment of Avista Corporation. | |
(3) | Avista Advantage will be a business segment of Avista Corporation. | |
(4) | “Other” will a business segment of Avista Corporation. |
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(1) | Avista Utilities, Inc. will be a business segment of Avista Formation Corp. | |
(2) | Avista Energy and Avista Power will comprise the Energy Trading and Resource Management business segment of AVA Formation Corp. | |
(3) | Avista Advantage will be a business segment of AVA Formation Corp. | |
(4) | “Other” will be a business segment of AVA Formation Corp. |
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• | amendments to the provisions of Avista’s articles of incorporation relating to (a) calling special meetings of shareholders, (b) the number, tenure, vacancy, classification, nomination or removal of directors or (c) adoption, amendment or repeal of Avista’s Bylaws require 80% shareholder approval, whereas similar amendments to AVA’s articles will require only 66-2/3% shareholder approval; | ||
• | amendments to the provisions of Avista’s Bylaws relating to matters described in clause (a) or (b) above require 80% shareholder approval, whereas similar amendments to AVA’s Bylaws will require only 66-2/3% shareholder approval; | ||
• | Avista’s articles of incorporation contain a “fair price” provision which limits the ability to enter into certain business combination transactions with an “Interested Shareholder”, whereas AVA’s articles of incorporation will contain no such provision; and | ||
• | Avista has a shareholder rights plan, whereas AVA will not have such a plan at the Effective Time of the Share Exchange, although AVA’s Board of Directors may consider whether or not to adopt such a plan after the Effective Time. |
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As of, or for the year ended, | ||||||||||||
December 31, | ||||||||||||
2003 | 2004 | 2005 | ||||||||||
(unaudited) | ||||||||||||
Earnings per common share from continuing operations, basic | $ | 1.03 | $ | 0.74 | $ | 0.93 | ||||||
Earnings per common share from continuing operations, diluted | 1.02 | 0.73 | 0.92 | |||||||||
Dividends paid per share | 0.490 | 0.515 | 0.545 | |||||||||
Book value per common share | 15.54 | 15.54 | 15.87 |
REGISTERED PUBLIC ACCOUNTING FIRM
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• | their results of operations, cash flows and financial condition, as well as the success of their business strategies and general economic and competitive conditions; | ||
• | the prior rights of holders of existing and future debt securities and preferred stock issued by those companies; and | ||
• | any applicable legal restrictions. |
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• | Avista’s Annual Report on Form 10-K for the year ended December 31, 2005 (the “Avista 2005 Form 10-K”); | ||
• | Current Reports on Form 8-K, filed on January 10, 2006 and February 14, 2006; and | ||
• | all other documents filed by Avista with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the filing of such Annual Report and prior to the termination of the offering made by this Proxy Statement-Prospectus, |
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ERIK J. ANDERSON | Director since 2000 (Current term expires in 2007) |
KRISTIANNE BLAKE | Director since 2000 (Current term expires in 2007) |
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ROY LEWIS EIGUREN | Director since 2002 (Current term expires in 2008) |
GARY G. ELY | Director since 2001 (Current term expires in 2008) |
JACK W. GUSTAVEL | Director since 2003 (Current term expires in 2007) | |
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JOHN F. KELLY* | Director since 1997 (For a term expiring in 2009) |
JESSIE J. KNIGHT, JR. | Director since 1999 (Current term expires in 2008) |
MICHAEL L. NOËL | Director since 2004 (Current term expires in 2007) | |
LURA J. POWELL, Ph.D.* | Director since 2003 (For a term expiring in 2008) | |
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HEIDI B. STANLEY* | Director Nominee (For a term expiring in 2009) |
R. JOHN TAYLOR* | Director since 1985 (For a term expiring in 2009) |
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• | Shareholders may nominate one or more persons for election as directors at a meeting only if written notice of such shareholder’s intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the Corporate Secretary no later than (i) with respect to an election to be held at an Annual Meeting of Shareholders, ninety (90) days in advance of such meeting and (ii) with respect to an election to be held at a special meeting of shareholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to shareholders. | |
• | Each such notice must set forth: | |
• | the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; | |
• | a representation that such shareholder is a holder of record of shares of the Common Stock of the Company and intends to appear in person or by proxy at the meeting to nominate the person or persons identified in the notice; | |
• | a description of all arrangements or understandings between such shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by such shareholder; | |
• | such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement under the Exchange Act and the rules and regulations thereunder (or any subsequent revisions replacing such Act, rules or regulations) if the nominee(s) had been nominated, or were intended to be nominated, by the Board; and | |
• | the consent of each nominee to serve as a director of the Company if so elected. | |
• | The Chair of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedures. |
• | the appropriate size of the Company’s Board of Directors; | |
• | the needs of the Company with respect to the particular talents and experience of its directors; | |
• | the knowledge, skills and executive leadership experience of nominees, as well as working experience at the executive leadership level in his/her field of expertise; |
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• | familiarity with the energy/utility industry; | |
• | recognition by other leaders as a person of integrity and outstanding professional competence with a proven record of accomplishments; | |
• | experience in the regulatory arena; | |
• | knowledge of the business of, and/or facilities for, the generation, transmission, and/or distribution of electric energy; | |
• | enhancement of the diversity and perspective of the Board; and | |
• | knowledge of the customers, community and employee base. |
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of the Board of Directors
Kristianne Blake — Chair | David A. Clack | Jessie J. Knight, Jr. | Michael L. Noël |
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Dividend | ||||||||||||||||||||||||
Board & | Equivalent | |||||||||||||||||||||||
Annual | Annual Retainer | Committee | for | |||||||||||||||||||||
Total | Retainer Paid | Paid in | Chair | Meeting | Deferred | |||||||||||||||||||
Director Name | Compensation | in Cash (1) | Stock (1) | Retainer | Fees (2) | Stock (3) | ||||||||||||||||||
Erik J. Anderson | $ | 85,000.00 | $ | 26,682.27 | $ | 35,984.40 | $ | 4,333.33 | $ | 18,000.00 | $ | 0.00 | ||||||||||||
Kristianne Blake | $ | 108,739.75 | $ | 32,679.67 | $ | 29,987.00 | $ | 9,000.00 | $ | 35,700.00 | $ | 1,373.08 | ||||||||||||
David A. Clack | $ | 96,100.00 | $ | 62,666.67 | $ | 0.00 | $ | 4,333.33 | $ | 29,100.00 | $ | 0.00 | ||||||||||||
Roy Lewis Eiguren | $ | 81,566.67 | $ | 2,675.69 | $ | 59,990.98 | $ | 0.00 | $ | 18,900.00 | $ | 0.00 | ||||||||||||
Jack Gustavel | $ | 85,733.00 | $ | 2,675.69 | $ | 59,990.98 | $ | 2,666.33 | $ | 20,400.00 | $ | 0.00 | ||||||||||||
John F. Kelly | $ | 80,800.00 | $ | 32,679.67 | $ | 29,987.00 | $ | 4,333.33 | $ | 13,800.00 | $ | 0.00 | ||||||||||||
Jessie J. Knight, Jr. | $ | 90,866.67 | $ | 2,675.69 | $ | 59,990.98 | $ | 0.00 | $ | 28,200.00 | $ | 0.00 |
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Dividend | ||||||||||||||||||||||||
Board & | Equivalent | |||||||||||||||||||||||
Annual | Annual Retainer | Committee | for | |||||||||||||||||||||
Total | Retainer Paid | Paid in | Chair | Meeting | Deferred | |||||||||||||||||||
Director Name | Compensation | in Cash (1) | Stock (1) | Retainer | Fees (2) | Stock (3) | ||||||||||||||||||
Michael L. Noël | $ | 91,766.67 | $ | 2,675.69 | $ | 59,990.98 | $ | 0.00 | $ | 29,100.00 | $ | 0.00 | ||||||||||||
Lura Powell | $ | 78,866.67 | $ | 22,672.68 | $ | 39,993.99 | $ | 0.00 | $ | 16,200.00 | $ | 0.00 | ||||||||||||
R. John Taylor | $ | 88,628.99 | $ | 22,672.68 | $ | 39,993.99 | $ | 1,667.00 | $ | 21,300.00 | $ | 2,995.32 | ||||||||||||
Totals | $ | 888,068.42 | $ | 210,756.40 | $ | 415,910.30 | $ | 26,333.32 | $ | 230,700.00 | $ | 4,368.40 |
(1) | Directors have the option of taking their retainer in stock, in cash or in a combination of stock and cash. | |
(2) | Includes fees for directors attending a subsidiary Board meeting – Blake and Taylor are the only directors who sit on a subsidiary Board. | |
(3) | Dividends are paid on those shares that were deferred prior to December 31, 2004, under the Non-Employee Director Stock Plan. Blake and Taylor are the only directors who deferred receipt of stock until a later date. |
• | Hire, develop, reward, and retain the most competent executives possible by determining the proper levels and types of executive compensation opportunities and take into consideration competitive compensation levels in the marketplace. |
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• | Promote a close identity of interest between management and shareholders and encourage decision-making that enhances shareholder value. The Committee believes that this objective is best achieved by tying incentive opportunities to the attainment of corporate and individual goals and through regular grants of equity compensation. | ||
• | Tie a significant portion of variable pay opportunity to key performance goals, including financial and non-financial targets, that support and reinforce the Company’s annual and long-term strategic goals. |
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John F. Kelly—Chair | Roy Lewis Eiguren | R. John Taylor |
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Annual | ||||||||||||||||||||||||||||
Compensation (1) | Long-Term Compensation(1) | |||||||||||||||||||||||||||
Awards | Payouts | |||||||||||||||||||||||||||
Long- | ||||||||||||||||||||||||||||
Restricted | Shares | Term | ||||||||||||||||||||||||||
Stock | Underlying | Incentive | All Other | |||||||||||||||||||||||||
Name and Principal Position | Year | Salary | Bonus | Awards | Options (#) | Payouts($) | Comp.($) (2) | |||||||||||||||||||||
G. G. Ely | 2005 | $ | 676,442 | $ | 510,159 | (3) | $ | 1,495,368 | (4) | $ | 21,225 | (5) | ||||||||||||||||
Chairman of the Board, | 2004 | $ | 633,173 | $ | 249,733 | $ | 23,769 | |||||||||||||||||||||
President & Chief Executive Officer | 2003 | $ | 528,205 | $ | 250,371 | $ | 23,120 | |||||||||||||||||||||
M. K. Malquist | 2005 | $ | 311,531 | $ | 155,340 | (3) | $ | 359,910 | (4) | $ | 13,873 | (5) | ||||||||||||||||
Senior Vice President | 2004 | $ | 303,288 | $ | 74,863 | $ | 11,363 | |||||||||||||||||||||
& Chief Financial Officer | 2003 | 254,036 | 79,208 | $ | 9,000 | |||||||||||||||||||||||
S. L. Morris | 2005 | $ | 297,634 | $ | 149,646 | (3) | $ | 359,910 | (4) | $ | 30,423 | (5) | ||||||||||||||||
Senior Vice President | 2004 | $ | 283,250 | $ | 68,622 | $ | 27,628 | |||||||||||||||||||||
2003 | $ | 261,390 | $ | 80,119 | $ | 25,686 | ||||||||||||||||||||||
K.S. Feltes | 2005 | $ | 214,204 | $ | 108,384 | (3) | $ | 113,208 | (4) | $ | 9,450 | (5) | ||||||||||||||||
Senior Vice President & | 2004 | $ | 205,346 | $ | 30,052 | $ | 9,000 | |||||||||||||||||||||
Corporate Secretary | 2003 | $ | 176,296 | $ | 37,429 | $ | 9,000 | |||||||||||||||||||||
D. J. Meyer | 2005 | $ | 240,000 | $ | 98,940 | (3) | $ | 359,910 | (4) | $ | 35,440 | (5) | ||||||||||||||||
Vice President & Chief | 2004 | $ | 249,231 | $ | 59,887 | $ | 36,646 | |||||||||||||||||||||
Counsel for Regulatory | 2003 | $ | 240,000 | $ | 72,835 | $ | 35,077 | |||||||||||||||||||||
& Governmental Affairs |
(1) | Includes any amounts deferred pursuant to the Executive Deferral Plan. This plan allows executive officers the opportunity to defer until their retirement or until their earlier termination, disability or death, up to 75% of their base salary and/or up to 100% incentive/bonus cash payments. Accumulated deferred compensation is credited with earnings at a non-preferential rate. Deferrals under the Executive Deferral Plan made after December 31, 2004, are subject to the provisions of Section 409A of the Internal Revenue code (Section 409A). Section 409A was enacted as part of the American Jobs Creation Act of 2004 and substantially impacts the federal income tax rules associated with the deferral of income under nonqualified deferred arrangements. A transitional relief period is currently in effect for Section 409A during which plans are required to operate in good faith compliance with Section 409A. Internal Revenue Service and the Treasury Department have issued certain interim and proposed guidance and are expected to issue further final guidance for compliance with Section 409A. During the transition relief period, which has been extended through December 31, 2006, plans may be amended to comply with Section 409A. Accordingly, during 2006, certain provisions of the Executive Deferral Plan will be modified in order to comply with the requirements of Section 409A and such guidance. | |
(2) | The Company does not provide any perquisites or other personal benefits to its executive officers. | |
(3) | Cash awards made to certain executive officers for 2005 performance in accordance with the Executive Incentive Compensation Plan. | |
(4) | Total value of shares paid out to Executive Officers under the Long-Term Incentive Plan for the performance share cycle, which ended on December 31, 2005. Participants received 120% of the target number of shares covered by the original awards since Avista ranked in the 67th percentile among the S&P 400 Utilities Index. Amounts also include the settlement of dividends on the total shares awarded to each individual. Of these amounts, Malquist deferred 50% of his award and Meyer deferred 20% of his award under the Executive Deferral Plan. The first cycle of three-year performance awards were granted in 2003. Therefore no awards were paid in 2003 and 2004. | |
(5) | Includes employer matching contributions under both the Executive Deferral Plan and the Investment and Employee Stock Ownership Plan (401(k) plan), pursuant to which the Company |
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matches 75% of each executive officer’s deferral up to 6% of salary. Also includes payments for unused, paid time-off accrued under the Company’s One-Leave Program. Amounts for 2005 under the Deferral Plan were: Ely—$11,775; Malquist—$4,423; Meyer—$1,990; Morris—$3,521; Feltes—$0. Amounts for 2005 under the 401(k) plan were: Ely—$9,450; Malquist—$9,450; Meyer—$9,450; Morris—$9,450; Feltes—$9,450. Amounts for 2005 under the One-Leave Program were: Ely—$0; Malquist—$0; Meyer—$24,000 (230 hrs.); Morris—$17,452 (120 hrs.); Feltes—$0. |
in Last Fiscal Year and FY End Option Values
Of Avista and any Indirect Subsidiaries
Shares | Number of Shares | Value of Unexercised In-the- | ||||||||||||||||||||||
Acquired | Underlying Unexercised | Money | ||||||||||||||||||||||
on | Value | Options at FY-End (#) | Options at FY-End($) | |||||||||||||||||||||
Name | Exercise(#) | Realized($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
G. G. Ely | 0 | 0 | 374,063 | 27,188 | $ | 1,547,431 | $ | 204,994 | ||||||||||||||||
M. K. Malquist | 0 | 0 | 57,188 | 19,063 | $ | 398,944 | $ | 132,981 | ||||||||||||||||
S. L. Morris | 0 | 0 | 88,188 | 6,563 | $ | 359,774 | $ | 49,481 | ||||||||||||||||
K. S. Feltes | 0 | 0 | 37,750 | 2,250 | $ | 122,935 | $ | 16,965 | ||||||||||||||||
D. J. Meyer | 0 | 0 | 131,188 | 6,563 | $ | 363,294 | $ | 49,481 |
in Last Fiscal Year
Number of Shares, Units | ||||||||
or Other | Performance or Other Period Until | |||||||
Name | Rights (#) | Maturation or Payout | ||||||
G. G. Ely | 64,400 | 3yrs; 12/31/2007 | ||||||
M. K. Malquist | 15,500 | 3yrs; 12/31/2007 | ||||||
S. L. Morris | 15,500 | 3yrs; 12/31/2007 | ||||||
K. S. Feltes | 5,300 | 3yrs; 12/31/2007 | ||||||
D. J. Meyer | 5,300 | 3yrs; 12/31/2007 |
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Years of Credited Service | ||||||||||||||||
Remuneration | 15 | 20 | 25 | 30 | ||||||||||||
$200,000 | $ | 75,000 | $ | 100,000 | $ | 125,000 | $ | 150,000 | ||||||||
$250,000 | $ | 93,750 | $ | 125,000 | $ | 156,250 | $ | 187,500 | ||||||||
$300,000 | $ | 112,500 | $ | 150,000 | $ | 187,500 | $ | 225,000 | ||||||||
$350,000 | $ | 131,250 | $ | 175,000 | $ | 218,750 | $ | 262,500 | ||||||||
$400,000 | $ | 150,000 | $ | 200,000 | $ | 250,000 | $ | 300,000 | ||||||||
$450,000 | $ | 168,750 | $ | 225,000 | $ | 281,250 | $ | 337,500 | ||||||||
$500,000 | $ | 187,500 | $ | 250,000 | $ | 312,500 | $ | 375,000 | ||||||||
$550,000 | $ | 206,250 | $ | 275,000 | $ | 343,750 | $ | 412,500 | ||||||||
$600,000 | $ | 225,000 | $ | 300,000 | $ | 375,000 | $ | 450,000 | ||||||||
$650,000 | $ | 243,750 | $ | 325,000 | $ | 406,250 | $ | 487,500 | ||||||||
$700,000 | $ | 262,500 | $ | 350,000 | $ | 437,500 | $ | 525,000 | ||||||||
$750,000 | $ | 281,250 | $ | 375,000 | $ | 468,750 | $ | 562,500 | ||||||||
$800,000 | $ | 300,000 | $ | 400,000 | $ | 500,000 | $ | 600,000 | ||||||||
$850,000 | $ | 318,750 | $ | 425,000 | $ | 531,250 | $ | 637,500 |
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Years of | ||||||||
Years of | Credited | |||||||
Company | Service | |||||||
Name | Service | (SERP) | ||||||
G. G. Ely | 39 | 30 | ||||||
M. K. Malquist (1) | 3 | 3 | ||||||
S. L. Morris | 24 | 24 | ||||||
K. S. Feltes | 8 | 8 | ||||||
D. J. Meyer (2) | 7 | 27 |
(1) | In accordance with Mr. Malquist’s employment agreement as described in this proxy statement, Mr. Malquist will be credited with three (3) years vesting service and two (2) years benefit service for each completed year of employment after he has had five (5) years of service with the Company. | |
(2) | Mr. Meyer was granted twenty (20) years of credited service upon his employment. | |
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Comparison of Five-Year Cumulative Total Returns – Avista vs. Industry Indexes
2001 | 2002 | 2003 | 2004 | 2005 | ||||||||||||||||
Avista | 66.67 | 60.40 | 98.07 | 98.45 | 101.66 | |||||||||||||||
S&P500 Index | 88.11 | 68.64 | 88.33 | 97.94 | 102.75 | |||||||||||||||
S&P400 Electric Utilities | 89.40 | 80.21 | 102.43 | 115.54 | 120.83 |
(1) | The S&P 500 Index consists of 500 stocks chosen for market size, liquidity and industry group representation. | |
(2) | The S&P 400 Electric Utilities Index currently includes 17 electric utility companies. |
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• | Avista Utilities generates, transmits and distributes electric energy and distributes natural gas. Avista Utilities also engages in wholesale purchases and sales of electric capacity and energy. | ||
• | The Energy Marketing and Resource Management business segment is comprised primarily of Avista Energy, Inc., which is engaged in electricity and natural gas marketing, trading and resource management. This segment also includes Avista Power, Inc., which owns an interest in a gas-fired generating plant. | ||
• | Avista Advantage, Inc. is a provider of facility information and cost management services for multi-site customers. | ||
• | The Other business segment, which is conducted through various subsidiaries, includes sheet metal fabrication, radiant floor heating systems and certain real estate investments. Avista intends to limit its future investments in this business segment. |
• | AVA, like Avista, is a Washington corporation; | ||
• | AVA’s authorized capital will be the same as that of Avista; | ||
• | AVA’s Board of Directors, as of the Effective Time, will be the same as Avista’s Board of Directors immediately prior to the Effective Time; and | ||
• | the senior executive officers of AVA, as of the Effective Time, will be senior executive officers of Avista. |
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• | Former holders of outstanding shares of Avista Common Stock will hold shares of AVA Common Stock; | ||
• | AVA will own all of the outstanding shares of Avista Common Stock; and | ||
• | Avista will continue to own, directly or indirectly, the outstanding shares of common stock of its subsidiaries that it currently holds. |
• | Avista becoming a subsidiary of AVA (and being renamed Avista Utilities, Inc.); and | ||
• | Avista Capital also becoming a direct subsidiary of AVA (instead of a subsidiary of Avista). |
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• | Avista’s traditional utility operations would be more separated from the non-utility businesses, thereby further ensuring that cross subsidization is avoided and that business risk is not transferred from other segments of the business to the traditional utility operations. | ||
• | The new structure would provide better legal protection for Avista Utilities from liabilities arising from other segments of the business. | ||
• | The new structure would provide the opportunity for AVA to consider alternative businesses and business relationships that are complementary to but separate from the utility business. | ||
• | The new structure would permit investors, analysts, and rating agencies to more easily analyze and value AVA’s individual lines of business. Capital structures may be used that are better suited to the particular requirements, characteristics and risks of the other | ||
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businesses without affecting the capital structure or creditworthiness of Avista Utilities and may increase the financial flexibility of the other businesses. | |||
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• | the cost of the formation of the holding company structure will not be included in future Avista Utilities ratemaking proposals; | ||
• | Avista will continue to provide access to information for AVA and all subsidiaries for audit purposes; | ||
• | Avista will continue to maintain prudent utility operating standards; | ||
• | Avista will continue to maintain internal controls that preclude “cross-subsidization” between the utility and other subsidiaries; | ||
• | Avista will continue to assure segregation of operations among the utility and other affiliated entities, and prevent co-mingling of assets, and will continue to comply with all applicable statutes, rules and commission practices regarding property transfers, affiliated or subsidiary transactions and securities transactions; and | ||
• | AVA costs (or corporate support costs) will be fairly allocated among the utility and other subsidiaries. |
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• | approval of the Share Exchange by the holders of Avista Common Stock; | ||
• | approval of the Share Exchange by the State Commissions (or, in the case of the MPSC, disclaimer of jurisdiction, if deemed necessary) and the FERC, which approvals shall not include, in the sole judgment of the Avista Board of Directors, any unacceptable conditions; | ||
• | listing of AVA Common Stock on the New York Stock Exchange, upon official notice of issuance; | ||
• | receipt by Avista of a favorable opinion of Heller Ehrman LLP covering certain United States federal income tax matters; and | ||
• | consents under various financing agreements of Avista. |
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• | the number of directors shall not exceed eleven (except in circumstances in which holders of AVA Preferred Stock are entitled to elect members of the Board); | ||
• | directors may be removed only for cause and only by the affirmative vote of the holders of a majority of the voting power of the shares of the company entitled generally to vote in the election of directors at a meeting of shareholders expressly called for that purpose; | ||
• | any vacancy on the Board may be filled by the remaining directors then in office even though less than a quorum; and | ||
• | special meetings of shareholders may be called only by the President, the Chairman of the Board, a majority of the Board of Directors, or the Executive Committee of the Board, and shall be called by the Corporate Secretary at the request of the holders of not less than two-thirds of all the outstanding shares of AVA Common Stock; and only matters specified in the call of or request for a special meeting may be considered or voted on at such meeting. |
• | a holder of AVA Common Stock may nominate persons for election as directors only if written notice (meeting specified requirements) of intention to make such nomination is given to the Corporate Secretary not later than (i) in the case of an annual meeting of shareholders, 90 days in advance of the meeting or (ii) in the case of a special meeting of shareholders, the seventh day after the date on which notice is first given to shareholders; and | ||
• | a holder of AVA Common Stock may propose business to be brought before an annual meeting of shareholders only if, among other things (i) such business is a proper matter for shareholder action under the Washington BCA and (ii) the shareholder shall give written notice (meeting specified requirements of intention to bring such business before the meeting is given to the Corporate Secretary (subject to certain exceptions) not less than 120 nor more than 180 days prior to the first anniversary of the date on which AVA first mailed its proxy materials for the preceding annual meeting of shareholders. |
• | directors will not be liable to AVA or its shareholders for monetary damages for conduct as a director, except as such limitation is prohibited by law; and |
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• | AVA will indemnify its directors against liability and expenses to the fullest extent permitted by law. |
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• | such “significant business transaction”; or | ||
• | the purchase of shares made by such “acquiring person”. |
• | the transaction complies with certain “fair price” provisions specified in the statute; or | ||
• | no earlier than five years after the “acquiring person’s” “share acquisition time”, the “significant business transaction” is approved at an annual or special meeting of AVA’s shareholders (in which the “acquiring person’s” shares may not be counted in determining whether the “significant business transaction” has been approved). |
• | a merger, share exchange, or consolidation of AVA or any of its subsidiaries with an “acquiring person” or its affiliate; | ||
• | a sale, lease, transfer or other disposition to an “acquiring person” or its affiliate of assets of AVA or any of its subsidiaries having an aggregate market value equal to 5% or more of all of the assets determined on a consolidated basis, or all the outstanding shares of AVA, or representing 5% or more of its earning power or net income determined on a consolidated basis; | ||
• | termination, at any time over the five-year period following the “share acquisition time”, of 5% or more of the employees of AVA as a result of the “acquiring person’s” acquisition of 10% or more of the shares of AVA; and | ||
• | the issuance or redemption by AVA or any of its subsidiaries of shares (or of options, warrants, or rights to acquire shares) of AVA or any of its subsidiaries to or beneficially owned by an “acquiring person” or its affiliate except pursuant to an offer, dividend distribution or redemption paid or made pro rata to all shareholders (or holders of options, warrants or rights). |
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• | such business combination shall have been approved by a majority of the Avista directors unaffiliated with the Interested Shareholder; or | ||
• | certain minimum price and procedural requirements are met. The Avista Articles provide that the “fair price” provision may be altered, amended or repealed only by the affirmative vote of the holders of at least 80% of the outstanding shares of Avista Common Stock. |
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“Flip-in” |
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Name | Office | |
Gary G. Ely | Chairman of the Board, President and Chief Executive Officer | |
Marian M. Durkin | Senior Vice President and General Counsel | |
Karen S. Feltes | Senior Vice President and Corporate Secretary | |
Malyn K. Malquist | Senior Vice President, Treasurer and Chief Financial Officer | |
Scott L. Morris | Senior Vice President |
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• | the beneficial shareholder submits to Avista the record shareholder’s consent to the dissent not later than the time the beneficial shareholder asserts dissenters’ rights, which consent shall be set forth in a written notice or other tangible medium; and | ||
• | the beneficial shareholder does so with respect to all shares of which such shareholder is the beneficial shareholder or over which such shareholder has power to direct the vote. |
• | where the payment demand must be sent; | ||
• | where and when certificates for certificated shares must be deposited; | ||
• | for holders of uncertificated shares, to what extent transfer of uncertificated shares will be restricted after the payment demand is received; | ||
• | a form for demanding payment that includes the date of the first announcement to news media or to shareholders of the terms of the Share Exchange and requires the person asserting dissenters’ rights certify whether or not such person acquired beneficial ownership of the shares before that date; |
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• | the date by which Avista must receive the payment demand, which date may not be less than 30 or more than 60 days after the dissenters’ notice is delivered; and | ||
• | a copy of Chapter 23B.13 of the Washington BCA. |
• | Avista’s balance sheet as of the end of a fiscal year ended not more than 16 months before the date of payment, an income statement for that year, a statement of changes in shareholders’ equity for that year, and the latest available interim financial statements, if any, and | ||
• | an explanation of how Avista estimated the fair value of the shares and how the interest was calculated; | ||
• | a statement of the dissenter’s right to demand payment under the Washington BCA; and | ||
• | a copy of Chapter 23B.13 of the Washington BCA. |
• | the dissenter believes that the amount paid or offered is less than the fair value of the dissenter’s shares or that the interest due is incorrectly calculated; | ||
• | Avista fails to make payment within 60 days after the date set for demanding payment; or | ||
• | the Plan of Exchange is not effected, and Avista does not return the deposited Avista certificates or release the transfer restrictions imposed on uncertificated shares within 60 days after the date set for demanding payment. |
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REGISTERED PUBLIC ACCOUNTING FIRM
2005 | 2004 | |||||||
Audit Fees (a) | $ | 1,505,815 | $ | 1,527,358 | ||||
Audit-Related Fees (b) | 133,291 | 35,674 | ||||||
Tax Fees (c) | 57,366 | 43,702 | ||||||
All Other Fees (d) | 3,000 | 3,250 | ||||||
Total | $ | 1,699,472 | $ | 1,609,984 |
• | Audit of the Company’s annual consolidated financial statements. | ||
• | Reviews of the Company’s quarterly reports on Form 10-Q. | ||
• | Comfort letters, agreed-upon procedures, statutory and regulatory audits, consents and other services related to SEC matters. | ||
• | Consultation on accounting standards. |
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Number of | ||||||||||||||||||||
Shares | ||||||||||||||||||||
Underlying | Number of | |||||||||||||||||||
Options | Shares | |||||||||||||||||||
Exercisable | Underlying | |||||||||||||||||||
Within | Other | |||||||||||||||||||
Name | Direct | Indirect | 60 Days(1) | Options(1) | Total | |||||||||||||||
Erik J. Anderson | 9,172 | 9,000 | 18,172 | |||||||||||||||||
Kristianne Blake (2) | 6,724 | 12,000 | 18,724 | |||||||||||||||||
David A. Clack (3) | 14,320 | 10,256 | 15,000 | 39,576 | ||||||||||||||||
Roy Lewis Eiguren | 8,178 | 830 | 6,000 | 15,008 | ||||||||||||||||
Gary G. Ely (4) | 65,218 | 41,163 | (5) | 374,063 | 27,187 | 507,631 | ||||||||||||||
Karen S. Feltes (6) | 5,204 | 3,212 | (5) | 37,750 | 2,250 | 48,416 | ||||||||||||||
Jack W. Gustavel | 10,919 | 10,919 | ||||||||||||||||||
John F. Kelly | 12,209 | 15,000 | 27,209 | |||||||||||||||||
Jessie J. Knight, Jr. | 16,257 | 15,000 | 31,257 | |||||||||||||||||
Malyn K. Malquist (7) | 7,610 | 10,439 | (8) | 57,188 | 19,062 | 94,299 | ||||||||||||||
David J. Meyer (9) | 23,098 | 15,089 | (10) | 131,188 | 6,562 | 175,937 | ||||||||||||||
Scott L. Morris (12) | 15,482 | 8,035 | (5) | 88,188 | 6,562 | 118,267 | ||||||||||||||
Michael L. Noël | 5,800 | 5,800 | ||||||||||||||||||
Lura J. Powell | 7,249 | 3,000 | 10,249 | |||||||||||||||||
Heidi B. Stanley | 8,732 | (11) | 8,732 | |||||||||||||||||
R. John Taylor (13) | 18,438 | 4,998 | (14) | 15,000 | 38,436 | |||||||||||||||
All directors and executive officers as a group, including those listed above—23 individuals | 243,050 | 144,268 | 970,502 | 72,073 | 1,429,893 |
(1) | Avista Common Stock options granted under the Long-Term Incentive Plan. Options reflected in the “Other Options” column are not exercisable within sixty days. The options’ vesting schedule will not be accelerated as a result of the consummation of the Holding Company Proposal. | |
(2) | In addition to the shares beneficially owned and reflected in this table, Mrs. Blake will also receive at a later date 2,519 shares of Avista Common Stock for which she has deferred receipt, in accordance with the provisions of the Company’s former Non-Employee Director Stock Plan. | |
(3) | Mr. Clack is retiring on May 11, 2006 and will not be standing for re-election. | |
(4) | In addition to the shares beneficially owned and reflected in this table, Mr. Ely has been credited with 40,418 shares of Avista Common Stock in the Company’s Executive Deferral Plan. At the February 9, 2006 Compensation Committee meeting, Mr. Ely was granted 12,600 restricted shares of Avista Common Stock, subject to provisions of the Long-Term Incentive Plan. The restricted stock shares are not reflected in this table, since they have not yet been issued. | |
(5) | Shares held in the Company’s 401(k) Investment Plan. |
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(6) | At the February 9, 2006 Compensation Committee meeting, Ms. Feltes was granted 3,000 restricted shares of Avista Common Stock, subject to the provisions of the Long-Term Incentive Plan. The restricted stock shares are not reflected in this table, since they have not yet been issued. | |
(7) | In addition to the shares beneficially owned and reflected in this table, Mr. Malquist has been credited with 5,245 shares of Avista Common Stock in the Company’s Executive Deferral Plan. At the February 9, 2006 Compensation Committee meeting, Mr. Malquist was granted 3,000 restricted shares of Avista Common Stock, subject to the provisions of the Long-Term Incentive Plan. The restricted stock shares are not reflected in this table, since they have not yet been issued. | |
(8) | Includes 2,439 shares held in the Company’s 401(k) Investment Plan and 8,000 shares held in a Family Trust Account. | |
(9) | In addition to the shares beneficially owned and reflected in this table, Mr. Meyer has been credited with 2,098 shares of Avista Common Stock in the Company’s Executive Deferral Plan. At the February 9, 2006 Compensation Committee meeting, Mr. Meyer was granted 1,000 restricted shares of Avista Common Stock, subject to the provisions of the Long-Term Incentive Plan. The restricted stock shares are not reflected in this table, since they have not yet been issued. | |
(10) | Includes 9,346 shares held in the Company’s 401(k) Investment Plan and 5,743 shares held in an IRA account. | |
(11) | Shares held by Ms. Stanley’s spouse in a profit-sharing plan not administered by the Company. | |
(12) | At the February 9, 2006 Compensation Committee meeting, Mr. Morris was granted 3,000 restricted shares of Avista Common Stock, subject to the provisions of the Long-Term Incentive Plan. The restricted stock shares are not reflected in this table, since they have not yet been issued. | |
(13) | In addition to the shares beneficially owned and reflected in this table, Mr. Taylor will also receive at a later date 5,496 shares of Avista Common Stock for which he has deferred receipt, in accordance with the provisions of the Non-Employee Director Stock Plan. | |
(14) | Includes 4,000 shares held in an employee benefit plan not administered by the Company for which Mr. Taylor shares voting and investment power and 998 shares held by Mr. Taylor as custodian for his children. |
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Senior Vice President, Human Resources &
Corporate Secretary
March ___, 2006
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• | is, or within the past three years has been, employed by Avista Corp. or has an immediate family member who is, or within the past three years has been, an executive officer of Avista Corp. | ||
• | received, or has an immediate family member who received, during any 12-month period within the last three years, more than $100,000 in direct compensation from Avista Corp., other than director or committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service). | ||
• | (i) is a partner or employee of Avista Corp.’s independent auditor, (ii) has an immediate family member who is a partner of Avista Corp.’s independent auditor or an employee that participates in such firm’s audit, assurance or tax compliance practice or (iii) was, or has an immediate family member that was, within the past three years, a partner or employee of Avista Corp.’s independent auditor and personally worked on Avista Corp.’s audit. | ||
• | is, or has an immediate family member who is, or in the past three years has been, employed as an executive officer of another company in which an executive officer of Avista Corp. at the same time serves or served on that company’s compensation committee. | ||
• | is an employee, or has an immediate family member who is an executive officer, of a company (excluding charitable organizations) that has made payments to, or received payments from, Avista Corp. for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million or 2% of such other company’s consolidated gross revenues. |
a. | Personal Relationships. The following relationships are not considered material relationships that would impair a director’s independence: |
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i. | The director or immediate family member resides within a service area of, and is provided with utility service by Avista Corp., and utility service is provided in the ordinary course of Avista Corp.’s business at rates or charges fixed in conformity with law or governmental authority. | ||
ii. | The director or immediate family member holds (including holdings by an entity with which the director or an immediate family member is affiliated as a director, officer, employee, or otherwise) securities issued publicly by Avista Corp. or its subsidiaries, provided the director or immediate family member receives no extra benefit not shared on a pro rata basis. |
b. | Business Relationships. All payments between Avista Corp. and an entity that is affiliated with a director or an immediate family member for goods or services, or other contractual arrangements, must be made in the ordinary course of business and on substantially the same terms as those prevailing at the time for comparable transactions with non-affiliated persons. The following relationships will not be considered to be material relationships that would impair a director’s independence: |
i. | The entity affiliated with the director or immediate family member resides within a service area of, and is provided with utility service by Avista Corp., and utility service is provided in the ordinary course of Avista Corp.’s business at rates or charges fixed in conformity with law or governmental authority. | ||
ii. | Payments made by Avista Corp. to an entity with which the director or an immediate family member of the director is (or was within the preceding three years) affiliated as a director, employee or otherwise of such company or payments received by Avista Corp. from such entity, for property or services, if the total amount of the payments made or received in each of the entity’s preceding three fiscal years does not exceed the greater of $1 million or two percent (2%) of the total gross revenues of such company in the applicable fiscal year, and the director and any immediate family members do not (and did not in the preceding three fiscal years) directly or indirectly own, in the aggregate, more than 10% of the entity. | ||
iii. | If a director is a partner in or of counsel to a law firm, the director (or an immediate family member) does not personally perform any legal services for Avista Corp., and the fees paid to the firm by Avista Corp. during each of the current fiscal year and each of such firm’s three preceding fiscal years do not exceed the greater of $200,000 or two percent (2%) of either such firm’s gross annual revenues or the Company’s gross annual revenues. |
c. | Banking Relationships. A director will not fail to be independent from management solely as a result of lending relationships, deposit relationships or other banking relationships (including, without limitation, trust department, investment and insurance relationships) between Avista Corp., on the one hand, and the director (or an immediate family member) or an entity with which the director (or an immediate family member) is affiliated, on the other hand, provided that: |
i. | such relationships are in the ordinary course of business of Avista Corp. and are on substantially the same terms as those prevailing at the time for comparable transactions with non-affiliated parties, |
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ii. | the amount of indebtedness does not exceed three percent (3%) of the affiliated company’s assets in any of the last three fiscal years, and | ||
iii. | such banking relationship does not involve the payment of interest and other fees that exceed any of the threshold amounts specified in Section b. iii. above. |
d. | Relationships with Not-for-Profit Entities. A director’s independence will not be considered impaired solely for the reason that the director or an immediate family member is an officer, director or trustee of a foundation, university or other not-for-profit organization that receives from Avista Corp. during the current fiscal year or any of the prior three fiscal years, contributions in an amount not exceeding the greater of $200,000 or two percent (2%) of the not-for-profit organization’s aggregate annual charitable receipts during the entity’s fiscal year. | ||
e. | Other Relationships. For relationships not covered above, the determination of whether the relationship is material or not, and therefore whether a director would be independent or not, shall be made in good faith by the directors the Board has determined are independent. |
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EXHIBIT A
PLAN OF SHARE EXCHANGE
THIS PLAN OF SHARE EXCHANGE (the“Plan of Exchange”), dated as of February 13, 2006, is between Avista Corporation, a Washington corporation(“Avista”), the corporation whose shares of common stock will be acquired pursuant to the exchange provided for in this Plan of Exchange (the“Exchange”), and AVA Formation Corp., a Washington corporation(“AVA”), the acquiring corporation. Avista and AVA, together, are referred to in this Plan of Exchange as the“Companies.”
RECITALS:
A. The authorized capital of Avista consists of (a) 200,000,000 shares of common stock, without nominal or par value (“Avista Common Stock”), of which 48,593,873 shares were issued and outstanding as of January 15, 2006, and (b) 10,000,000 shares of preferred stock, without nominal or par value(“Avista Preferred Stock”), of which 262,500 shares were issued and outstanding as of December 31, 2005. The number of issued and outstanding shares of Avista Common Stock is subject to increase to the extent that additional shares are issued prior to the Effective Time (as defined below).
B. AVA is a wholly-owned subsidiary of Avista, with authorized capital of (a) 200,000,000 common shares, without nominal or par value(“AVA Common Stock”), of which one hundred (100) shares are issued and outstanding and owned by Avista, and (b) 10,000,000 preferred shares, without nominal or par value, none of which are issued.
C. The Boards of Directors of the Companies deem it desirable and in the best interests of the Companies and the shareholders of Avista that, at the Effective Time, each share of Avista Common Stock be exchanged for one share of AVA Common Stock, with the result that AVA becomes the owner of all outstanding shares of Avista Common Stock and that each holder of shares of Avista Common Stock shall automatically become the holder of an identical number of shares of AVA Common Stock, all on the terms and subject to the conditions set forth below.
D. The Boards of Directors of the Companies have each adopted this Plan of Exchange. The Board of Directors of Avista has voted Avista’s shares of AVA Common Stock to approve, and recommended that the shareholders of Avista approve, this Plan of Exchange pursuant to the Washington Business Corporation Act, Title 23B, Revised Code of Washington, as amended (the“Act”), and specifically Section 23B.11.030 of the Act.
NOW, THEREFORE, the Companies agree as follows:
ARTICLE I
This Plan of Exchange shall be submitted to the holders of Avista Common Stock for approval as provided by Section 23B.11.030 of the Act. The affirmative vote of at least two-thirds ( 2/3) of the outstanding shares of Avista Common Stock shall be necessary to approve the Plan of Exchange.
ARTICLE II
Subject to the terms and conditions of this Plan of Exchange, the Exchange shall become effective immediately following the close of business on the date of filing with the Secretary of State of the State of Washington (the“Secretary of State”) of articles of share exchange pursuant to Section 23B.11.050 of the Act (the“Articles”), or at such later time and date as may be stated in the Articles (the time and date at and on which the Exchange becomes effective, the“Effective Time”).
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ARTICLE III
A. At the Effective Time:
(1) Each share of Avista Common Stock issued and outstanding immediately prior to the Effective Time shall be automatically exchanged for one share of AVA Common Stock, which share shall be fully paid and nonassessable. | |
(2) AVA shall acquire and become the owner and holder of each issued and outstanding share of Avista Common Stock so exchanged. | |
(3) Each share of AVA Common Stock issued and outstanding immediately prior to the Effective Time shall be canceled and shall constitute an authorized but unissued share of AVA Common Stock. | |
(4) Each right to receive shares of Avista Common Stock and each unexpired and unexercised option to purchase shares of Avista Common Stock (each, an“Avista Grant”) under an Avista executive compensation or employee benefit plan (each, an“Avista Plan”), whether vested or unvested, shall, pursuant to an amendment to each such Avista Plan, become the right to receive an equal number of shares of AVA Common Stock or an option to purchase, at the same price per share specified in such Avista Grant, that number of shares of AVA Common Stock equal to the number of shares of Avista Common Stock that could have been purchased immediately prior to the Effective Time (assuming full vesting), as the case may be, under the Avista Plans. Each Avista Grant shall be subject to the same terms and conditions as are set forth in the Avista Plans. | |
(5) Each share of Avista Common Stock held under the Avista Direct Stock Purchase and Dividend Reinvestment Plan (the“Dividend Reinvestment Plan”) immediately prior to the Effective Time shall automatically be exchanged for an equal number (including fractional and uncertificated shares) of shares of AVA Common Stock, and shall continue to be held under the Dividend Reinvestment Plan. |
B. Each former holder of shares of Avista Common Stock shall be entitled to receive only (1) shares of AVA Common Stock in exchange for such Avista Common Stock as provided in this Plan of Exchange or (2) payment of the fair value of such shares of Avista Common Stock under Chapter 23B.13 of the Act.
C. As of the Effective Time, AVA shall adopt any of the Avista Plans as in effect immediately prior to the Effective Time under which Avista Grants are outstanding or that continues to provide for new Avista Grants. The Avista Plans shall be appropriately amended to provide for the issuance and delivery of AVA Common Stock on and after the Effective Time on substantially the same terms as Avista Common Stock would have been issuable thereunder immediately prior to the Effective Time.
D. As of the Effective Time, AVA shall succeed to the Dividend Reinvestment Plan as in effect immediately prior to the Effective Time, and the Dividend Reinvestment Plan shall be appropriately amended to provide for the issuance and delivery of AVA Common Stock on and after the Effective Time.
E. As of the Effective Time, each and every preferred share purchase right granted pursuant to the Rights Agreement, dated as of November 15, 1999, between Avista and the Bank of New York as successor Rights Agent, as amended, shall expire and no further rights shall be granted.
ARTICLE IV
The filing of the Articles with the Secretary of State and the consummation of the Exchange are subject to satisfaction of each of the following conditions precedent:
A. The approval by the holders of Avista Common Stock provided for in Article I of this Plan of Exchange; | |
B. the receipt of such orders, authorizations, approvals, waivers or disclaimers of jurisdiction from the Washington Utilities and Transportation Commission, the Idaho Public Utility Commission, the Montana Public Service Commission, the Oregon Public Utility Commission, the Federal Energy Regulatory Commission, and all other regulatory bodies, boards or agencies as are or may be required in connection with the Exchange and related transactions, which orders, authorizations, approvals, waivers |
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and disclaimers shall remain in full force and effect, and shall not include, in the sole judgment of the Board of Director of Avista, unacceptable conditions; | |
C. the effectiveness of a registration statement under the Securities Act of 1933, as amended, relating to AVA Common Stock to be issued in the Exchange; | |
D. the approval by the New York Stock Exchange for the listing of the AVA Common Stock to be issued in the Exchange; and | |
E. the receipt by Avista of a favorable opinion of Heller Ehrman LLP covering certain United States federal income tax matters. |
ARTICLE V
Following the Effective Time, each holder of an outstanding certificate or certificates that represented shares of Avista Common Stock immediately prior to the Effective Time may, but shall not be required to, surrender such certificates to AVA’s transfer agent for cancellation and reissuance of a new certificate or certificates in such holder’s name or for cancellation and transfer, and each such holder or transferee shall be entitled to receive a certificate or certificates representing the same number of shares of AVA Common Stock as the shares of Avista Common Stock previously represented by the certificate or certificates surrendered. Until so surrendered or presented for exchange or transfer, each outstanding certificate that, immediately prior to the Effective Time, represented Avista Common Stock shall be deemed and shall be treated for all purposes to represent the ownership of the same number of shares of AVA Common Stock as though such surrender or exchange or transfer had taken place. The holders of Avista Common Stock at the Effective Time shall have no right at and after the Effective Time to have any shares of Avista Common Stock transferred on the stock transfer books of Avista (such stock transfer books being deemed closed for this purpose at the Effective Time), and each record of a holder of outstanding certificate(s) that represented shares of Avista Common Stock immediately prior to the Effective Time shall be recorded as representing the ownership by such holder of the same number of shares of AVA Common Stock in the stock transfer books of AVA at the Effective Time.
ARTICLE VI
A. This Plan of Exchange may be amended, modified or supplemented, or compliance with any provision of this Plan of Exchange may be waived, at any time prior to the Effective Time (including, without limitation, after receipt of the affirmative vote of holders of Avista Common Stock as provided in Article I above), by the mutual consent of the Boards of Directors of Avista and AVA, so long as such amendment, modification, supplement or waiver would not, in the sole judgment of the Board of Directors of Avista, materially and adversely affect the shareholders of Avista.
B. This Plan of Exchange may be terminated and the Exchange and related transactions abandoned at any time prior to the Effective Time (including, without limitation, after receipt of the affirmative vote of holders of Avista Common Stock as provided in Article I above), if the Board of Directors of Avista determines, in its sole judgment, that consummation of the Exchange would for any reason be inadvisable or not in the best interests of Avista or its shareholders.
EXECUTED by each of the Companies, pursuant to authorization and approval given by its Board of Directors, as of the date first above written.
AVISTA CORPORATION | AVA FORMATION CORP. | |||||
By: | /s/ Gary G. Ely | By: | /s/ Gary G. Ely | |||
Gary G. Ely | Gary G. Ely | |||||
Its Chairman, President & CEO | Its President |
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NAME
SHARES
* | The name will be changed prior to the Effective Time of the Share Exchange. |
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SPECIAL SHAREHOLDERS MEETINGS
DIRECTORS
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BYLAWS
AMENDMENTS TO ARTICLES OF INCORPORATION
LIMITATION OF DIRECTOR LIABILITY
INDEMNIFICATION
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Marian M. Durkin | ||||
Vice President and Secretary | ||||
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EXHIBIT C
AMENDED AND RESTATED BYLAWS
ARTICLE I.
OFFICES
The principal office of the Corporation initially shall be in the City of Spokane, State of Washington. The Corporation may move its principal office or have such other offices, either within or without the State of Washington, as the Board of Directors may determine from time to time.
ARTICLE II.
SHAREHOLDERS
Section 1. Annual Meeting. The Annual Meeting of Shareholders for the election of directors and transaction of such other business as may properly come before the meeting shall be held on such date in the month of May in each year as is determined by the Board of Directors.
Section 2. Special Meetings. Special meetings of the shareholders may be called by the President, the Chairman of the Board of Directors, a majority of the Board of Directors, and any Executive Committee of the Board of Directors. A special meeting of the shareholders shall be called by the Secretary upon receipt of written demands for such a meeting from not less than two-thirds of all outstanding shares of this corporation entitled to vote on any matter proposed to be considered at the meeting.
Section 3. Place of Meeting. Meetings of the shareholders, whether they be annual or special, shall be held at the principal office of the Corporation, unless a place, either within or without the State of Washington, is otherwise designated in the meeting notice provided to shareholders.
Section 4. Notice of Meeting. Subject to the last sentence of this Section 4, written or printed notice of every meeting of shareholders shall be mailed by the Corporate Secretary or an Assistant Corporate Secretary. Notice of a shareholders’ meeting to act on an amendment to the articles of incorporation, a plan of merger or share exchange, a proposed sale of assets pursuant to Section 12.020 of Title 23B of the Revised Code of Washington (as amended from time to time, the“Washington Business Corporation Act”), or the dissolution of the corporation shall be given not less than twenty (20) nor more than sixty (60) days before the date of the meeting to each holder of record of shares entitled to vote at the meeting. Notice of all other shareholders’ meetings shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting. The notice shall be mailed to each shareholder at such shareholder’s last known post office address. If a shareholder is present at a meeting without objection, or waives notice of the meeting in writing before or after the meeting, notice of the meeting shall be unnecessary with respect to that shareholder.
Section 5. Voting of Shares. At every meeting of shareholders, each share entitled to vote on any issue to be considered at such meeting shall be entitled to one vote. Subject to the provisions of the Washington Business Corporation Act and the Articles of Incorporation of the Corporation, as amended from time to time (the“Articles of Incorporation”), shareholders may vote and otherwise act in person or by proxy. In elections of directors there shall be cumulative voting as provided in the Washington Business Corporation Act.
* The name will be changed prior to the Effective Time of the Share Exchange. |
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Section 6. Quorum. A majority of the number of outstanding shares of the Corporation entitled to vote at the meeting, present in person or by proxy, shall constitute a quorum. Shares constituting less than a quorum shall have power to adjourn any meeting from time to time without notice.
Section 7. Closing of Share Transfer Records or Fixing of Record Date. For the purposes of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors of the Corporation may provide that the share transfer records of the Corporation shall be closed for a stated period not to exceed fifty (50) days. If the share transfer records shall be closed for the purpose of determining shareholders entitled to notice of or to vote at a meeting of shareholders, such books shall be closed for at least ten (10) days immediately preceding such meeting. In lieu of closing the share transfer records, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy (70) days and, in case of a meeting of shareholders, not less than ten (10) days prior to the date on which the particular action, requiring such determination of shareholders, is to be taken. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this section, such determination shall apply to any adjournment thereof.
Section 8. Voting Record. The officer or agent having charge of the share transfer records of the Corporation shall prepare, at least ten (10) days before each meeting of shareholders, an alphabetical list of the shareholders entitled to vote at such meeting or any adjournment thereof, arranged by voting group, and within each voting group, by class or series of shares, with the address of and the number of shares held by each shareholder. The shareholders’ list shall be made available for inspection by any shareholder, the shareholder’s agent or the shareholder’s attorney, beginning ten (10) days prior to the meeting and continuing through the meeting, at the corporation’s principal office or at a place identified in the meeting notice in the city where the meeting will be held.
Section 9. Conduct of Proceedings. The Chairman of the Board shall preside at all meetings of the shareholders. In the absence of the Chairman, the President shall preside and in the absence of both, the most senior Vice President shall preside. The members of the Board of Directors present at the meeting may appoint any officer of the Corporation or member of the Board to act as Chairman of any meeting in the absence of the Chairman, the President, or Executive Vice President. The Corporate Secretary of the Corporation, or in the Secretary’s absence, an Assistant Corporate Secretary, shall act as Secretary at all meetings of the shareholders. In the absence of the Corporate Secretary or Assistant Corporate Secretary at any meeting of the shareholders, the presiding officer may appoint any person to act as Secretary of the meeting.
Section 10. Proxies. At all meetings of shareholders, a shareholder may vote in person or by proxy. A shareholder or the shareholder’s duly authorized agent or attorney-in-fact may appoint a proxy by (i) executing a proxy in writing or (ii) transmitting or authorizing the transmission of an electronic proxy in any manner permitted by the Washington Business Corporation Act. Such proxy shall be filed with the Corporate Secretary of the Corporation before or at the time of the meeting.
Section 11. Advance Notice of Business to be Presented at Annual Meeting. (a) Shareholders may propose business to be brought before the Annual Meeting of Shareholders only if (i) such business is a proper matter for shareholder action under the Washington Business Corporation Act and (ii) the shareholder has given timely notice in proper written form of such shareholder’s intent to propose such business.
(b) To be timely, a shareholder’s notice relating to the Annual Meeting shall be delivered to the Corporate Secretary at the principal executive offices of the Corporation not less than 120 or more than 180 days prior to the first anniversary (the“Anniversary”) of the date on which the Corporation first mailed its proxy materials for the preceding year’s Annual Meeting of Shareholders. However, if the date of the Annual Meeting is advanced more than 30 days prior to or delayed by more than 30 days after the Anniversary of the preceding year’s Annual Meeting, then notice by the shareholder to be timely must be delivered to the Corporate Secretary at the principal executive offices of the Corporation not later than the close of business on the later of (i) the 90th day prior to such Annual Meeting or (ii) the 15th day following the day on which
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(c) To be in proper form, a shareholder’s notice to the Corporate Secretary shall be in writing and shall set forth (i) the name and address of the shareholder who intends to make the proposal and the classes and numbers of the Corporation’s shares owned of record by such shareholder, (ii) a representation that the shareholder intends to vote such shares at such meeting, (iii) a description of the business the shareholder intends to bring before the meeting, including such information as would be required to be included in a proxy statement filed pursuant to Regulation 14A promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, as amended (the“Exchange Act”), had the matter been proposed, or intended to be proposed, by the Board of Directors of the Corporation, (iv) the name and address of any beneficial owner(s) of the Corporation’s shares on whose behalf such business is to be presented and the class and number of shares beneficially owned by each such beneficial owner (beneficial ownership to be determined pursuant to Rule 13d-3 under the Exchange Act), and (v) any material interest in such business of such shareholder or any such beneficial owner.
(d) Only such business as shall have been brought before the meeting in accordance with the procedures set forth in this Section 11 shall be conducted at an Annual Meeting of Shareholders. The Chairman of the meeting shall have the power and the duty to determine whether any business proposed to be brought before a meeting was proposed in accordance with the procedures set forth in this Section 11, and, if any business is not in compliance with this Section, to declare that such defective proposal shall be disregarded. The determination of the Chairman shall be conclusive.
(e) Notwithstanding the foregoing provisions of this Section 11, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 11. Nothing in this Section shall be deemed to expand or diminish any rights of a shareholder under Rule 14a-8 under the Exchange Act, or any successor rule to request inclusion of a proposal in the Corporation’s proxy statement or to present for action at an Annual Meeting any proposal so included.
(f) Only such business as shall have been brought before the meeting pursuant to the Corporation’s notice of meeting shall be conducted at a special meeting of shareholders.
ARTICLE III.
BOARD OF DIRECTORS
Section 1. General Powers. The powers of the Corporation shall be exercised by or under the authority of, and the business and affairs of the Corporation managed under the direction of, the Board of Directors, subject to any limitation set forth in the Articles of Incorporation.
Section 2. Number, Tenure and Eligibility. The number of directors of the Corporation is eleven (11). The directors shall be divided into three classes, each class to be as nearly equal in number as possible. The terms of the directors in the first class shall expire at the first annual shareholders’ meeting after their election, the terms of the directors in the second class shall expire at the second annual shareholders’ meeting after their election, and the terms of the directors in the third class shall expire at the third annual shareholders’ meeting after their election. At each annual shareholders’ meeting held thereafter, the directors shall be chosen for terms of three years to succeed those whose terms expire. All directors shall hold office until the expiration of their respective terms of office and until their successors shall have been elected and qualified. No person may be elected or re-elected as a director if, at the time of their election or re-election, such person shall have attained the age of seventy (70) years. Any director who attains such age while in office shall retire from the Board of Directors effective at the Annual Meeting of Shareholders held in the year in which their then current term expires, and any such director shall not be nominated or re-elected as a director.
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Section 3. Regular Meetings. The regular Annual Meeting of the Board of Directors shall be held immediately following the adjournment of the Annual Meeting of the shareholders or as soon as practicable after said Annual Meeting of Shareholders. But, in any event, said regular Annual Meeting of the Board of Directors must be held on either the same day as the Annual Meeting of Shareholders or the next business day following said Annual Meeting of Shareholders. At such meeting the Board of Directors, including directors newly elected, shall organize itself for the coming year, shall elect officers of the Corporation for the ensuing year, and shall transact all such further business as may be necessary or appropriate. The Board shall hold regular quarterly meetings, without call or notice, on such dates as determined by the Board of Directors. At such quarterly meetings the Board of Directors shall transact all business properly brought before the Board.
Section 4. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the Chairman of the Board, the President or any three (3) directors. Notice of any special meeting shall be given to each director at least two (2) days in advance of the meeting.
Section 5. Emergency Meetings. In the event of a catastrophe or a disaster causing the injury to or death of members of the Board of Directors and the principal officers of the Corporation, any director or officer may call an emergency meeting of the Board of Directors.
Notice of the time and place of the emergency meeting shall be given not less than two (2) days prior to the meeting and may be given by any available means of communication. The director or directors present at the meeting shall constitute a quorum for the purpose of filling vacancies determined to exist. The directors present at the emergency meeting may appoint such officers as necessary to fill any vacancies determined to exist. All appointments under this Section 5 shall be temporary until a special meeting of the shareholders and directors is held as provided in these Bylaws.
Section 6. Conference by Telephone. The members of the Board of Directors may participate in a meeting of the Board of Directors by means of a conference telephone or similar communication equipment by means of which all persons participating in the meeting can hear and communicate with each other at the same time. Participation in a meeting by such means shall constitute presence in person at a meeting.
Section 7. Quorum and Voting. A majority of the number of directors shall constitute a quorum for the transaction of business at any meeting of the Board of Directors. The action of a majority of the directors present at a meeting at which a quorum is present shall be the action of the Board.
Section 8. Action Without a Meeting. Any action required by the Washington Business Corporation Act to be taken at a meeting of the Board of Directors of the Corporation, or any action which may be taken at a meeting of the Board of Directors, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the directors. Such consent shall have the same effect as a unanimous vote.
Section 9. Vacancies. Subject to the Articles of Incorporation, any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of Directors. Any director so elected to fill a vacancy shall be elected for the unexpired term of his or her predecessor in office. Any directorship to be filled by reason of an increase in the number of directors may be filled by the Board of Directors or, if applicable, one or more series of preferred shares, for a term of office continuing only until the next election of directors by the shareholders.
Section 10. Resignation of Director. Any director may resign at any time. Such resignation shall be made in writing and shall take effect at the time specified therein. If no time is specified, it shall take effect from the time of its receipt by the Corporate Secretary, who shall record such resignation, noting the day, hour and minute of its reception. The acceptance of a resignation shall not be necessary to make it effective.
Section 11. Removal. Any director may be removed from office at any time, but only for cause and only by the affirmative vote of at least a majority of all of the shares of this corporation entitled generally to vote in the election of directors (the“Voting Shares”), voting together as a single class, at a meeting of shareholders called expressly for that purpose. If less than the entire Board of Directors is to be removed, no one of the directors may be removed if the votes cast against the removal of such director would be sufficient
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Section 12. Order of Business. The Chairman of the Board shall preside at all meetings of the directors. In the absence of the Chairman, the officer or member of the Board designated by the Board of Directors shall preside. At meetings of the Board of Directors, business shall be transacted in such order as the Board may determine. Minutes of all proceedings of the Board of Directors shall be prepared and maintained by the Corporate Secretary or an Assistant Corporate Secretary and the original shall be maintained in the principal office of the Corporation.
Section 13. Nomination of Directors. Nominations for the election of directors may be made by the Board of Directors, or a nominating committee appointed by the Board of Directors, or by any holder of Voting Shares. However, any holder of Voting Shares may nominate one or more persons for election as directors at a meeting only if written notice of such shareholder’s intent to make such nomination or nominations has been given, either by personal delivery or by United States mail, postage prepaid, to the Corporate Secretary not later than (i) with respect to an election to be held at an Annual Meeting of Shareholders, ninety (90) days in advance of such meeting and (ii) with respect to an election to be held at a special meeting of shareholders for the election of directors, the close of business on the seventh day following the date on which notice of such meeting is first given to shareholders. Each such notice shall set forth (a) the name and address of the shareholder who intends to make the nomination and of the person or persons to be nominated; (b) a representation that such shareholder is a holder of record of Voting Shares of the Corporation and intends to appear in person or by proxy at the meeting to nominate the person or persons identified in the notice; (c) a description of all arrangements or understandings between such shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by such shareholder; (d) such other information regarding each nominee proposed by such shareholder as would be required to be included in a proxy statement under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (or any subsequent revisions replacing such Act, rules or regulations) if the nominee(s) had been nominated, or were intended to be nominated, by the Board of Directors; and (e) the consent of each nominee to serve as a Director of the Corporation if so elected. The Chairman of the meeting may refuse to acknowledge the nomination of any person not made in compliance with the foregoing procedure.
Section 14. Presumption of Assent. A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken, shall be presumed to have assented to the action unless the director’s dissent shall be entered in the minutes of the meeting or unless the director shall file his or her written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Corporate Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.
ARTICLE IV.
COMMITTEES OF THE BOARD OF DIRECTORS
Section 1. Appointment. The Board of Directors may, by resolution adopted by a majority of the entire Board of Directors, designate from among its members one or more committees. Each such committee shall consist of two (2) or more of the directors of the Corporation, except that any Executive Committee shall consist of three (3) or more directors. A majority of the members of any such committee may determine its action and fix the time and place of its meetings unless the Board of Directors shall otherwise provide.
Section 2. Authority. The Executive Committee, when the Board of Directors is not in session, shall have and may exercise all of the authority of the Board of Directors including authority to authorize distributions or the issuance of shares, except to the extent, if any, that such authority shall be limited by the resolution appointing the Executive Committee or by the Washington Business Corporation Act. Any other committee, to the extent granted in the applicable resolution, shall have all the authority of the Board of
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Section 3. Tenure. Each member of the Executive Committee shall hold office until the next regular Annual Meeting of the Board of Directors following designation as a member of the Executive Committee and until a successor has been designated. Members of any other committees shall serve at the pleasure of the Board of Directors.
Section 4. Meetings. Regular meetings of any committee may be held without notice at such times and places as the committee may fix from time to time by resolution. Any member of a committee may call a special meeting upon not less than two (2) days notice stating the place, date and hour of the meeting, which notice may be written or oral. Any member of a committee may waive notice of any meeting and no notice of any meeting need be given to any committee member who attends in person.
Section 5. Quorum and Voting. A quorum for the transaction of business at any meeting of a committee of the board of directors consists of a majority of the members of such committee. The action of a majority of the members of a committee present at a meeting at which a quorum is present shall be the action of the committee, except that any action taken by the Executive Committee must be authorized by the affirmative vote of a majority of its appointed members.
Section 6. Action Without a Meeting. Any action required or permitted to be taken by a committee at a meeting may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the members of the committee. Such consent shall have the same effect as a unanimous vote.
Section 7. Presumption of Asset. A member of a committee who is present at a committee meeting at which action on any corporate matter is taken, shall be presumed to have assented to the action unless the director’s dissent shall be entered in the minutes of the meeting or unless the director shall file his or her written dissent to such action with the person acting as the Secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Corporate Secretary of the Corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a member of the committee who voted in favor of such action.
Section 8. Procedure. Each committee designated by the Board of Directors shall, to the extent not specified by the Board of Directors, select a presiding officer from its members and may fix its own rules of procedure, which shall not be inconsistent with these Bylaws. It shall keep regular minutes of its proceedings and report the same to the Board of Directors for its information at a meeting thereof held next after the proceedings shall have been taken.
ARTICLE V.
OFFICERS
Section 1. Number. The Board of Directors shall appoint one of its members Chairman of the Board. The Board of Directors shall also appoint a Chief Executive Officer and a President, one of whom may also serve as Chairman, one or more Vice Presidents (with such relative rank and title as the Board may determine), a Corporate Secretary, and a Treasurer. The Board of Directors may from time to time appoint such other officers as the Board deems appropriate. The same person may be appointed to more than one office. The Chief Executive Officer shall have the authority to appoint such other officers, including assistant officers, as might be deemed appropriate.
Section 2. Election and Term of Office. The officers of the Corporation shall be elected by the Board of Directors at the Annual Meeting of the Board. Each officer shall hold office until his or her successor shall have been duly elected and qualified.
Section 3. Removal. The Board of Directors may remove any officer or agent at any time if, in its judgment, such removal is in the best interests of the Corporation. The Chief Executive Officer may remove
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Section 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise may be filled by the Board of Directors for the unexpired portion of the term.
Section 5. Powers and Duties. The officers shall have such powers and duties as usually pertain to their offices, except as modified by the Board of Directors, and shall have such other powers and duties as may from time to time be conferred upon them by the Board of Directors.
ARTICLE VI.
CONTRACTS, CHECKS AND DEPOSITS
Section 1. Contracts. The Board of Directors may authorize any officer or officers or agents, to enter into any contract or to execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances.
Section 2. Checks/ Drafts/ Notes. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors.
Section 3. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositories as the Board of Directors by resolution may select.
ARTICLE VII.
CERTIFICATES FOR SHARES AND THEIR TRANSFER
Section 1. Certificates for Shares. Certificates representing shares of the Corporation shall be in such form as shall be determined by the Board of Directors and shall contain such information as prescribed by the Washington Business Corporation Act. Such certificates shall be signed by the President or a Vice President and by either the Corporate Secretary or an Assistant Corporate Secretary, and sealed with the corporate seal or a facsimile thereof. The signatures of such officers upon a certificate may be facsimiles. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the share transfer records of the Corporation. All certificates surrendered to the Corporation for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefor upon such terms and indemnity to the Corporation as the Board of Directors may prescribe.
Section 2. Transfer of Shares. Transfer of shares of the Corporation shall be made only on the share transfer records of the Corporation by the holder of record of such shares or by such holder’s legal representative, who shall furnish proper evidence of authority to transfer, or such holder’s attorney authorized by power of attorney duly executed and filed with the Corporate Secretary of the Corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the share transfer records of the Corporation shall be deemed by the Corporation to be the owner of such shares for all purposes. The Board of Directors shall have the power to appoint one or more transfer agents and registrars for transfer and registration of certificates of shares.
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ARTICLE VIII.
CORPORATE SEAL
The seal of the Corporation shall be in such form as the Board of Directors shall prescribe.
ARTICLE IX.
INDEMNIFICATION
Section 1. Indemnification of Directors and Officers. The Corporation shall indemnify, defend and reimburse the expenses of any person who is or was a director or officer of the Corporation or, while serving in such capacity, is or was also serving at the request of the Corporation as a director, officer, partner, trustee, employee, or agent of another enterprise or employee benefit plan, all to the extent permitted by and in accordance with Article 8 of the Articles of Incorporation and the Washington Business Corporation Act.
Section 2. Liability Insurance. The Corporation shall have the power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee, or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, other enterprise, or employee benefit plan (each an“Indemnified Person”) against any liability asserted against such Indemnified Person and incurred by him or her or arising out of his or her status as an Indemnified Person, whether or not the Corporation would have the power to indemnify him or her against such liability under the laws of the State of Washington.
Section 3. Ratification of Acts of Director, Officer or Shareholder. Any transaction questioned in any shareholders’ derivative suit on the ground of lack of authority, defective or irregular execution, adverse interest of director, officer or shareholder, nondisclosure, miscomputation, or the application of improper principles or practices of accounting may be ratified before or after judgment, by the Board of Directors or by the shareholders in case less than a quorum of directors are qualified; and, if so ratified, shall have the same force and effect as if the questioned transaction had been originally duly authorized, and said ratification shall be binding upon the Corporation and its shareholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned transaction.
ARTICLE X.
AMENDMENTS
Section 2 of Article III (other than the provision thereof specifying the number of Directors of the Corporation), Sections 9, 11 and 13 of Article III, and this sentence shall not be altered, amended or repealed, and no provision inconsistent therewith or herewith shall be included in these Bylaws, without the affirmative votes of the holders of not less than two-thirds ( 2/3rds) of all outstanding shares of each voting group of this corporation entitled generally to vote in the election of directors. Otherwise, to the extent permitted by the Articles of Incorporation and except as to Section 6 of Article II of these Bylaws, the Board of Directors may alter or amend these Bylaws at any meeting duly held, the notice of which includes notice of the proposed amendment. Bylaws adopted by the Board of Directors shall be subject to change or repeal by the shareholders.
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EXHIBIT D
DISSENTERS’ RIGHTS
Revised Code of Washington (RCW) Sections:
23B.13.010 Definitions.
23B.13.020 Right to dissent.
23B.13.030 Dissent by nominees and beneficial owners.
23B.13.200 Notice of dissenters’ rights.
23B.13.210 Notice of intent to demand payment.
23B.13.220 Dissenters’ rights — Notice.
23B.13.230 Duty to demand payment.
23B.13.240 Share restrictions.
23B.13.250 Payment.
23B.13.260 Failure to take action.
23B.13.270 After-acquired shares.
23B.13.280 Procedure if shareholder dissatisfied with payment or offer.
23B.13.300 Court action.
23B.13.310 Court costs and counsel fees.
23B.13.010
Definitions. |
As used in this chapter:
(1) “Corporation” means the issuer of the shares held by a dissenter before the corporate action, or the surviving or acquiring corporation by merger or share exchange of that issuer. | |
(2) “Dissenter” means a shareholder who is entitled to dissent from corporate action under RCW 23B.13.020 and who exercises that right when and in the manner required by RCW 23B.13.200 through 23B.13.280. | |
(3) “Fair value,” with respect to a dissenter’s shares, means the value of the shares immediately before the effective date of the corporate action to which the dissenter objects, excluding any appreciation or depreciation in anticipation of the corporate action unless exclusion would be inequitable. | |
(4) “Interest” means interest from the effective date of the corporate action until the date of payment, at the average rate currently paid by the corporation on its principal bank loans or, if none, at a rate that is fair and equitable under all the circumstances. | |
(5) “Record shareholder” means the person in whose name shares are registered in the records of a corporation or the beneficial owner of shares to the extent of the rights granted by a nominee certificate on file with a corporation. | |
(6) “Beneficial shareholder” means the person who is a beneficial owner of shares held in a voting trust or by a nominee as the record shareholder. | |
(7) “Shareholder” means the record shareholder or the beneficial shareholder. |
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23B.13.020
Right to dissent. |
(1) A shareholder is entitled to dissent from, and obtain payment of the fair value of the shareholder’s shares in the event of, any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation is a party (i) if shareholder approval is required for the merger by RCW 23B.11.030, 23B.11.080, or the articles of incorporation, and the shareholder is entitled to vote on the merger, or (ii) if the corporation is a subsidiary that is merged with its parent under RCW 23B.11.040; | |
(b) Consummation of a plan of share exchange to which the corporation is a party as the corporation whose shares will be acquired, if the shareholder is entitled to vote on the plan; | |
(c) Consummation of a sale or exchange of all, or substantially all, of the property of the corporation other than in the usual and regular course of business, if the shareholder is entitled to vote on the sale or exchange, including a sale in dissolution, but not including a sale pursuant to court order or a sale for cash pursuant to a plan by which all or substantially all of the net proceeds of the sale will be distributed to the shareholders within one year after the date of sale; | |
(d) An amendment of the articles of incorporation, whether or not the shareholder was entitled to vote on the amendment, if the amendment effects a redemption or cancellation of all of the shareholder’s shares in exchange for cash or other consideration other than shares of the corporation; or | |
(e) Any corporate action taken pursuant to a shareholder vote to the extent the articles of incorporation, bylaws, or a resolution of the board of directors provides that voting or nonvoting shareholders are entitled to dissent and obtain payment for their shares. |
(2) A shareholder entitled to dissent and obtain payment for the shareholder’s shares under this chapter may not challenge the corporate action creating the shareholder’s entitlement unless the action fails to comply with the procedural requirements imposed by this title, RCW 25.10.900 through 25.10.955, the articles of incorporation, or the bylaws, or is fraudulent with respect to the shareholder or the corporation.
(3) The right of a dissenting shareholder to obtain payment of the fair value of the shareholder’s shares shall terminate upon the occurrence of any one of the following events:
(a) The proposed corporate action is abandoned or rescinded; | |
(b) A court having jurisdiction permanently enjoins or sets aside the corporate action; or | |
(c) The shareholder’s demand for payment is withdrawn with the written consent of the corporation. |
23B.13.030
Dissent by nominees and beneficial owners. |
(1) A record shareholder may assert dissenters’ rights as to fewer than all the shares registered in the shareholder’s name only if the shareholder dissents with respect to all shares beneficially owned by any one person and delivers to the corporation a notice of the name and address of each person on whose behalf the shareholder asserts dissenters’ rights. The rights of a partial dissenter under this subsection are determined as if the shares as to which the dissenter dissents and the dissenter’s other shares were registered in the names of different shareholders.
(2) A beneficial shareholder may assert dissenters’ rights as to shares held on the beneficial shareholder’s behalf only if:
(a) The beneficial shareholder submits to the corporation the record shareholder’s consent to the dissent not later than the time the beneficial shareholder asserts dissenters’ rights, which consent shall be set forth either (i) in a record or (ii) if the corporation has designated an address, location, or system to |
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which the consent may be electronically transmitted and the consent is electronically transmitted to the designated address, location, or system, in an electronically transmitted record; and | |
(b) The beneficial shareholder does so with respect to all shares of which such shareholder is the beneficial shareholder or over which such shareholder has power to direct the vote. |
23B.13.200
Notice of dissenters’ rights. |
(1) If proposed corporate action creating dissenters’ rights under RCW 23B.13.020 is submitted to a vote at a shareholders’ meeting, the meeting notice must state that shareholders are or may be entitled to assert dissenters’ rights under this chapter and be accompanied by a copy of this chapter.
(2) If corporate action creating dissenters’ rights under RCW 23B.13.020 is taken without a vote of shareholders, the corporation, within ten days after the effective date of such corporate action, shall deliver a notice to all shareholders entitled to assert dissenters’ rights that the action was taken and send them the notice described in RCW 23B.13.220.
23B.13.210
Notice of intent to demand payment. |
(1) If proposed corporate action creating dissenters’ rights under RCW 23B.13.020 is submitted to a vote at a shareholders’ meeting, a shareholder who wishes to assert dissenters’ rights must (a) deliver to the corporation before the vote is taken notice of the shareholder’s intent to demand payment for the shareholder’s shares if the proposed action is effected, and (b) not vote such shares in favor of the proposed action.
(2) A shareholder who does not satisfy the requirements of subsection (1) of this section is not entitled to payment for the shareholder’s shares under this chapter.
23B.13.220
Dissenters’ rights — Notice. |
(1) If proposed corporate action creating dissenters’ rights under RCW 23B.13.020 is authorized at a shareholders’ meeting, the corporation shall deliver a notice to all shareholders who satisfied the requirements of RCW 23B.13.210.
(2) The notice must be sent within ten days after the effective date of the corporate action, and must:
(a) State where the payment demand must be sent and where and when certificates for certificated shares must be deposited; | |
(b) Inform holders of uncertificated shares to what extent transfer of the shares will be restricted after the payment demand is received; | |
(c) Supply a form for demanding payment that includes the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action and requires that the person asserting dissenters’ rights certify whether or not the person acquired beneficial ownership of the shares before that date; | |
(d) Set a date by which the corporation must receive the payment demand, which date may not be fewer than thirty nor more than sixty days after the date the notice in subsection (1) of this section is delivered; and | |
(e) Be accompanied by a copy of this chapter. |
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23B.13.230
Duty to demand payment. |
(1) A shareholder sent a notice described in RCW 23B.13.220 must demand payment, certify whether the shareholder acquired beneficial ownership of the shares before the date required to be set forth in the notice pursuant to RCW 23B.13.220(2)(c), and deposit the shareholder’s certificates, all in accordance with the terms of the notice.
(2) The shareholder who demands payment and deposits the shareholder’s share certificates under subsection (1) of this section retains all other rights of a shareholder until the proposed corporate action is effected.
(3) A shareholder who does not demand payment or deposit the shareholder’s share certificates where required, each by the date set in the notice, is not entitled to payment for the shareholder’s shares under this chapter.
23B.13.240
Share restrictions. |
(1) The corporation may restrict the transfer of uncertificated shares from the date the demand for their payment is received until the proposed corporate action is effected or the restriction is released under RCW 23B.13.260.
(2) The person for whom dissenters’ rights are asserted as to uncertificated shares retains all other rights of a shareholder until the effective date of the proposed corporate action.
23B.13.250
Payment. |
(1) Except as provided in RCW 23B.13.270, within thirty days of the later of the effective date of the proposed corporate action, or the date the payment demand is received, the corporation shall pay each dissenter who complied with RCW 23B.13.230 the amount the corporation estimates to be the fair value of the shareholder’s shares, plus accrued interest.
(2) The payment must be accompanied by:
(a) The corporation’s balance sheet as of the end of a fiscal year ending not more than sixteen months before the date of payment, an income statement for that year, a statement of changes in shareholders’ equity for that year, and the latest available interim financial statements, if any; | |
(b) An explanation of how the corporation estimated the fair value of the shares; | |
(c) An explanation of how the interest was calculated; | |
(d) A statement of the dissenter’s right to demand payment under RCW 23B.13.280; and | |
(e) A copy of this chapter. |
23B.13.260
Failure to take action. |
(1) If the corporation does not effect the proposed action within sixty days after the date set for demanding payment and depositing share certificates, the corporation shall return the deposited certificates and release any transfer restrictions imposed on uncertificated shares.
(2) If after returning deposited certificates and releasing transfer restrictions, the corporation wishes to undertake the proposed action, it must send a new dissenters’ notice under RCW 23B.13.220 and repeat the payment demand procedure.
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23B.13.270
After-acquired shares. |
(1) A corporation may elect to withhold payment required by RCW 23B.13.250 from a dissenter unless the dissenter was the beneficial owner of the shares before the date set forth in the dissenters’ notice as the date of the first announcement to news media or to shareholders of the terms of the proposed corporate action.
(2) To the extent the corporation elects to withhold payment under subsection (1) of this section, after taking the proposed corporate action, it shall estimate the fair value of the shares, plus accrued interest, and shall pay this amount to each dissenter who agrees to accept it in full satisfaction of the dissenter’s demand. The corporation shall send with its offer an explanation of how it estimated the fair value of the shares, an explanation of how the interest was calculated, and a statement of the dissenter’s right to demand payment under RCW 23B.13.280.
23B.13.280
Procedure if shareholder dissatisfied with payment or offer. |
(1) A dissenter may deliver a notice to the corporation informing the corporation of the dissenter’s own estimate of the fair value of the dissenter’s shares and amount of interest due, and demand payment of the dissenter’s estimate, less any payment under RCW 23B.13.250, or reject the corporation’s offer under RCW 23B.13.270 and demand payment of the dissenter’s estimate of the fair value of the dissenter’s shares and interest due, if:
(a) The dissenter believes that the amount paid under RCW 23B.13.250 or offered under RCW 23B.13.270 is less than the fair value of the dissenter’s shares or that the interest due is incorrectly calculated; | |
(b) The corporation fails to make payment under RCW 23B.13.250 within sixty days after the date set for demanding payment; or | |
(c) The corporation does not effect the proposed action and does not return the deposited certificates or release the transfer restrictions imposed on uncertificated shares within sixty days after the date set for demanding payment. |
(2) A dissenter waives the right to demand payment under this section unless the dissenter notifies the corporation of the dissenter’s demand under subsection (1) of this section within thirty days after the corporation made or offered payment for the dissenter’s shares.
23B.13.300
Court action. |
(1) If a demand for payment under RCW 23B.13.280 remains unsettled, the corporation shall commence a proceeding within sixty days after receiving the payment demand and petition the court to determine the fair value of the shares and accrued interest. If the corporation does not commence the proceeding within the sixty-day period, it shall pay each dissenter whose demand remains unsettled the amount demanded.
(2) The corporation shall commence the proceeding in the superior court of the county where a corporation’s principal office, or, if none in this state, its registered office, is located. If the corporation is a foreign corporation without a registered office in this state, it shall commence the proceeding in the county in this state where the registered office of the domestic corporation merged with or whose shares were acquired by the foreign corporation was located.
(3) The corporation shall make all dissenters, whether or not residents of this state, whose demands remain unsettled, parties to the proceeding as in an action against their shares and all parties must be served
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(4) The corporation may join as a party to the proceeding any shareholder who claims to be a dissenter but who has not, in the opinion of the corporation, complied with the provisions of this chapter. If the court determines that such shareholder has not complied with the provisions of this chapter, the shareholder shall be dismissed as a party.
(5) The jurisdiction of the court in which the proceeding is commenced under subsection (2) of this section is plenary and exclusive. The court may appoint one or more persons as appraisers to receive evidence and recommend decision on the question of fair value. The appraisers have the powers described in the order appointing them, or in any amendment to it. The dissenters are entitled to the same discovery rights as parties in other civil proceedings.
(6) Each dissenter made a party to the proceeding is entitled to judgment (a) for the amount, if any, by which the court finds the fair value of the dissenter’s shares, plus interest, exceeds the amount paid by the corporation, or (b) for the fair value, plus accrued interest, of the dissenter’s after-acquired shares for which the corporation elected to withhold payment under RCW 23B.13.270.
23B.13.310
Court costs and counsel fees. |
(1) The court in a proceeding commenced under RCW 23B.13.300 shall determine all costs of the proceeding, including the reasonable compensation and expenses of appraisers appointed by the court. The court shall assess the costs against the corporation, except that the court may assess the costs against all or some of the dissenters, in amounts the court finds equitable, to the extent the court finds the dissenters acted arbitrarily, vexatiously, or not in good faith in demanding payment under RCW 23B.13.280.
(2) The court may also assess the fees and expenses of counsel and experts for the respective parties, in amounts the court finds equitable:
(a) Against the corporation and in favor of any or all dissenters if the court finds the corporation did not substantially comply with the requirements of RCW 23B.13.200 through 23B.13.280; or | |
(b) Against either the corporation or a dissenter, in favor of any other party, if the court finds that the party against whom the fees and expenses are assessed acted arbitrarily, vexatiously, or not in good faith with respect to the rights provided by chapter 23B.13 RCW. |
(3) If the court finds that the services of counsel for any dissenter were of substantial benefit to other dissenters similarly situated, and that the fees for those services should not be assessed against the corporation, the court may award to these counsel reasonable fees to be paid out of the amounts awarded the dissenters who were benefited.
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INFORMATION NOT REQUIRED IN PROSPECTUS
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AVA FORMATION CORP. | ||||||
By: | /s/ Marian M. Durkin | |||||
Marian M. Durkin | ||||||
Vice President and Corporate Secretary |
Signature | Title | Date | ||
* | Chairman of the Board and President | |||
Gary G. Ely | (Principal Executive Officer) | March 23, 2006 | ||
* | Director, Vice President and Chief Financial Officer | |||
Malyn K. Malquist | (Principal Financial and Accounting Officer) | March 23, 2006 | ||
/s/ Marian M. Durkin | Director, Vice President and | |||
Marian M. Durkin | Corporate Secretary | March 23, 2006 |
*By | /s/ Marian M. Durkin | |||
Marian M. Durkin | ||||
Attorney-in-Fact |