<PAGE>
As filed with the Securities and Exchange Commission on March 2, 1999.
Registration No. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
HAWAIIAN ELECTRIC INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
Hawaii 99-0208097
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
</TABLE>
900 Richards Street,
Honolulu, Hawaii 96813
(808) 543-5662
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
----------------
ROBERT F. MOUGEOT
Financial Vice President & Chief Financial Officer
Hawaiian Electric Industries, Inc.
900 Richards Street,
Honolulu, Hawaii 96813
(808) 543-5641
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
----------------
Copies to:
<TABLE>
<S> <C>
DAVID J. REBER, ESQ. DAVID P. FALCK, ESQ.
Goodsill Anderson Quinn & Stifel Winthrop, Stimson, Putnam & Roberts
1099 Alakea Street One Battery Park Plaza
Honolulu, HI 96813 New York, NY 10004
(808) 547-5600 (212) 858-1000
</TABLE>
----------------
Approximate date of commencement of proposed sale to public: From time to
time after the effective date of this Registration Statement, as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box. [_]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earliest
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(b)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
(Calculation of Registration Fee on following page)
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this
Registration Statement shall thereafter become effective in accordance with
Section 8(a) of the Securities Act of 1933 or until the Registration Statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Proposed
Proposed Maximum
Maximum Aggregate Amount of
Title of each Class of Amount to be Offering Price Offering Registration
Securities to be Registered Registered(1) Per Unit* Price* Fee
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Medium-Term Notes,
Series C............. $300,000,000 100% $300,000,000 (1)
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
* Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457 under the Securities Act of 1933.
(1) An aggregate principal amount of $6,000,000 of unsold Medium-Term Notes,
Series B, registered by the registrant pursuant to Registration Statement
No. 33-58820 are being carried forward to this Registration Statement
pursuant to Rule 429 under the Securities Act of 1933. The registration
fee of $1,875 associated with such securities was previously paid. An
aggregate principal amount/offering price of $200,000,000 of unsold Debt
Securities, Trust Preferred Securities, Partnership Preferred Securities,
Guarantees, Preferred Stock and Common Stock registered by the registrant
(and affiliated entities) pursuant to Registration Statement Nos. 333-
18809, 333-18809-01, 333-18809-02, 333-18809-03 and 333-18809-04 are also
being carried forward to this Registration Statement pursuant to Rule 429
under the Securities Act of 1933. The registration fee of $60,606
associated with such securities was previously paid. Accordingly, the
total amount of securities to which the prospectus pursuant to such Rule
429 contained in this Registration Statement relates, when combined with
the unsold securities registered pursuant to Registration Statement No.
33-58820 and Registration Statement Nos. 333-18809, 333-18809-01, 333-
18809-02, 333-18809-03 and 333-18809-04, is $300,000,000, $94,000,000 of
which are additional securities to be registered pursuant to this
Registration Statement. A registration fee of $26,132 is being paid
herewith in connection with the registration of said additional
securities.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+The information in this prospectus is not complete and may be changed. We may +
+not sell these securities until the registration statement filed with the +
+Securities and Exchange Commission is effective. This prospectus is not an +
+offer to sell these securities and it is not soliciting an offer to buy these +
+securities in any state where the offer or sale is not permitted. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 2, 1999
PROSPECTUS
$300,000,000
Hawaiian Electric Industries, Inc.
Medium-Term Notes, Series C
Due from 9 Months to 30 Years from Date of Issue
-----------
Hawaiian Electric Industries, Inc. ("HEI") may offer from time to time up to
$300,000,000 aggregate principal amount of its Medium-Term Notes, Series C (the
"Medium-Term Notes" or the "Notes"). Each Note will be denominated in U.S.
dollars and will include the following terms, unless different terms are
described in the applicable pricing supplement:
. A stated maturity date from 9 months to 30 years from date of issue
. Interest payments on fixed rate Notes on each April 10 and October 10
. Interest payments on floating rate Notes on a monthly, quarterly, semiannual
or annual basis
. Minimum denominations of $1,000 and integral multiples of $1,000
. Redemption and/or repayment provisions, whether mandatory, at HEI's option,
at the option of the holders or none at all
. Book-entry (through The Depository Trust Company) or certificated form
. Interest at fixed or floating rates, or no interest at all. The floating
interest rate may be based on one or more of the following indices plus or
minus a spread and/or multiplied by a spread multiplier:
. CD rate
. Commercial paper rate
. Federal funds rate
. LIBOR
. Prime rate
. Treasury rate
. Such other interest basis or interest rate formula as may be specified in
the applicable pricing supplement
HEI will specify final terms for each Note in the applicable pricing
supplement, which may be different from the terms described in this prospectus.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus or any pricing supplement is truthful or complete. Any
representation to the contrary is a criminal offense.
HEI may sell the Notes to the Agents as principals for resale at varying or
fixed offering prices or through the Agents as agents using their reasonable
best efforts on HEI's behalf. Unless otherwise specified in the applicable
pricing supplement, the price to the public for the Notes will be 100% of the
principal amount. If HEI sells all of the Notes, HEI expects to receive
proceeds of between $297,750,000 and $299,625,000 after paying the Agents'
discounts and commissions of between $375,000 and $2,250,000 and before
deducting expenses payable by HEI. HEI may also sell the Notes without the
assistance of the Agents (whether acting as principal or as agent).
The address of HEI's principal executive offices is 900 Richards Street,
Honolulu, Hawaii 96813 and its telephone number is (808) 543-5662.
-----------
Merrill Lynch & Co. Goldman, Sachs & Co.
-----------
The date of this Prospectus is , 1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
The Company................................................................ 3
Ratio of Earnings to Fixed Charges......................................... 4
Use of Proceeds............................................................ 4
Where You Can Find More Information........................................ 5
Description of the Notes................................................... 6
General.................................................................. 6
Interest Rate............................................................ 8
Book-Entry Notes......................................................... 17
Redemption at the Option of HEI.......................................... 19
Repayment at the Option of the Holder.................................... 19
Discount Notes........................................................... 20
Amortizing Notes......................................................... 21
Other Provisions; Addenda................................................ 21
Restriction on Liens..................................................... 21
Restriction on Sale-Leaseback Transactions............................... 23
Restriction on Dispositions of HECO Shares............................... 23
Consolidations, Mergers, Conveyances, Transfers or Leases................ 24
Absence of Restrictions on Certain Transactions.......................... 24
Events of Default........................................................ 24
Defeasance............................................................... 26
Modification of Indenture and Waiver..................................... 27
Regarding the Trustee.................................................... 28
Listing.................................................................. 28
Governing Law............................................................ 28
Certain United States Federal Income Tax Consequences...................... 28
General.................................................................. 28
Payments of Interest..................................................... 29
Original Issue Discount.................................................. 29
Short-Term Notes......................................................... 31
Market Discount.......................................................... 31
Amortizable Bond Premium................................................. 32
Election to Treat All Interest as OID.................................... 32
Sale, Exchange and Retirement of Notes................................... 33
Backup Withholding and Information Reporting............................. 33
Plan of Distribution....................................................... 34
Validity of Notes.......................................................... 35
Experts.................................................................... 35
</TABLE>
----------------
You should rely only on the following information contained or
incorporated by reference in this prospectus and any pricing supplement. HEI
has not, and the Agents have not, authorized any other person to provide you
with different information. If anyone provides you with different or
inconsistent information, you should not rely on it. HEI is not, and the Agents
are not, making an offer to sell these securities in any jurisdiction where the
offer or sale is not permitted. You should assume that the information
appearing in this prospectus, any pricing supplement or the documents
incorporated by reference is accurate only as of the date such information is
given. HEI's business, financial condition and results of operations may have
changed since those dates.
2
<PAGE>
THE COMPANY
HEI was incorporated in 1981 under the laws of the State of Hawaii and is
a holding company with subsidiaries engaged in the electric utility, savings
bank, freight transportation and other businesses, primarily in the State of
Hawaii, and also engaged in independent power and integrated energy services
projects in Asia and the Pacific. HEI's predecessor, Hawaiian Electric Company,
Inc. ("HECO"), was incorporated under the laws of the Kingdom of Hawaii (now
the State of Hawaii) on October 13, 1891.
As a result of a 1983 corporate reorganization, HECO became an HEI
subsidiary, and common shareholders of HECO became common shareholders of HEI.
HECO and its electric utility subsidiaries, Maui Electric Company, Limited
("MECO") and Hawaii Electric Light Company, Inc. ("HELCO"), are regulated
operating public utilities providing the only public utility electric service
on the islands of Oahu, Maui, Lanai, Molokai and Hawaii. HEI also owns directly
or indirectly the following operating subsidiaries which comprise its principal
diversified companies: American Savings Bank, F.S.B. ("ASB"), Hawaiian Tug &
Barge Corp. ("HTB") and HEI Power Corp. ("HEIPC").
ASB, a federal savings bank acquired in 1988, is the third largest
financial institution in Hawaii based on total assets of $5.7 billion as of
December 31, 1998, and had deposits of $3.9 billion as of December 31, 1998.
HTB was acquired in 1986 and provides ship assist and charter towing services
and owns Young Brothers, Limited, a regulated intrastate public carrier of
waterborne freight among the Hawaiian Islands. HEIPC was formed in March 1995
to pursue independent power and integrated energy services projects in Asia and
the Pacific, and through subsidiaries had committed (as of December 31, 1998)
to invest up to an additional $84 million in connection with existing and
planned projects. HEI also has a subsidiary with passive investments primarily
in leveraged leases and, in September 1998, began winding down the land
development and real estate investment businesses of its real estate
subsidiaries.
HEI is a legal entity separate and distinct from its various
subsidiaries. As a holding company with no significant operations of its own,
the principal sources of its funds are dividends or other distributions from
its operating subsidiaries, borrowings and sales of equity. The ability of
certain of HEI's subsidiaries to pay dividends or make other distributions to
HEI is subject to contractual and regulatory restrictions, including the
provisions of an agreement with the Hawaii Public Utilities Commission
(pertaining to the electric utility subsidiaries) and the capital requirements
imposed on the savings bank, as well as restrictions and limitations set forth
in debt instruments, preferred stock resolutions and guarantees. HEI does not
expect that the regulatory and contractual restrictions applicable to HEI or
its direct or indirect subsidiaries will affect the ability of HEI and its
subsidiaries to pay their indebtedness or significantly affect their operations
as they are now being conducted.
For additional information concerning HEI's and its subsidiaries'
businesses and affairs, including their capital requirements and external
financing plans, pending legal and regulatory proceedings and descriptions of
certain laws and regulations to which those companies are subject, prospective
purchasers should refer to the documents incorporated by reference that are
listed under the caption "Where You Can Find More Information."
3
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The following tables set forth the ratio of earnings to fixed charges for
HEI and its subsidiaries for the periods indicated.
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------
1994 1995 1996 1997 1998
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges, excluding
interest on ASB deposits........................ 2.31 2.02 1.93 1.89 1.85
==== ==== ==== ==== ====
Ratio including interest on ASB deposits......... 1.73 1.60 1.56 1.58 1.47
==== ==== ==== ==== ====
</TABLE>
For purposes of calculating the ratio of earnings to fixed charges,
"earnings" represent the sum of (i) pretax income from continuing operations
(excluding undistributed net income or net loss from less-than-fifty-percent-
owned persons) and (ii) fixed charges (excluding capitalized interest). "Fixed
charges" are calculated both excluding and including interest on ASB's deposits
during the applicable periods and represent the sum of (i) interest, whether
capitalized or expensed, but excluding interest on nonrecourse debt from
leveraged leases which is not included in interest expense in HEI's
consolidated statements of income, (ii) amortization of debt expense and
discount or premium related to any indebtedness, whether capitalized or
expensed, (iii) the interest factor in rental expense, (iv) the preferred stock
dividend requirements of HEI's subsidiaries, increased to an amount
representing the pretax earnings required to cover such dividend requirements
and (v) the preferred securities distribution requirements of trust
subsidiaries.
USE OF PROCEEDS
HEI expects to use the net proceeds from the sale of the Notes to reduce
its short-term debt, to repay other indebtedness (including refinancing
previously issued Notes), to make investments in and loans to subsidiaries
(principally to help finance their capital expenditure programs and their
investments in subsidiaries and to retire debt) and for its working capital and
general corporate purposes. The use of proceeds in connection with a particular
issuance of Notes will be set forth in the applicable pricing supplement.
4
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement filed with the SEC.
The registration statement contains additional information and exhibits not
included in this prospectus and refers to documents that are filed as exhibits
to other SEC filings. HEI also files annual, quarterly and current reports,
proxy statements and other information with the SEC. You may read and copy the
registration statement and any document that HEI files at the SEC's public
reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can call
the SEC's toll-free telephone number at 1-800-SEC-0330 for further information
on the public reference room. The SEC maintains a web site at www.sec.gov that
contains reports, proxy and information statements and other information
regarding companies (such as HEI) that file documents with the SEC
electronically. The documents can be found by searching the EDGAR Archives at
the SEC's web site. HEI's SEC filings, and other information on HEI, may also
be obtained on the Internet at its web site at www.hei.com.
The SEC allows HEI to "incorporate by reference" the information that it
files with the SEC, which means that HEI can disclose important information to
you by referring you to those documents. The information incorporated by
reference is considered to be part of this prospectus and should be read with
the same care. Later information that HEI files with the SEC will automatically
update and supersede information in this prospectus or an earlier filed
document. HEI has filed with the SEC and incorporates by reference the
documents below:
. Annual Report on Form 10-K for the year ended December 31, 1997.
. Quarterly Reports on Form 10-Q for the quarters ended March 31,
1998, June 30, 1998 and September 30, 1998.
. Current Reports on Form 8-K dated August 3, 1998, September 3,
1998, September 14, 1998, October 19, 1998, November 25, 1998,
December 4, 1998 and February 23, 1999.
. Any future filings made with the SEC under Sections 13(a), 13(c),
14 and 15 of the Securities Exchange Act of 1934 (the "Exchange
Act") if the filings are made prior to the time that all of the
Notes are sold in this offering.
You may request a free copy of any of these filings by writing or
telephoning HEI at the following address or telephone number:
Hawaiian Electric Industries, Inc.
Attn: Investor Relations
P.O. Box 730
Honolulu, Hawaii 96808-0730
Telephone: (808) 543-7383
5
<PAGE>
DESCRIPTION OF THE NOTES
HEI will issue Notes under an Indenture, dated as of October 15, 1988, as
supplemented by a Second Supplemental Indenture (collectively, the
"Indenture"), between HEI and Citibank, N.A., as trustee (the "Trustee"). This
prospectus briefly outlines some of the Indenture provisions. If you would like
more information about the Indenture, you should review the Indenture as filed
with the SEC. See "Where You Can Find More Information" on how to locate the
Indenture and the supplements to the Indenture. You may also review the
Indenture and its supplements at the Trustee's offices at 399 Park Avenue, New
York, New York 10043.
HEI provides information to you about the Notes in two separate
documents. The first document is this prospectus, which provides general
information concerning the Notes, some of which may not apply to a particular
Note. The second document is a pricing supplement, which will provide final
details about the terms of a specific Note and is filed with the SEC about the
time the Note is sold. To the extent information in a pricing supplement about
a specific Note you are purchasing differs from the information in this
prospectus, you should rely on the specific information in the pricing
supplement. This prospectus describes some, but not all, of the terms of the
Notes, all of which may be varied by a pricing supplement.
This prospectus includes summaries of the Notes and the Indenture. If the
information in this prospectus differs from the information in the Notes or the
Indenture, you should in all cases rely on the information in the Notes and the
Indenture.
General
The Notes are a single series of securities under the Indenture, except
as described below under "Defeasance". The Indenture does not limit the amount
of additional debt securities that HEI may issue in the future under additional
supplements to the Indenture. Each series of debt securities, and each specific
Note or other debt security of a series, may differ as to its terms. The Notes
and all other debt securities which HEI has issued or may issue in the future
under the Indenture will be referred to herein as the "Securities."
The Indenture contains certain limitations on the ability of HEI to incur
secured indebtedness. See "Restriction on Liens" and "Restriction on Sale-
Leaseback Transactions." The Indenture does not impose restrictions on the
ability of HEI's subsidiaries to incur any indebtedness, including secured
indebtedness. Some of HEI's subsidiaries are subject to debt instruments which
impose limitations on their ability to incur indebtedness and to grant security
interests. These limitations are applicable, however, only so long as the
related indebtedness is outstanding and, in any event, are not enforceable by
holders of the Notes.
Unless secured as described under "Restriction on Liens," the Notes will
be unsecured obligations of HEI and will rank pari passu (that is, without
priority and on the same creditor level in the event of a liquidation of HEI)
with all other unsecured and unsubordinated indebtedness of HEI, including
other Securities issued under the Indenture. As of December 31, 1998, the
amount of HEI's total unsecured and unsubordinated indebtedness with which the
Notes would have ranked pari passu was $272 million.
The rights of HEI, and consequently its creditors, to participate in any
distribution of the assets of any of its subsidiaries is subject to the prior
claims of the creditors of such subsidiaries, except to the extent that claims
of HEI in its capacity as a creditor are recognized. Accordingly, the Notes
will be effectively subordinated to all obligations of such subsidiaries. As of
December 31, 1998, $628 million of HEI's total consolidated indebtedness of
$900 million was indebtedness of such subsidiaries.
The Notes are currently limited to up to $300,000,000 aggregate principal
amount. Each Note will mature and be due and payable on the maturity date
stated in the Note (the "Stated Maturity"), which will be from nine months to
thirty years from the Original Issue Date. Each Note will also be due and
payable (in
6
<PAGE>
whole or in part) on any earlier date on which the principal or an installment
of principal of a Note becomes due and payable, whether by a declaration of
acceleration, call for redemption at the option of HEI, repayment at the option
of the holder or otherwise as agreed to by the purchaser and HEI and specified
in the specific Note and applicable pricing supplement. The date upon which a
Note is due and payable, whether the Stated Maturity or such earlier date, will
be referred to as the "Maturity."
Each Note will bear interest from the date of original issuance (the
"Original Issue Date") at a fixed rate ("Fixed Rate Notes") or at a floating
rate ("Floating Rate Notes") determined by reference to the Commercial Paper
Rate, the Prime Rate, the London Interbank Offered Rate ("LIBOR"), the Treasury
Rate, the Certificate of Deposit ("CD") Rate, the Federal Funds Rate or other
interest rate basis, plus or minus a Spread and/or multiplied by a Spread
Multiplier, if any, applicable to such Note. See "Interest Rate." HEI may also
issue a Note ("Discount Notes") at a discount from the principal amount payable
at its Stated Maturity and such Discount Note will bear no interest or will
bear interest at a rate that is below market interest rates at the time of
issuance.
HEI may offer different interest rates at the same time depending upon,
among other factors, the Stated Maturity of the Notes and the aggregate
principal amount of Notes purchased in any single transaction. HEI may also
offer Notes with different variable terms other than interest rates at the same
time to different investors. HEI may change interest rates, interest rate
formula and other variable terms of the Notes from time to time, but no change
will affect any Note already issued or as to which an offer to purchase has
been accepted by HEI.
HEI will make payments of principal, premium, if any, and interest with
respect to the Notes in United States dollars. HEI will issue Notes in fully
registered book-entry form (each, a "Book-Entry Note"), except in certain
limited circumstances, in which case HEI will issue Notes in certificated form
(each, a "Definitive Note"). See "Book-Entry Notes." HEI will issue Notes in
denominations of $1,000 and integral multiples of $1,000. Book-Entry Notes may
be transferred or exchanged only through a participating member of The
Depository Trust Company (or such other depositary as is identified in an
applicable pricing supplement) (the "Depositary"). See "Book-Entry Notes."
Registration of transfers of Definitive Notes will be made at the Corporate
Trust Office of the Trustee. HEI and the Trustee will not charge any service
charge for any such registration of transfer or exchange of Definitive Notes.
HEI may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection with the transfer or exchange (other
than exchanges not involving any transfer).
HEI will make payments of principal of, and premium, if any, and
interest, if any, on Book-Entry Notes through the Trustee to the Depositary.
See "Book-Entry Notes." In the case of Definitive Notes, HEI will pay principal
and premium, if any, at the Maturity of each Definitive Note in immediately
available funds upon presentation and surrender of the Definitive Note at the
Corporate Trust Office of the Trustee in the Borough of Manhattan, The City of
New York, or at such other place as HEI is entitled to designate. In the case
of a permitted repayment on an Optional Repayment Date, HEI will make payment
upon submission of a duly completed election form in accordance with the
provisions described below. HEI will pay any interest due at the Maturity of a
Definitive Note to the person to whom payment of the principal thereof and
premium, if any, thereon shall be made. HEI will pay interest due on Definitive
Notes other than at Maturity at the Corporate Trust Office of the Trustee or,
at HEI's option, by check mailed to the address of the Person entitled thereto
as such address shall appear in the Security Register. A holder of $10,000,000
or more in aggregate principal amount of Definitive Notes having the same
Interest Payment Dates will be entitled to receive interest payments (other
than at Maturity) by wire transfer of immediately available funds if the
Trustee has received appropriate wire transfer instructions from the holder not
less than 15 calendar days prior to the applicable Interest Payment Date. Any
such wire transfer instructions received by the Trustee shall be effective
until revoked by the holder.
7
<PAGE>
Reference is made to the pricing supplement applicable to each Note for
the following terms:
. the principal amount and purchase price of such Note (the "Issue
Price"), which may be expressed as a percentage of the principal
amount at which such Note will be issued;
. the Original Issue Date of such Note;
. the Stated Maturity of such Note;
. whether such Note is a Fixed Rate Note, a Floating Rate Note and/or
a Discount Note;
. if such Note is a Fixed Rate Note, the annual interest rate, if
any;
. if such Note is a Floating Rate Note, the Base Rate or Rates, the
Initial Interest Rate, the Interest Determination Date or Dates,
the Interest Reset Date or Dates, the Interest Payment Dates, the
Index Maturity, the Maximum Interest Rate and/or Minimum Interest
Rate, if any, and the Spread and/or Spread Multiplier, if any, and
the Calculation Agent (if other than the Trustee), and any other
terms relating to the particular method of calculating the interest
rate for such Note;
. if such Note is a Discount Note, the issue price and the annual
interest rate, if any;
. the date or dates from which any such interest shall accrue, if
other than the Original Issue Date;
. the terms for redemption, repayment or a sinking fund, if any; and
. any other terms of such Note consistent with the provisions of the
Indenture.
Interest Rate
General
Each interest-bearing Note will bear interest from its Original Issue
Date at the rate per annum, in the case of a Fixed Rate Note, or pursuant to
the interest rate formula, in the case of a Floating Rate Note, specified in
the Note and in the applicable pricing supplement, until the principal thereof
is paid or made available for payment. Interest payments on the Notes will be
in an amount equal to the interest accrued from and including the immediately
preceding Interest Payment Date (as defined below) in respect of which interest
has been paid or duly made available for payment (or from and including the
Original Issue Date, if no interest has been paid or duly made available for
payment since that date) to but excluding the applicable Interest Payment Date
or Maturity (each, an "Interest Period"). Interest will be payable in arrears
to the holders of such Notes (which, in the case of Book-Entry Notes, will be a
nominee of the Depositary) on the Regular Record Date (as defined below) for
each Interest Payment Date and, in the case of interest payable at Maturity, to
the person to whom principal shall be payable at Maturity.
HEI will make the first payment of interest on any Note originally issued
between a Regular Record Date and the related Interest Payment Date to the
holder of the Note on the next Regular Record Date. The payment will be made on
the Interest Payment Date following such next Regular Record Date. The "Regular
Record Date" with respect to any Note shall be the date (whether or not a
Business Day) that is 15 calendar days prior to the related Interest Payment
Date. However, any interest not punctually paid or duly provided for will no
longer be payable to the holder of the Note on the Regular Record Date and
instead will be paid either (a) to the holder of record on a special record
date to be fixed by the Trustee in accordance with the Indenture or (b) in such
other lawful manner that is selected by HEI and deemed practicable by the
Trustee.
8
<PAGE>
Fixed Rate Notes
HEI will pay interest on Fixed Rate Notes semiannually on April 10 and
October 10 of each year (each, an "Interest Payment Date" with respect to Fixed
Rate Notes), and at Maturity with respect to the principal then maturing.
Interest on Fixed Rate Notes will be computed on the basis of a 360-day year of
twelve 30-day months. If any Interest Payment Date or the Maturity of a Fixed
Rate Note falls on a day that is not a Business Day, the applicable payments
may be made on the next Business Day. In such case, no interest will accrue on
the amount so payable for such period of delay.
Floating Rate Notes
Each Floating Rate Note will bear interest at a rate determined by
reference to one or more interest rate bases (each, a "Base Rate"), which may
be adjusted by a Spread and/or Spread Multiplier (each as described below). The
applicable pricing supplement will designate one or more of the following Base
Rates as applicable to each Floating Rate Note:
. the Commercial Paper Rate (such Note being a "Commercial Paper Rate
Note");
. the Prime Rate (such Note being a "Prime Rate Note");
. LIBOR (such Note being a "LIBOR Note");
. the Treasury Rate (such Note being a "Treasury Rate Note");
. the CD Rate (such Note being a "CD Rate Note");
. the Federal Funds Rate (such Note being a "Federal Funds Rate
Note"); or
. such other Base Rate or interest rate formula as is set forth in
such pricing supplement and in such Floating Rate Note.
If the Base Rate for a Note is LIBOR, the applicable pricing supplement
and Note will also specify the Designated LIBOR Page, as explained below.
The interest rate on each Floating Rate Note will be calculated by
reference to the specified Base Rate or Rates (a) plus or minus the Spread, if
any, and/or (b) multiplied by the Spread Multiplier, if any. The "Spread" is
the number of basis points (one one-hundredth of a percentage point) specified
in the pricing supplement to be added to or subtracted from the Base Rate for
such Note to calculate the interest rate for such Floating Rate Note. The
"Spread Multiplier" is the percentage specified in the pricing supplement to be
multiplied by the Base Rate (or by the Base Rate increased or decreased by the
Spread) to calculate the interest rate for such Floating Rate Note. The "Index
Maturity" for any Floating Rate Note is the period to maturity of the
instrument or obligation from which the Base Rate or Rates is calculated.
The interest rate with respect to each Base Rate will be determined in
accordance with the applicable provisions below. Except as set forth above or
in an applicable pricing supplement, the interest rate in effect on each day
shall be (a) if such day is an Interest Reset Date, the interest rate
determined as of the Interest Determination Date immediately preceding such
Interest Reset Date, or (b) if such day is not an Interest Reset Date, the
interest rate determined as of the Interest Determination Date immediately
preceding the most recent Interest Reset Date.
9
<PAGE>
Interest Reset Dates. The rate of interest on each Floating Rate Note
will be reset daily, weekly, monthly, quarterly, semiannually or annually
(each, an "Interest Reset Date"), as specified in the applicable Note and
pricing supplement. The Interest Reset Date will be as follows:
<TABLE>
<CAPTION>
Type of Floating Rate Note Interest Reset Date
--------------------------------- -------------------------------------
<C> <S>
Notes which reset daily.......... Each Business Day
Notes (other than Treasury Rate
Notes) which reset weekly....... Wednesday of each week
Treasury Rate Notes which reset
weekly.......................... Tuesday of each week
Notes which reset monthly........ Third Wednesday of each month
Notes which reset quarterly...... Third Wednesday of March, June,
September and December of each year
Notes which reset semiannually... Third Wednesday of two months of each
year as specified in the applicable
Note and pricing supplement
Notes which reset annually....... Third Wednesday of one month of each
year as specified in the applicable
Note and pricing supplement
</TABLE>
Notwithstanding the foregoing, (a) the interest rate in effect from the
Original Issue Date to the first Interest Reset Date with respect to a Floating
Rate Note will be the Initial Interest Rate (as set forth in the applicable
Note and pricing supplement) and (b) the interest rate in effect for the ten
days immediately prior to Maturity of a Floating Rate Note will be that in
effect on the tenth day preceding Maturity. Any Interest Reset Date that does
not fall on a Business Day will be postponed to the next Business Day. In the
case of a LIBOR Note, however, if such next succeeding Business Day falls in
the next calendar month, the Interest Reset Date will be the preceding Business
Day. The term "Business Day" means any day other than a Saturday or Sunday or
any other day on which banks in The City of New York are generally authorized
or obligated by law or executive order to close and, with respect to LIBOR
Notes, is also a London Business Day. As used herein, "London Business Day"
means any day on which dealings in deposits in U.S. dollars are transacted in
the London interbank market.
10
<PAGE>
Interest Payment Dates. Except as provided below or in an applicable
pricing supplement, interest will be payable on the following dates ("Interest
Payment Dates" with respect to Floating Rate Notes):
<TABLE>
<CAPTION>
Type of Floating Rate Note Interest Payment Date
--------------------------------- --------------------------------------
<C> <S>
Notes which reset daily, weekly
or monthly...................... Third Wednesday of each month or the
third Wednesday of March, June,
September and December of each year,
as specified in the applicable Note
and pricing supplement
Notes which reset quarterly...... Third Wednesday of March, June,
September and December of each year
Notes which reset semiannually... Third Wednesday of the two months of
each year specified in the applicable
Note and pricing supplement
Notes which reset annually....... Third Wednesday of the month of each
year specified in the applicable Note
and pricing supplement
All Notes........................ At Maturity with respect to the
principal then maturing
</TABLE>
If any Interest Payment Date for any Floating Rate Note, other than at
Maturity, falls on a day that is not a Business Day, such Interest Payment Date
will be postponed to the next succeeding Business Day and no interest on such
payment will accrue for such period of delay. In the case of a LIBOR Note,
however, if such next succeeding Business Day falls in the next succeeding
calendar month, such Interest Payment Date will be the immediately preceding
Business Day. If the Maturity of a Floating Rate Note does not fall on a
Business Day, the applicable payment may be made on the next succeeding
Business Day, and no interest on such payment shall accrue for such period of
delay.
11
<PAGE>
Interest Determination Dates. The Interest Determination Dates for
Floating Rate Notes pertaining to an Interest Reset Date will be as follows:
<TABLE>
<CAPTION>
Type of Floating Rate Note Interest Determination Date
--------------------------------- ---------------------------------------
<C> <S>
Commercial Paper Rate Note....... Second Business Day preceding such
Interest Reset Date
Prime Rate Note.................. Second Business Day preceding such
Interest Reset Date
CD Rate Note..................... Second Business Day preceding such
Interest Reset Date
Federal Funds Rate Note.......... Second Business Day preceding such
Interest Reset Date
LIBOR Note....................... Second London Business Day preceding
such Interest Reset Date
Treasury Rate Note............... Day of the week in which such Interest
Reset Date falls on which day Treasury
bills would normally be auctioned by
the U.S. Department of the Treasury,
as described below
Note with two or more Base Most recent Business Day that is at
Rates........................... least two Business Days prior to the
applicable Interest Reset Date for
such Floating Rate Note on which each
Base Rate is determinable
</TABLE>
Treasury bills are generally sold at auction on Monday of each week,
unless that day is a legal holiday, in which case the auction is usually held
on the following Tuesday, except that such auction may be held on the preceding
Friday. If, as a result of a legal holiday, an auction is so held on the
preceding Friday, such Friday will be the Interest Determination Date for the
Treasury Rate Note pertaining to the Interest Reset Date occurring in the next
succeeding week. If an auction date with respect to a Treasury Rate Note shall
fall on any Interest Reset Date, then such Interest Reset Date shall instead be
the Business Day next succeeding such auction date.
Each Base Rate will be determined as of the Interest Determination Date,
and the applicable interest rate will take effect on the applicable Interest
Reset Date.
Maximum and Minimum Interest Rates. The pricing supplement applicable to
a Floating Rate Note may provide that such Note has either or both of (a) a
maximum limitation, or ceiling, on the rate of interest which may accrue during
any Interest Period (a "Maximum Interest Rate"), and (b) a minimum limitation,
or floor, on the rate of interest which may accrue during any Interest Period
(a "Minimum Interest Rate"). In addition to any Maximum Interest Rate that may
be applicable to any Floating Rate Note pursuant to the above provisions, the
interest rate on the Floating Rate Notes will in no event be higher than the
maximum rate permitted by New York or Hawaii law, whichever is lower, as the
same may be modified by United States law of general application.
12
<PAGE>
Floating Rate Determinations and Calculations
Except as otherwise provided herein, all percentages resulting from any
calculations on any Floating Rate Notes will be rounded to the nearest one
hundred-thousandth of a percentage point (with five one-millionths of a
percentage point being rounded up, e.g., 9.876545% (or .09876545) being rounded
to 9.87655% (or .0987655)), and all dollar amounts used in or resulting from
such calculation on any Floating Rate Notes will be rounded to the nearest cent
(with one half cent being rounded up).
Accrued interest on a Floating Rate Note is calculated by multiplying the
principal amount of such Floating Rate Note by an accrued interest factor. Such
accrued interest factor is computed by adding the interest factors calculated
for each day in the applicable Interest Period. The interest factor (expressed
as a decimal) for each such day is computed by dividing the interest rate
(expressed as a decimal) applicable to such date by 360, in the case of
Commercial Paper Rate Notes, Prime Rate Notes, LIBOR Notes, CD Rate Notes or
Federal Funds Rate Notes, or by the actual number of days in the year, in the
case of Treasury Rate Notes. The interest factor for Floating Rate Notes for
which the interest rate is calculated with reference to two or more Base Rates
will be calculated in each period in the same manner as if only the lowest,
highest or average of the applicable Base Rate applied, as specified in the
applicable Note and pricing supplement.
The Trustee shall be the calculation agent (the "Calculation Agent") and
shall calculate the interest rate on Floating Rate Notes on or before each
Calculation Date. Upon the request of the holder of any Floating Rate Note, the
Calculation Agent will provide the interest rate then in effect, and, if
determined, the interest rate that will become effective on the next Interest
Reset Date with respect to such Floating Rate Note. The Calculation Agent's
determination of any interest rate will be final and binding in the absence of
manifest error. The "Calculation Date," if applicable, pertaining to any
Interest Determination Date will be the earlier of (i) the tenth calendar day
after such Interest Determination Date, or, if such day is not a Business Day,
the next succeeding Business Day and (ii) the Business Day preceding the
applicable Interest Payment Date or Maturity, as the case may be.
The Calculation Agent shall determine each Base Rate in accordance with
the following provisions. To the extent a Base Rate is determined by reference
to the offered rates or quotations of dealers, banks, trust companies, brokers
or others selected by the Calculation Agent as described below, such parties
may include the Calculation Agent, the Agents and/or their respective
affiliates, as the case may be.
Commercial Paper Rate Notes. Commercial Paper Rate Notes will bear
interest at the interest rates (calculated with reference to the Commercial
Paper Rate and the Spread and/or Spread Multiplier, if any) specified in the
Commercial Paper Rate Notes and in the applicable pricing supplement.
The "Commercial Paper Rate," with respect to each Interest Reset Date,
will be determined by the Calculation Agent on the Calculation Date and will be
the Money Market Yield (as defined below) as of the Interest Determination Date
next preceding such Interest Reset Date of the rate for commercial paper having
the Index Maturity specified in the applicable Note and pricing supplement, as
such rate shall be published by the Board of Governors of the Federal Reserve
System in "Statistical Release H.15(519), Selected Interest Rates", or any
successor publication (such publication being hereinafter called "H.15(519)"),
under the heading "Commercial Paper-Nonfinancial". In the event that such rate
is not published prior to 3:00 P.M., New York City time, on the related
Calculation Date, then the Commercial Paper Rate with respect to such Interest
Reset Date will be the Money Market Yield on the applicable Interest
Determination Date of the rate for commercial paper of the Index Maturity
specified in the applicable Note and pricing supplement as published by the
Federal Reserve Bank of New York in its daily statistical release "Composite
3:30 P.M. Quotations for U.S. Government Securities", or any successor
publication (such publication being hereinafter called "Composite Quotations"),
under the heading "Commercial Paper" (with an Index Maturity of one month or
three months being deemed to be equivalent to an Index Maturity of 30 days or
90 days, respectively). If by 3:00 P.M., New York City time, on such
Calculation Date such rate is not yet published in either H.15(519) or
Composite Quotations, then the Commercial Paper Rate will be calculated by the
13
<PAGE>
Calculation Agent and shall be the Money Market Yield of the arithmetic mean of
the offered rates as of 11:00 A.M., New York City time, on the applicable
Interest Determination Date of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent, in its discretion, for
commercial paper of the specified Index Maturity placed for an industrial
issuer whose bond rating is "Aa," or the equivalent, from a nationally
recognized statistical rating organization. If the dealers selected as
aforesaid by the Calculation Agent are not quoting offered rates as described
in the preceding sentence, the Commercial Paper Rate with respect to such
Interest Reset Date will be the Commercial Paper Rate in effect under the Note
on such Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
Money Market Yield = DX360X100
----------
360-(DXM)
where "D" refers to the applicable per annum rate for commercial paper quoted
on a bank discount basis and expressed as a decimal, and "M" refers to the
actual number of days in the applicable Interest Reset Period.
Prime Rate Notes. Prime Rate Notes will bear interest at the interest
rates (calculated with reference to the Prime Rate and the Spread and/or Spread
Multiplier, if any) specified in the Prime Rate Notes and in the applicable
pricing supplement.
The "Prime Rate," with respect to each Interest Reset Date, will be
determined by the Calculation Agent on the Calculation Date and will be the
rate as of the Interest Determination Date next preceding such Interest Reset
Date as published in H.15(519) under the heading "Bank Prime Loan". In the
event that such rate is not published prior to 3:00 P.M., New York City time,
on the related Calculation Date, then the Prime Rate with respect to such
Interest Reset Date will be the arithmetic mean of the rates of interest
publicly announced by each bank that appears on such Interest Determination
Date on the display designated as page "USPRIME1" on the Reuters Monitor Money
Rates Service (or any successor service or such other page as may replace the
USPRIME1 page on that service for the purpose of displaying prime rates or base
lending rates of major United States banks) ("Reuters Screen USPRIME1 Page") as
such bank's prime rate or base lending rate as in effect for such Interest
Determination Date. If fewer than four such rates appear on the Reuters Screen
USPRIME1 Page as of the applicable Interest Determination Date, the Prime Rate
with respect to such Interest Reset Date will be the arithmetic mean of the
prime rates or base lending rates (quoted on the basis of the actual number of
days in the year divided by a 360-day year) as of the close of business on such
Interest Determination Date as furnished in The City of New York by the major
money center banks, if any, that have provided such quotations and by a
reasonable number of substitute banks or trust companies to obtain four such
prime rate quotations, provided such substitute banks or trust companies are
organized and doing business under the laws of the United States, or any state
thereof, each having total equity capital of at least $500 million and being
subject to supervision or examination by federal or state authority, selected
by the Calculation Agent to provide such rate or rates. If the banks or trust
companies selected as aforesaid by the Calculation Agent are not quoting rates
as described in the preceding sentence, the Prime Rate with respect to such
Interest Reset Date will be the Prime Rate in effect on such Interest
Determination Date.
LIBOR Notes. Each LIBOR Note will bear interest at the interest rate
(calculated with reference to LIBOR and the Spread and/or Spread Multiplier if
any) specified in the LIBOR Notes and in the applicable pricing supplement.
14
<PAGE>
"LIBOR," with respect to each Interest Reset Date, will be determined by
the Calculation Agent in accordance with the following provisions:
. With respect to an Interest Determination Date, LIBOR will be
either: (a) if "LIBOR Reuters" is specified in the applicable Note
and pricing supplement, the arithmetic mean of the offered rates
(unless the Designated LIBOR Page by its terms provides only for a
single rate, in which case such single rate shall be used) for
deposits in U.S. dollars having the Index Maturity specified in
such Note and pricing supplement, commencing on the applicable
Interest Reset Date, that appear (or, if only a single rate is
required as aforesaid, appears) on the Designated LIBOR Page as of
11:00 A.M., London time, on such Interest Determination Date, or
(b) if "LIBOR Telerate" is specified in the applicable Note and
pricing supplement or if neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified in the applicable Note and pricing
supplement as the method for calculating LIBOR, the rate for
deposits in U.S. dollars having the Index Maturity specified in
such Note and pricing supplement, commencing on such Interest Reset
Date, that appears on the Designated LIBOR Page as of 11:00 A.M.,
London time, on such Interest Determination Date. If fewer than two
such offered rates so appear, or if no such rate so appears where
the Designated LIBOR Page provides only for a single rate, LIBOR on
such Interest Determination Date will be determined in accordance
with the provisions described in the following paragraph.
. With respect to an Interest Determination Date on which fewer
offered rates appear than are required in the preceding paragraph,
the Calculation Agent will request the principal London offices of
each of four major reference banks (which may include the Agents or
their affiliates) in the London interbank market as selected by the
Calculation Agent, to provide the Calculation Agent with its
offered quotation for deposits in U.S. dollars for the period of
the Index Maturity specified in the applicable Note and pricing
supplement, commencing on the applicable Interest Reset Date to
prime banks in the London interbank market at approximately 11:00
A.M., London time, on such Interest Determination Date and in a
principal amount that is representative for a single transaction in
U.S. dollars in such market at such time. If at least two such
quotations are so provided, then LIBOR on such Interest
Determination Date will be the arithmetic mean of such quotations.
If fewer than two such quotations are so provided, then LIBOR on
such Interest Determination Date will be the arithmetic mean of the
rates quoted at approximately 11:00 A.M., New York City time on
such Interest Determination Date by three major banks in The City
of New York selected by the Calculation Agent for loans in
U.S. dollars to leading European banks, having the Index Maturity
specified in the applicable Note and pricing supplement and in a
principal amount that is representative for a single transaction in
U.S. dollars in such market at such time. If the banks so selected
by the Calculation Agent are not quoting rates as described in the
preceding sentence, LIBOR determined as of such Interest
Determination Date will be LIBOR in effect under the Note on such
Interest Determination Date.
"Designated LIBOR Page" means (a) if "LIBOR Reuters" is specified in the
applicable pricing supplement, the display in the Reuter Monitor Money Rates
Service (or any successor service) on the page specified in such pricing
supplement (or any other page as may replace such page on such service) for the
purpose of displaying the London interbank rates of major banks for U.S.
dollars, or (b) if "LIBOR Telerate" is specified in the applicable pricing
supplement or neither "LIBOR Reuters" nor "LIBOR Telerate" is specified in the
applicable pricing supplement as the method for calculating LIBOR, the display
on the Dow Jones Telerate Service (or any successor service) on the page
specified in such pricing supplement (or any other page as may replace such
page on such service) for the purpose of displaying the London interbank rates
of major banks for U.S. dollars.
15
<PAGE>
Treasury Rate Notes. Treasury Rate Notes will bear interest at the
interest rates (calculated with reference to the Treasury Rate and the Spread
and/or Spread Multiplier, if any) specified in the Treasury Rate Notes and in
the applicable pricing supplement.
The "Treasury Rate," with respect to each Interest Reset Date, will be
determined by the Calculation Agent on the Calculation Date and will be the
rate for the auction held on the Interest Determination Date next preceding
such Interest Reset Date of direct obligations of the United States ("Treasury
bills") having the Index Maturity specified in the applicable Note and pricing
supplement as published in H.15(519) under the heading "Treasury bills-auction
average (investment)". If by 3:00 P.M., New York City time, on such Calculation
Date such rate is not yet published in H.15(519), then the Treasury Rate shall
be the auction average rate (expressed as a bond equivalent on the basis of a
year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise reported by the U.S. Department of the Treasury. In the event that
the results of the auction of Treasury bills having the Index Maturity
designated in the applicable Note and pricing supplement are not published or
reported as provided above by 3:00 P.M., New York City time, on such
Calculation Date or if no such auction is held on the applicable Interest
Determination Date, then the Treasury Rate will be calculated by the
Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent rounded as aforesaid) of the arithmetic mean of the secondary market
bid rates, as of approximately 3:30 P.M., New York City time, on such Interest
Determination Date, of three leading primary United States government
securities dealers selected by the Calculation Agent, in its discretion, for
the issue of Treasury bills with a remaining maturity closest to the Index
Maturity designated in the applicable Note and pricing supplement. If the
dealers selected as aforesaid by the Calculation Agent are not quoting bid
rates as described in the preceding sentence, the Treasury Rate with respect to
such Interest Reset Date will be the Treasury Rate in effect under the Note on
such Interest Determination Date.
CD Rate Notes. CD Rate Notes will bear interest at the interest rates
(calculated with reference to the CD Rate and the Spread and/or Spread
Multiplier, if any) specified in the CD Rate Notes and in the applicable
pricing supplement.
The "CD Rate," with respect to each Interest Reset Date, will be
determined by the Calculation Agent on the Calculation Date and will be the
rate as of the Interest Determination Date next preceding such Interest Reset
Date for negotiable United States dollar certificates of deposit having the
Index Maturity specified in the applicable Note and pricing supplement as
published in H.15(519) under the heading "CDs (Secondary Market)". In the event
that such rate is not published prior to 3:00 P.M., New York City time, on the
related Calculation Date, then the CD Rate with respect to such Interest Reset
Date shall be the rate on such Interest Determination Date for negotiable
United States dollar certificates of deposit having the Index Maturity
specified in the applicable Note and pricing supplement as published in the
Composite Quotations under the heading "Certificates of Deposit". If by 3:00
P.M., New York City time, on such Calculation Date such rate is not published
in either H.15(519) or Composite Quotations, the CD Rate with respect to such
Interest Reset Date shall be calculated by the Calculation Agent and shall be
the arithmetic mean of the secondary market offered rates, as of 10:00 A.M.,
New York City time, on such Interest Determination Date, of three leading
nonbank dealers in negotiable United States dollar certificates of deposit in
The City of New York selected by the Calculation Agent for negotiable United
States certificates of deposit of major United States money center banks with a
remaining maturity closest to the Index Maturity specified in the applicable
Note and pricing supplement in United States dollars. If the dealers selected
as aforesaid by the Calculation Agent are not quoting rates as described in the
preceding sentence, the CD Rate with respect to such Interest Reset Date will
be the CD Rate in effect under the Note on such Interest Determination Date.
Federal Funds Rate Notes. Federal Funds Rate Notes will bear interest at
the interest rates (calculated with reference to the Federal Funds Rate and the
Spread and/or Spread Multiplier, if any) specified in the Federal Funds Rate
Notes and in the applicable pricing supplement.
16
<PAGE>
The "Federal Funds Rate," with respect to each Interest Reset Date, will
be determined by the Calculation Agent on the Calculation Date and will be the
rate as of the Interest Determination Date next preceding such Interest Reset
Date for United States dollar federal funds as published in H.15(519) under the
heading "Federal Funds (Effective)". In the event that such rate is not
published prior to 3:00 P.M., New York City time, on the relevant Calculation
Date, then the Federal Funds Rate with respect to such Interest Reset Date will
be the rate on such Interest Determination Date as published in Composite
Quotations under the heading "Federal Funds/Effective Rate". If by 3:00 P.M.,
New York City time, on such Calculation Date such rate is not published in
either H.15(519) or Composite Quotations, the Federal Funds Rate with respect
to such Interest Reset Date shall be calculated by the Calculation Agent and
shall be the arithmetic mean of the rates, as of 9:00 A.M., New York City time,
on the applicable Interest Determination Date, for the last transaction in
overnight United States dollar federal funds arranged by three leading brokers
of United States dollar federal funds transactions in The City of New York
selected by the Calculation Agent. If the brokers selected as aforesaid by the
Calculation Agent are not quoting rates as described in the preceding sentence,
the Federal Funds Rate with respect to such Interest Reset Date will be the
Federal Funds Rate in effect under the Note on such Interest Determination
Date.
Book-Entry Notes
Except as described below, the Notes will be issued as Book-Entry Notes
and represented by one or more global securities (each, a "Global Security")
that will be deposited with, or on behalf of, The Depository Trust Company, New
York, New York ("DTC"), or such other Depositary as is designated by HEI, and
registered in the name of a nominee of the Depositary.
DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the New York Uniform Commercial Code, and a "clearing
agency" registered pursuant to the provisions of Section 17A of the Exchange
Act. DTC holds securities that its participants ("Participants") deposit with
DTC. DTC also facilitates the settlement among Participants of securities
transactions, such as transfers and pledges, in deposited securities through
electronic computerized book-entry changes in Participants' accounts, thereby
eliminating the need for physical movement of securities certificates. Direct
participants ("Direct Participants") include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
DTC is owned by a number of its Direct Participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. The Agents are Direct Participants of the
Depositary. Access to the DTC system is also available to others such as
securities brokers and dealers, banks and trust companies that clear through or
maintain a custodial relationship with a Direct Participant, either directly or
indirectly ("Indirect Participants"). The rules applicable to DTC and its
Participants are on file with the SEC.
Upon issuance, all Book-Entry Notes having the same issue price, issue
date, maturity date, interest rate, redemption and repayment provisions, if
any, and interest payment dates will be represented by one or more Global
Securities and will be deposited with DTC or its custodian. If, however, the
aggregate principal amount of any issue exceeds $200 million, one Global
Security will be issued with respect to each $200 million of principal amount
and an additional Global Security will be issued with respect to any remaining
principal amount of such issue.
So long as the Depositary or its nominee is the registered owner of a
Global Security, the Depositary or its nominee, as the case may be, will be the
sole holder of the Book-Entry Notes represented thereby for all purposes under
the Indenture. Except as otherwise provided below, the beneficial owners of the
Global Security or Securities representing Book-Entry Notes will not be
entitled to receive physical delivery of Definitive Notes and will not be
considered the holders thereof for any purpose under the Indenture, and no
Global Security representing Book-Entry Notes shall be so exchangeable or
transferable. Accordingly, each beneficial owner must rely on the procedures of
the Depositary and, if such beneficial owner is not a Participant, on the
17
<PAGE>
procedures of the Participant through which such beneficial owner owns its
interest in order to exercise any rights of a holder under such Global Security
or the Indenture. The laws of some jurisdictions require that certain
purchasers of securities take physical delivery of such securities in
certificated form. Such limits and laws may impair the ability to transfer
beneficial interests in a Global Security representing Book-Entry Notes.
Purchases of Book-Entry Notes under the DTC system must be made by or
through Direct Participants, which will receive a credit for such Book-Entry
Notes on DTC's records. The ownership interest of each actual purchaser of each
Book-Entry Note ("beneficial owner") is in turn to be recorded on the Direct
and Indirect Participants' records. Beneficial owners will not receive written
confirmation from DTC of their purchase, but beneficial owners are expected to
receive written confirmations providing details of the transaction, as well as
periodic statements of their holdings, from the Direct or Indirect Participant
through which the beneficial owner entered into the transaction. Transfers of
ownership interests in a Global Security representing Book-Entry Notes are to
be accomplished by entries made on the books of Participants acting on behalf
of beneficial owners. Beneficial owners will not receive certificates
representing their ownership interests of a Global Security representing Book-
Entry Notes, except in the event that use of the book-entry system for such
Book-Entry Notes is discontinued.
To facilitate subsequent transfers, all Global Securities representing
Book-Entry Notes which are deposited with, or on behalf of, the Depositary are
registered in the name of the Depositary's nominee, Cede & Co. The deposit of
Global Securities with, or on behalf of, the Depositary and their registration
in the name of Cede & Co. will effect no change in beneficial ownership. DTC
has no knowledge of the actual beneficial owners of the Global Securities
representing the Book-Entry Notes. DTC's records reflect only the identity of
the Direct Participants to whose accounts such Book-Entry Notes are credited,
which may or may not be the beneficial owners. The Participants will remain
responsible for keeping account of their holdings on behalf of their customers.
If applicable, redemption notices will be sent to Cede & Co. as
registered holder of the Book-Entry Notes. If less than all of the Notes within
an issue are being redeemed, DTC will determine in accordance with its usual
procedures the amount of the interest of each Direct Participant to be
redeemed.
Neither DTC nor Cede & Co. will itself consent or vote with respect to
the Global Securities representing Book-Entry Notes. Under its usual
procedures, DTC mails an omnibus proxy (the "Omnibus Proxy") to HEI as soon as
possible after the record date. The Omnibus Proxy assigns Cede & Co.'s
consenting or voting rights to those Direct Participants to whose accounts the
Book-Entry Notes are credited on the record date (identified in a listing
attached to the Omnibus Proxy).
Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants and by Direct
Participants and Indirect Participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
So long as the Notes are Book-Entry Notes, principal, premium (if any)
and interest payments on such Book-Entry Notes will be made by HEI in
immediately available funds through the Trustee to DTC. DTC's practice is to
credit Direct Participants' accounts on the date on which interest is payable
in accordance with their respective holdings shown on DTC's records unless DTC
has reason to believe that it will not receive payment on such date. Payments
by Participants to beneficial owners will be governed by standing instructions
and customary practices as is the case with securities held for the accounts of
customers in bearer form or registered in "street name" and will be the
responsibility of such Participant and not of DTC, the Agents or HEI, subject
to any statutory or regulatory requirements as may be in effect from time to
time. Payment of principal, premium (if any) and interest to DTC is the
responsibility of HEI and the Trustee. Disbursement of such payments to Direct
Participants is the responsibility of DTC and disbursement of such payments to
the beneficial owners is the responsibility of Direct and Indirect
Participants.
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A beneficial owner shall give notice of its exercise of any option it may
have to elect to have its Book-Entry Notes repaid by HEI, through its
Participant, to the Trustee, and shall effect delivery of such Book-Entry Notes
by causing the Direct Participant to transfer to the Trustee the Participant's
interest in the Global Security or Securities representing such Book-Entry
Notes on the Depositary's records. The requirement for physical delivery of
Book-Entry Notes in connection with the exercise of a beneficial owner's option
for repayment will be deemed satisfied when the ownership rights in the Global
Security or Securities representing such Book-Entry Notes are transferred by
Direct Participants to the Trustee on the Depositary's records.
Each Global Security representing Book-Entry Notes will be exchangeable
for Definitive Notes of like tenor and terms and of differing authorized
denominations in a like aggregate principal amount, only if (i) the Depositary
notifies HEI that it is unwilling or unable to continue as Depositary for the
Global Securities or HEI becomes aware that the Depositary has ceased to be a
clearing agency registered under the Exchange Act and, in either such case, HEI
shall not have appointed a successor to the Depositary within 90 days
thereafter, (ii) HEI, in its sole discretion, determines that the Global
Securities will be exchangeable for Definitive Notes or (iii) an Event of
Default will have occurred and be continuing with respect to the Notes under
the Indenture. Upon any such exchange, the Definitive Notes will be registered
in the names of the beneficial owners of the Global Security or Securities
representing Book-Entry Notes, which names will be provided by the Depositary's
relevant Participants (as identified by the Depositary) to the Trustee.
The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources (including DTC) that HEI believes to be
accurate, but HEI assumes no responsibility for the accuracy thereof. HEI
assumes no responsibility for the performance by DTC or its Participants of
their respective obligations as described herein or under the rules and
procedures governing their respective operations.
Redemption at the Option of HEI
The Notes will not be subject to any sinking fund. The Notes will be
redeemable at the option of HEI prior to the Stated Maturity only if a
Redemption Commencement Date and an Initial Redemption Percentage are specified
in the applicable Note and pricing supplement. If so specified, the Notes will
be subject to redemption at the option of HEI on any date on and after the
applicable Redemption Commencement Date in whole or from time to time in part
in increments of $1,000 or such other minimum denomination specified in such
pricing supplement (provided that any remaining principal amount thereof shall
be at least $1,000 or such other minimum denomination), at the applicable
Redemption Price (as defined below), together with unpaid interest accrued
thereon to the date of redemption, on written notice given to the holders
thereof not less than 30 nor more than 60 calendar days prior to the date of
redemption and in accordance with the provisions of the Indenture. "Redemption
Price", with respect to a Note, means an amount equal to the Initial Redemption
Percentage specified in the applicable Note and pricing supplement (as adjusted
by the Annual Redemption Percentage Reduction, if applicable) multiplied by the
unpaid principal amount to be redeemed. The Initial Redemption Percentage, if
any, applicable to a Note shall decline at each anniversary of the Redemption
Commencement Date by an amount equal to the Annual Redemption Percentage
Reduction (if any) specified in the applicable Note and pricing supplement,
until the Redemption Price is equal to 100% of the unpaid principal amount to
be redeemed. If any Note is redeemed in part, a new Note of like tenor for the
unredeemed portion and otherwise having the same terms as the partially
redeemed Note will be issued in the name of the holder upon presentation and
surrender of the partially redeemed Note. For a discussion of the redemption of
Discount Notes, see "Discount Notes."
Repayment at the Option of the Holder
The Notes will be repayable by HEI at the option of the holders thereof
prior to the Stated Maturity only if one or more Optional Repayment Dates are
specified in the applicable Note and pricing supplement. If so specified, the
Notes will be subject to repayment at the option of the holders thereof on any
Optional Repayment Date in whole or from time to time in part in increments of
$1,000 or such other minimum
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denomination as is specified in the applicable pricing supplement (provided
that any remaining principal amount thereof shall be at least $1,000 or such
minimum denomination), at a repayment price equal to 100% of the unpaid
principal amount to be repaid, together with unpaid interest accrued thereon to
the date of repayment. For any Note to be repaid, such Note must be received,
together with the form entitled "Option to Elect Repayment" duly completed, by
the Trustee at its office maintained for such purpose in the Borough of
Manhattan in The City of New York, or in such other location as HEI selects in
conformity with the Indenture, not less than 30 nor more than 60 calendar days
prior to the date of repayment. If any Note is repaid in part, a new Note of
like tenor for the unpaid portion and otherwise having the same terms as the
partially repaid Note will be issued in the name of the holder upon
presentation and surrender of the partially repaid Note. For a discussion of
the repayment of Discount Notes, see "Discount Notes."
Only the Depositary may exercise a repayment option in respect of Global
Securities representing Book-Entry Notes. Accordingly, beneficial owners of
Global Securities that desire to exercise their repayment option, if any, with
respect to all or any portion of the Book-Entry Notes represented by such
Global Securities, must instruct the Participant through which they own their
interest to direct the Depositary to exercise the repayment option on their
behalf by delivering the related Global Security and duly completed election
form to the Trustee as aforesaid. In order to ensure that such Global Security
and election form are received by the Trustee on a particular day, the
applicable beneficial owner must so instruct the Participant through which it
owns its interest before such Participant's deadline for accepting instructions
for that day. Participants may have different deadlines for accepting
instructions from their customers. Accordingly, a beneficial owner should
consult the Participant through which it owns an interest in a Global Security
for the Participant's deadline for receiving repayment instructions. In
addition, at the time such instructions are given, each such beneficial owner
shall cause the Participant through which it owns its interest to transfer such
beneficial owner's interest in the Global Security or Securities representing
the related Book-Entry Notes, on the Depositary's records, to the Trustee. The
exercise of an option to elect repayment shall be irrevocable. See "Book-Entry
Notes."
If applicable, HEI will comply with the requirements of Section 14(e) of
the Exchange Act and the rules promulgated thereunder, and any other securities
laws or regulations, in connection with any such repayment.
Discount Notes
HEI may offer Discount Notes from time to time that have an Issue Price
(as specified in the applicable pricing supplement) that is less than 100% of
the principal amount thereof (i.e., par) by more than a percentage equal to the
product of 0.25% and the number of full years to the Stated Maturity. Such
Discount Notes will bear no interest or will bear interest at a rate that is
below market rates at the time of issuance. The difference between the Issue
Price of a Discount Note and 100% of the principal amount of the Note is
referred to as the "Discount." In the event of redemption, repayment or
acceleration of maturity of a Discount Note, the amount payable to the holder
of such Discount Note will be equal to the sum of (i) the Issue Price
(increased by an accrual of Discount) and, in the event of any redemption of
such Discount Note (if applicable), multiplied by the Initial Redemption
Percentage (as adjusted by the Annual Redemption Percentage Reduction, if
applicable) and (ii) any unpaid interest accrued thereon to the date of such
redemption, repayment or acceleration of maturity, as the case may be.
For purposes of determining the amount of Discount that has accrued as of
any date on which redemption, repayment or acceleration of maturity occurs for
a Discount Note, such Discount will be accrued using a constant yield method.
The constant yield will be calculated using a 30-day month, 360-day year
convention, a compounding period that, except for the Initial Period (as
defined below), corresponds to the shortest period between Interest Payment
Dates for the applicable Discount Note (with ratable accruals within a
compounded period), a coupon rate equal to the initial coupon rate applicable
to such Discount Note and an assumption that the maturity of such Discount Note
will not be accelerated. If the period from the date of issue to the initial
Interest Payment Date for a Discount Note (the "Initial Period") is shorter
than the compounded
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period for such Discount Note, a proportionate amount of the yield for an
entire compounding period will be accrued. If the Initial Period is longer than
the compounding period, then such period will be divided into a regular
compounding period and a short period with the short period being treated as
provided above.
The accrual of the applicable Discount may differ from the accrual of
original issue discount, certain Discount Notes may not be treated as having
original issue discount, and Notes other than Discount Notes may be treated as
issued with original issue discount, in each case for United States federal
income tax purposes. See "Certain United States Federal Income Tax
Consequences."
Amortizing Notes
HEI may from time to time offer Notes with the amount of principal
thereof and interest thereon payable in installments over the term of such
Notes ("Amortizing Notes"). Interest on each Amortizing Note will be computed
on the basis of a 360-day year of twelve 30-day months. Payments with respect
to Amortizing Notes will be applied first to interest due and payable thereon
and then to the reduction of the unpaid principal amount thereof. Further
information concerning additional terms and provisions of Amortizing Notes will
be specified in the applicable pricing supplement, including a table setting
forth a principal repayment schedule for such Amortizing Notes.
Other Provisions; Addenda
Any provisions of a Note, including but not limited to the specification
and determination of one or more Base Rates, the calculation of the interest
rate applicable to a Floating Rate Note, the Interest Payment Dates, the Stated
Maturity and any redemption or repayment provisions, may be modified by the
terms specified under "Other Provisions" in the Note or in an Addendum to the
Note, if so specified in the Note (or any Addendum to the Note) and in the
applicable pricing supplement.
Restriction on Liens
Except as described below, HEI will not create, incur, issue, assume,
permit or suffer to exist any Indebtedness (as defined below) secured after the
date of the Indenture by any security interest on any property of HEI
(including, without limitation, property of HEI consisting of any share or
shares of capital stock or indebtedness of any subsidiary of HEI), whether such
property, shares or indebtedness are owned by HEI at the date of the Indenture
or thereafter acquired, without effectively providing concurrently therewith
that the Securities, including the Notes (together, at the option of HEI, with
any other indebtedness ranking equally with the Securities and then existing or
thereafter created), shall be secured equally and ratably with (or prior to)
the Indebtedness so created, incurred, issued, assumed, permitted or suffered
to exist.
The foregoing restrictions do not limit the ability of any subsidiary of
HEI to incur, issue, assume, permit or suffer to exist any of its own
indebtedness or to grant security interests on any of its properties. The
foregoing restrictions also do not apply to:
(1) security interests on any property acquired, constructed or
improved by HEI or on any shares of capital stock or indebtedness of any
subsidiary acquired by HEI after the date of the Indenture which
security interests are created or assumed at the time of or within 270
days after the acquisition of, or the expenditure of the costs of
construction or improvements of, and which secure the payment of all or
any part of the purchase price of, such property, shares of capital
stock or indebtedness, or which secure payment of all or any part of the
cost of any such construction or improvements, provided that, in the
case of any such acquisition, construction or improvement, such security
interest does not apply to any property or shares of capital stock or
indebtedness owned by HEI other than that acquired, constructed or
improved except, in the case of any such construction or improvement,
any real property on which the property is so constructed or the
improvement is located;
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(2) security interests which exist on any property, shares of
capital stock or indebtedness at the time of acquisition of such
property, shares or indebtedness by HEI;
(3) security interests which exist on any property of a
corporation or other Person (as defined below) at the time such
corporation is merged with or into or consolidated with HEI or at the
time of a sale or transfer of the properties of such corporation or
other Person as an entirety or substantially as an entirety to HEI;
(4) security interests in favor of the United States of America or
any State thereof, or any department, agency or instrumentality or
political subdivision of the United States of America or any State
thereof, or in favor of any other country or political subdivision, (A)
to secure partial progress, advance or other payments pursuant to any
contract or statute, (B) to secure any indebtedness incurred or
guaranteed for the purpose of financing or refinancing all or any part
of the purchase price of any property, shares of capital stock or
indebtedness subject to such security interests, or (C) to secure the
cost of constructing or improving any property subject to such security
interests (including, without limitation, security interests incurred in
connection with pollution control, industrial revenue or similar
financings);
(5) security interests on any property arising in connection with
any defeasance, covenant defeasance or in substance defeasance of any
Indebtedness pursuant to express contractual provisions or generally
accepted accounting principles;
(6) security interests on any capital stock of any corporation
which is registered in the name of HEI or otherwise owned by or held for
the benefit of HEI which may constitute "margin stock" as such term is
defined in Section 207.2(i) of Title 12 of the Code of Federal
Regulations (or any successor provisions); and
(7) any extension, renewal or replacement (or successive
extensions, renewals or replacements) in whole or in part of any
security interest referred to above in clauses (1)-(6), inclusive;
provided, however, that the principal amount of Indebtedness secured
thereby shall not exceed the original principal amount of Indebtedness
and that such extension, renewal or replacement shall be limited to all
or a part of the property (plus improvements and construction on such
property), shares of capital stock or indebtedness which was subject to
the security interest so extended, renewed or replaced.
Notwithstanding the foregoing, HEI may, without equally and ratably
securing the Securities, create, incur, issue, assume, permit or suffer to
exist Indebtedness secured by any security interest not excepted by the
foregoing clauses (1) through (7), inclusive, if the aggregate amount of such
Indebtedness, together with all other Indebtedness of HEI existing at such time
and secured by security interests not so excepted, does not exceed 10% of
Consolidated Net Tangible Assets (as defined below).
"Indebtedness" means (1) any indebtedness, whether or not represented by
bonds, debentures, notes or other securities, for the repayment of money
borrowed, (2) all deferred indebtedness (including, without limitation,
capitalized leases) for the payment of the purchase price of property or assets
purchased, and (3) all guaranties, endorsements, assumptions or other
contingent obligations in respect of, or to purchase or otherwise to acquire,
indebtedness of the types described in clauses (1) and (2) above.
"Consolidated Net Tangible Assets" means the total amount of assets
appearing on the consolidated balance sheet of HEI and its subsidiaries less,
without duplication: (a) all current liabilities (excluding any thereof which
are by their terms extendable or renewable at the sole option of the obligor
without requiring the consent of the obligee to a date more than 12 months
after the date of determination); (b) all reserves for depreciation and other
asset valuation reserves but excluding any reserves for deferred federal income
taxes arising from accelerated amortization or otherwise; (c) all intangible
assets such as goodwill, trademarks, trade names, patents and unamortized debt
discount and expense carried as an asset on such balance sheet; and (d) all
appropriate adjustments on account of minority interests of other persons
holding common stock in any
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subsidiary. The Indenture states that Consolidated Net Tangible Assets are
determined in accordance with generally accepted accounting principles and as
of a date not more than 90 days prior to the happening of the event for which
such determination is being made.
"Person" means any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any governmental agency or political subdivision.
Restriction on Sale-Leaseback Transactions
HEI may not engage in any Sale-Leaseback Transaction unless the amount of
Sale-Leaseback Debt resulting from such transaction plus the aggregate of all
other Sale-Leaseback Debt then existing, does not exceed 5% of Consolidated Net
Tangible Assets. However, if a Sale-Leaseback Transaction would result in the
amount of Sale-Leaseback Debt exceeding the foregoing limitation, then such
transaction is permitted, but only if the excess amount of Sale-Leaseback Debt,
if treated as Indebtedness secured by a security interest for the purposes of
the restrictions described under "Restriction on Liens", would be permissible
under such restrictions, and provided further that the amount of such excess
shall be treated as Indebtedness for such purpose and not as Sale-Leaseback
Debt.
"Sale-Leaseback Transaction" means any sale by HEI to any person (other
than HEI or a subsidiary) after the date of the Indenture of any property owned
by HEI, which sale occurs more than 270 days after the later of the
acquisition, completion of construction or commencement of commercial
operations of such property by HEI, if, as part of the same transaction or
series of transactions, HEI leases as lessee for a period of three years or
longer the same property or other substantially equivalent property which it
intends to use for substantially the same purposes pursuant to a lease which
contains an option or right to repurchase said property.
"Sale-Leaseback Debt" means, as to any particular lease entered into in a
Sale-Leaseback Transaction, at any date as of which the amount thereof is to be
determined, the total net amount of rent (determined in accordance with
generally accepted accounting principles) required to be paid under such lease
during the remaining term thereof, discounted from the respective due dates
thereof to such date at the rate per annum which would then be used to
determine lease classification under generally accepted accounting principles.
The net amount of rent required to be paid under any such lease for any such
period shall be the aggregate amount of the rent payable by the lessee with
respect to such period after excluding amounts required to be paid on account
of maintenance and repairs, insurance, taxes, assessments, water rates and
similar charges. The term "Sale-Leaseback Debt" excludes any part thereof
representing any extension, renewal or replacements (or successive extensions,
renewals or replacements) of Indebtedness secured by any security interest
existing at the date of the Indenture, provided that the Sale-Leaseback
Transaction resulting in such Sale-Leaseback Debt is limited to all or a part
of the property (plus improvements and construction on such property) which was
subject to the security interest securing the Indebtedness so extended, renewed
or replaced.
Restriction on Dispositions of HECO Shares
HEI currently holds 100% of the outstanding common stock of HECO. HEI
will not sell, transfer or otherwise dispose of, and will not permit HECO to
issue, sell, transfer or otherwise dispose of, any shares of capital stock of
any class or classes of HECO ordinarily having voting power for the election of
HECO's board of directors. This covenant will not restrict the issuance, sale,
transfer or other disposition of HECO's voting shares to HEI or to any of HEI's
direct or indirect wholly-owned subsidiaries. The covenant also will not
restrict (i) sales or transfers by HECO of preferred stock or other classes of
capital stock of HECO which do not ordinarily have voting power in the election
of HECO's Board of Directors or of the capital stock of its subsidiaries, (ii)
consolidations of HECO or mergers of HECO with or into HEI or any of its direct
or indirect
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wholly-owned subsidiaries, or (iii) consolidations or mergers of HECO with or
into any other corporation if the corporation formed by such consolidation or
merger is a direct or indirect wholly-owned subsidiary of HEI.
Consolidations, Mergers, Conveyances, Transfers or Leases
HEI will not consolidate with or merge into any other corporation or
convey, transfer or lease its properties and assets substantially as an
entirety to any Person or permit any Person to consolidate with or merge into
HEI or convey, transfer or lease its properties and assets substantially as an
entirety to HEI unless certain conditions are met, including the conditions
that:
. the corporation formed by such consolidation or into which HEI is
merged, or the Person which acquires by conveyance or transfer or
which leases the property and assets of HEI substantially as an
entirety, is a Person organized and existing in corporate form
under the laws of the United States of America, any State thereof
or the District of Columbia, and such Person expressly assumes, by
supplemental indenture, the due and punctual payment of the
principal of (and premium, if any) and interest (if any) on all
the Securities and the performance of all of the covenants of HEI
under the Indenture;
. immediately after giving effect to such transaction no Event of
Default, and no event which after notice and lapse of time would
become an Event of Default, has occurred and is continuing; and
. HEI has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, as provided in the Indenture.
Absence of Restrictions on Certain Transactions
Other than the restrictions on liens, sale and leaseback transactions and
consolidations, mergers, conveyances, transfers and leases described above, the
Indenture and the Notes do not contain any covenants or other provisions
designed to afford holders of the Notes protection in the event of a highly
leveraged transaction involving HEI or in the event of a recapitalization,
merger or other transaction (leveraged or otherwise) involving HEI, its
affiliates or its management.
Events of Default
Each of the following is an Event of Default under the Indenture with
respect to any series of Securities outstanding thereunder, including the Notes
as a series of Securities:
. failure to pay any interest on any Security of such series when due
and payable and continuation of such failure for 30 days;
. failure to pay any principal of (or premium, if any, on) any
Security of such series when due and payable and continuance of
such failure for a period of three Business Days;
. failure to deposit any sinking fund payment, when and as due by the
terms of a Security of that series, and continuance of such failure
for a period of three Business Days;
. failure to perform or the breach of any covenant or warranty of HEI
made in or pursuant to the Indenture (other than a covenant or
warranty of HEI made in or pursuant to the Indenture solely for the
benefit of one or more series of Securities other than such
series), continued for 60 days after written notice to HEI by the
Trustee, or to HEI and the Trustee by the holders of at least 10%
in principal amount of the Securities of such series outstanding
under the Indenture as provided in the Indenture;
. failure to pay when due and payable after the expiration of any
applicable grace period, any portion of the principal of indebtedness of
HEI pursuant to a bond, debenture, note or other
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evidence of indebtedness in excess of $5,000,000 (including a
default with respect to Securities of any series other than that
series), or acceleration of such indebtedness for other default
thereunder, without such Indebtedness having been discharged, or
such acceleration having been rescinded or annulled, within 10 days
after written notice to HEI by the Trustee or to HEI and the Trustee
by the holders of at least 10% in principal amount of the Securities
of such series outstanding under the Indenture (provided that this
Event of Default shall be inapplicable if and so long as HEI is
contesting in good faith such payment obligation or such
acceleration and HEI has received the written opinion of counsel
that it has a meritorious position with respect thereto);
. certain events of bankruptcy, insolvency or reorganization; and
. any other Event of Default specified with respect to Securities of such
series.
An Event of Default with respect to any other series of Securities issued
under the Indenture will not necessarily constitute an Event of Default with
respect to the Notes.
The Trustee must, within 90 days after a default occurs with respect to
a series of Securities, transmit by mail to all holders of such series notice
of such default, unless it has been cured or waived (default is defined to
include the events specified above without the grace periods or notice). The
Trustee may withhold notice of a default, except a default in the payment of
principal, premium, if any, or interest, if and so long as the Trustee
determines in good faith (through its board, executive committee, trust
committee or certain officers specified in the Indenture) that the withholding
of such notice is in the interest of such holders. In the case of any default
or breach of any covenant or warranty, except for a default or breach that is
specifically addressed in the Indenture, no notice of such default or breach
shall be given to holders for at least 30 days after the occurrence of such
default or breach.
If an Event of Default with respect to any series of outstanding
Securities issued under the Indenture (including the Notes) shall occur and be
continuing, then either the Trustee or the holders of not less than 25% in
principal amount of the outstanding Securities of such series may declare the
principal amount (or if any of the Securities of such series are Discount
Notes or similar securities, such portion of the principal amount as may be
specified thereon) of all of the Securities of such series to be due and
payable immediately; provided, however, that at any time after a declaration
of acceleration of the Securities of any series and before a judgment or
decree for payment has been obtained, the holders of a majority in principal
amount of the outstanding Securities of such series may, under certain
circumstances, rescind and annul such acceleration and its consequences if all
Events of Default with respect to the Securities of such series, other than
the nonpayment of the principal of the Securities of such series which has
become due solely by such declaration of acceleration, have been cured or
waived as provided in the Indenture. Any money collected by the Trustee
pursuant to the exercise of its rights upon an Event of Default shall be
applied first to amounts owing to the Trustee under the Indenture.
No holder of any Security of any series will have any right to institute
any proceeding with respect to the Indenture, or for the appointment of a
receiver or trustee or for any remedy thereunder, unless such holder shall
have previously given to the Trustee written notice of a continuing Event of
Default and the holders of at least 25% in aggregate principal amount of the
outstanding Securities of such series shall have made written request, and
offered reasonable indemnity, to the Trustee to institute such proceeding as
trustee, and the Trustee shall not have received from the holders of a
majority in aggregate principal amount of the outstanding Securities of such
series a direction inconsistent with such request and shall have failed to
institute such proceeding within 60 days. However, such limitations do not
apply to a suit instituted by a holder of a Security for enforcement of
payment of the principal of and premium, if any, or interest on such Security
on or after the respective due dates expressed in such Security.
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For purposes of the preceding two paragraphs a series of Securities will
not deemed to be outstanding if HEI takes certain steps to discharge its
obligations relating to that series. See "Defeasance".
HEI will be required to furnish to the Trustee annually a statement as to
the performance by HEI of certain of its obligations under the Indenture and as
to any default in such performance.
Defeasance
Defeasance and Discharge
Subject to election by HEI, which election HEI has made with respect to
the Notes, the Indenture provides that HEI will be discharged from any and all
obligations in respect of a series of Securities (except for certain
obligations to register the transfer or exchange of Securities of such series,
to replace stolen, lost or mutilated Securities, to maintain paying agencies
and to hold monies for payment in trust) upon the deposit with the Trustee or
any other trustee, in trust, of money and/or U.S. Government Obligations which
through the payment of interest and principal in respect thereof in accordance
with their terms will provide money in an amount sufficient to pay the
principal of (and premium, if any) and each installment of interest on such
Securities at least one day prior to the dates on which such payments are due
in accordance with the terms of the Indenture and such Securities. Such a trust
may only be established if, among other things required by the Indenture, HEI
delivers to the Trustee an opinion of counsel to the effect that HEI has
received from, or there has been published by, the Internal Revenue Service a
ruling or there has been a change in applicable federal income tax laws and
regulations (including a change in the official interpretation by the Internal
Revenue Service) to the effect that holders of such Securities will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit, defeasance and discharge and will be subject to federal income
tax on the same amount and in the same manner and at the same times as would
have been the case if such deposit, defeasance and discharge had not occurred.
Defeasance of Certain Covenants and Certain Events of Default
Subject to election by HEI, which election HEI has made with respect to
the Notes, the Indenture provides that with respect to a series of the
Securities HEI may omit to comply with certain restrictive covenants, including
those described under "Restrictions on Liens" and "Restriction on Sale-
Leaseback Transactions" above, and the Event of Default described in the fourth
bullet point under "Events of Default" above, shall be inapplicable to
Securities of such series, upon the deposit with the Trustee, in trust, of
money and/or U.S. Government Obligations which through the payment of interest
and principal in respect thereof in accordance with their terms will provide
money in an amount sufficient to pay the principal of (and premium, if any) and
each installment of interest on such Securities at least one day prior to the
date on which such payments are due in accordance with the terms of the
Indenture and such Securities. The obligations of HEI under the Indenture and
such Securities other than with respect to the covenants referred to above and
the Events of Default other than the Event of Default referred to above shall
remain in full force and effect. Such a trust may only be established if, among
other things required by the Indenture, HEI has delivered to the Trustee an
opinion of counsel to the effect that the holders of such Securities will not
recognize income, gain or loss for federal income tax purposes as a result of
such deposit and defeasance of certain obligations and will be subject to
federal income tax on the same amount and in the same manner and at the same
times as would have been the case if such deposit and defeasance had not
occurred.
Designation of a Portion of a Series as a New Series
It is contemplated that a single series of the Securities, such as the
Notes, will be created which would include Securities with sufficiently
different terms that some of them (e.g., fixed rate Securities), but not others
of them (e.g., floating rate Securities), would readily be the subject of
defeasance and discharge or covenant defeasance, as described below. In order
to facilitate such defeasance or covenant defeasance, HEI acting by
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board resolution of its Board of Directors shall have the right, at any time or
from time to time, unilaterally to designate a portion of the Securities of any
series, which is to be the subject of such defeasance or covenant defeasance,
as a separate series under the Indenture, with the remainder to be unaffected
as to series designation by such action, and to assign a new series designation
thereto to distinguish the Securities of such new series from all other
Securities. Thereafter, the Securities included in such new series, on the one
hand, and the remainder of such Securities, on the other hand, shall be of
different series for all purposes under the Indenture, and provisions in the
Indenture or in any Security which apply to each series separately or otherwise
depend upon or relate to series designation, shall give effect to such action
by HEI, but the provisions of the Indenture and of any Security shall otherwise
be unaffected thereby.
Covenant Defeasance and Certain Other Events of Default
In the event that HEI exercises its option to omit compliance with
certain covenants of the Indenture with respect to the Notes as described above
and the Notes are declared due and payable prior to the Stated Maturity because
of the occurrence of any then-applicable Event of Default, the amount of money
and U.S. Government Obligations on deposit with the Trustee will be sufficient
to pay amounts due on the Notes at their Stated Maturity but may not be
sufficient to pay amounts due on the Notes at the time of the acceleration
resulting from such Event of Default. However, HEI shall remain liable for such
payments.
Modification of Indenture and Waiver
Without the consent of any holders of Securities, HEI and the Trustee may
enter into one or more supplemental indentures for certain purposes enumerated
in the Indenture, such as to evidence succession to HEI of another corporation,
to cure ambiguities in the Indenture or to make any other provisions that shall
not adversely affect the interests of the holders of Securities of any series
in any material respect. The consent of the holders of not less than 66 2/3% in
principal amount of the Securities of each series affected by a supplemental
indenture is required for the purpose of adding any provisions to, or changing
in any manner or eliminating any of the provisions of, the Indenture pursuant
to such supplemental indenture. No such supplemental indenture will, however,
without the consent of the holders of each outstanding Security under the
Indenture of each such series directly affected thereby:
. change the Stated Maturity of, or any installment of, principal of
or interest on, any Security, or reduce the principal thereof or
the rate of interest thereon or redemption premium payable thereon,
or shorten the time period during which such Security may not be
redeemed at the option of HEI, or reduce the amount of principal of
a Discount Note that would be due and payable upon a declaration of
acceleration of the Stated Maturity, or otherwise modify the terms
of payment of or the place of payment for the principal thereof or
interest or redemption premium thereon;
. reduce the percentage of principal amount of the outstanding
Securities of such series required to consent to any supplemental
indenture or to any waiver provided for in the Indenture;
. change any obligation of HEI to maintain an office or agency at the
place or places where the principal of and premium, if any, and
interest, if any, on the Securities of such series are payable; or
. modify certain of the provisions in the Indenture relating to
supplemental indentures, waivers of certain covenants and waivers
of past defaults.
A supplemental indenture which changes or eliminates any covenant or
other provision of the Indenture which has expressly been included solely for
the benefit of one or more particular series of Securities, or which modifies
the rights of the holders of Securities of such series with respect to such
covenant or other provision, shall be deemed not to affect the rights under the
Indenture of the holders of any other Securities.
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<PAGE>
The holders of 66 2/3% in aggregate principal amount of the outstanding
Securities of a series may waive compliance by HEI with the provisions of the
Indenture restricting liens and sale-leaseback transactions insofar as they
relate to the Securities of such series. The holders of a majority in aggregate
principal amount of the outstanding Securities of a series may waive any past
default under the Indenture, except a default in the payment of principal,
premium, if any, or interest or in respect of any covenant or provision of the
Indenture referred to in the second preceding paragraph above.
Regarding the Trustee
HEI and its affiliates may, from time to time, enter into commercial
banking and other transactions with the Trustee in the ordinary course of
business.
Listing
The Notes will not be listed on any national or regional securities
exchange.
Governing Law
The Indenture and the Notes will be governed by the laws of the State of
New York.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
General
The following summary describes certain United States federal income tax
consequences of the purchase, ownership and disposition of Notes. Except where
noted, it deals only with Notes held as capital assets by holders that are
United States Persons ("U.S. Holders") and that purchased Notes at their
original issuance, and assumes that the holder is the beneficial owner of the
Note. For this purpose, "United States Person" means a citizen or resident of
the United States, a corporation, partnership or other entity created or
organized in or under the laws of the United States or any political
subdivision thereof, an estate the income of which is subject to United States
federal income taxation regardless of its source, or a trust the administration
of which is subject to the primary jurisdiction of a United States court and
with respect to which one or more United States persons have authority to
control all substantial decisions.
This summary does not deal with special situations, such as those of
dealers in securities, financial institutions, insurance companies, individual
retirement or other tax-deferred accounts, tax exempt organizations, persons
who hold Notes as a hedge against currency risk, persons who have otherwise
hedged the risk of ownership of a Note or persons who hold Notes as part of a
straddle with other investments or whose "functional currency" is not the U.S.
dollar. Furthermore, it does not address the United States federal income tax
consequences of purchasing, owning and disposing of Amortizing Notes and it
does not address, to the extent relevant, the United States federal income tax
consequences of purchasing, owning and disposing of extendible Notes or
renewable Notes. Finally, it does not purport to cover any foreign, state or
local tax consequences associated with the purchase, ownership or disposition
of Notes or all of the possible United States federal income tax consequences
of the purchase, ownership or disposition of Notes.
The discussion is based upon the Internal Revenue Code of 1986, as
amended (the "Code"), including the regulations, rulings and judicial decisions
thereunder as of the date hereof. Such authorities may be repealed, revoked or
modified so as to result in United States federal income tax consequences
different from those discussed below. There is no assurance that the Internal
Revenue Service ("IRS") will not take a contrary view.
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Payments of Interest
Interest on a Note will generally be taxable to a U.S. Holder as ordinary
interest income from domestic sources at the time it is paid or accrued in
accordance with the holder's method of accounting for United States federal
income tax purposes. However, different rules apply with respect to Original
Issue Discount Notes (as defined below).
Original Issue Discount
An "Original Issue Discount Note" is a Note whose stated redemption price
at maturity (i.e., the sum of its principal amount plus all other payments to
be made on the Note other than "qualified stated interest") exceeds its issue
price (i.e., the first price at which a substantial amount of the Notes in the
issuance is sold, excluding sales to bond houses, brokers and others acting as
underwriters, placement agents or wholesalers) by more than 0.25 percent of the
stated redemption price at maturity multiplied by the number of complete years
to maturity. The term "Original Issue Discount Note" does not necessarily
include all Notes identified as Discount Notes, and may include Notes that are
not otherwise Discount Notes but that have been issued with OID for United
States federal income tax purposes. "Qualified stated interest" is stated
interest that is unconditionally payable in cash or in property (other than
debt instruments of the issuer) at least annually at a single fixed rate,
provided that the rate appropriately takes into account the length of intervals
between payments, or at certain variable rates of interest or certain
combinations thereof.
U.S. Holders of Original Issue Discount Notes with maturities of more
than one year will be required to include original issue discount within the
meaning of the Code ("OID") in gross income as interest income before receiving
cash to which such interest income is attributable. The amount of OID annually
includible in income by a U.S. Holder is the sum of the daily portions of OID
with respect to each Original Issue Discount Note held by such U.S. Holder for
each day during the taxable year or portion of a taxable year that the U.S.
Holder holds such Original Issue Discount Note. The daily portion is determined
by allocating to each day of any accrual period a pro rata portion of an amount
equal to the "adjusted issue price" of the Original Issue Discount Note at the
beginning of the accrual period multiplied by the yield to maturity of the
Original Issue Discount Note less the amount, if any, of qualified stated
interest allocable to the accrual period. The "accrual period" for an Original
Issue Discount Note may be of any length and may vary in length over the term
of the Original Issue Discount Note, provided that each accrual period is no
longer than one year and each scheduled payment of principal or interest occurs
on either the first or final day of an accrual period. The "adjusted issue
price" is the issue price of the Original Issue Discount Note increased by the
accrued OID for all prior accrual periods (and decreased by the amount of all
payments previously made on the Original Issue Discount Note, other than
qualified stated interest payments). Sections 1271 through 1275 of the Code and
the regulations thereunder (the "OID Regulations") provide detailed rules for
computing OID.
Under the OID Regulations, a Floating Rate Note will qualify as a
"variable rate debt instrument" if (a) its issue price does not exceed the
total noncontingent principal payments due under the Floating Rate Note by more
than a specified de minimis amount, (b) it does not provide for any principal
payments that are contingent, and (c) it provides for stated interest, paid or
compounded at least annually, at current values of (i) one or more qualified
floating rates, (ii) a single fixed rate and one or more qualified floating
rates, (iii) a single objective rate, or (iv) a single fixed rate and a single
objective rate that is a qualified inverse floating rate. Any qualified
floating rate or objective rate must be set at current value. The meanings of
the terms "qualified floating rates," "single objective rate," "qualified
inverse floating rate," "current value" and other terms are contained in the
OID Regulations.
If a Floating Rate Note that provides for stated interest at a single
qualified floating rate (or a single objective rate) throughout the term
thereof qualifies as a "variable rate debt instrument" under the OID
Regulations, then any stated interest on such Note which is unconditionally
payable in cash or property (other than debt instruments of the issuer) at
least annually during the term of the Note will constitute qualified stated
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interest and will be taxed accordingly. Thus, such a Floating Rate will
generally not be treated as having been issued with OID unless the Floating
Rate Note is issued at a "true" discount (i.e., at a price below the Note's
stated principal amount) in excess of a specified de minimis amount. OID on
such a Floating Rate Note arising from "true" discount is allocated to an
accrual period using the constant yield method described above by assuming that
the variable rate is a fixed rate equal to, in the case of a qualified floating
rate or qualified inverse floating rate, the value as of the issue date of the
qualified floating rate or qualified inverse floating rate.
In general, any other Floating Rate Note that qualifies as a "variable
rate debt instrument" will be converted into an "equivalent" fixed rate debt
instrument for purposes of determining the amount and accrual of OID and
qualified stated interest on the Floating Rate Note. The OID Regulations
generally require that such a Floating Rate Note be converted into an
"equivalent" fixed rate debt instrument by substituting any qualified floating
rate or qualified inverse floating rate provided for under the terms of the
Floating Rate Note with a fixed rate equal to the value of the qualified
floating rate or qualified inverse floating rate, as the case may be, as of the
Floating Rate Note's issue date.
Once the Floating Rate Note is converted into an "equivalent" fixed rate
debt instrument pursuant to the foregoing rules, the amount of OID and
qualified stated interest, if any, are determined for the "equivalent" fixed
rate debt instrument by applying the general OID rules to the "equivalent"
fixed rate debt instrument. A U.S. Holder of the Floating Rate Note will
account for such OID and qualified stated interest as if the U.S. Holder held
the "equivalent" fixed rate debt instrument. In each accrual period,
appropriate adjustments will be made to the amount of qualified stated interest
or OID assumed to have been accrued or paid with respect to the "equivalent"
fixed rate debt instrument in the event that such amounts differ from the
actual amount of interest accrued or paid on the Floating Rate Note during the
accrual period.
If a Floating Rate Note does not qualify as a "variable rate debt
instrument" under the OID Regulations, then the Floating Rate Note would be
treated as a contingent payment debt obligation (a "CP Note").
U.S. Holders of CP Notes would be required to take amounts treated as
interest into income, under the noncontingent bond method, as described in the
OID Regulations, whether or not any payment thereon is fixed or determinable in
the taxable year. HEI would be required to determine the "comparable yield" for
the CP Note, which is the yield at which HEI would issue a fixed rate
instrument with similar terms and conditions, such as the level of
subordination. In no event may this yield be less than the applicable federal
rate, which is periodically published in IRS revenue rulings.
In addition, HEI would be required to construct a projected payment
schedule, including the amount of all noncontingent payments and each
contingent payment. These scheduled payments must produce the comparable yield
for the CP Note. A U.S. Holder will be required to use this projected payment
schedule to determine its interest (all of which is accrued as OID, as
described above) and adjustments thereto with respect to a CP Note, unless it
determines its own schedule and explicitly discloses that fact to the IRS. In
such an event, HEI would provide the projected payment schedule for any CP Note
with the relevant pricing supplement.
If the amount of a contingent payment on a CP Note is more than the
projected amount of the contingent payment, as reflected in the projected
payment schedule, the excess constitutes a positive adjustment, generally on
the date of payment. If the amount of the contingent payment is less than the
projected amount thereof, the difference is a negative adjustment.
The amount by which the positive adjustments on a CP Note in a taxable
year exceeds the negative adjustments in that year constitutes a net positive
adjustment, which is treated as additional interest for the taxable year.
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The amount by which negative adjustments on a CP Note in a taxable year
exceed the positive adjustments in that year constitutes a net negative
adjustment. A U.S. Holder's net negative adjustment for a taxable year first
reduces the U.S. Holders' amount otherwise includible as interest on the CP
Note for the taxable year. Second, to the extent the negative adjustment
exceeds the U.S. Holder's amount of interest for the taxable year, the excess
constitutes an ordinary loss, limited to the amount of interest on the CP Note
included by the U.S. Holder in prior taxable years reduced by any amount of net
negative adjustments from prior taxable years which were previously treated as
ordinary losses. Third, any remainder of net negative adjustments is a
carryforward to the extent of the U.S. Holder's interest on the CP Note in
subsequent taxable years or, if the U.S. Holder has a negative adjustment
carryforward in the year of retirement, sale or disposition, it reduces the
amount realized on such retirement, sale or disposition.
Short-Term Notes
In the case of Original Issue Discount Notes having a term of one year or
less ("Short-Term Notes"), all payments (including stated interest) are
included in the stated redemption price at maturity. The excess of the stated
redemption price at maturity over the issue price of a Short-Term Note
generally constitutes OID.
In general, individuals and certain other cash-method U.S. Holders of
Short-Term Notes are not required to include OID in income as it accrues unless
they elect to do so. However, accrual-method taxpayers and certain other
holders are required to include OID in income. Unless such holder makes an
election to accrue OID according to a constant-yield method based on daily
compounding, it must be included on a straight-line basis. In the case of a
U.S. Holder who is not required (and does not elect) to include OID in income
currently, any gain realized on the sale, exchange or retirement of a Short-
Term Note will be ordinary income to the extent of the OID accrued through the
date of sale, exchange or retirement. In addition, U.S. Holders who do not
elect to currently include OID may be required to defer deductions for a
portion of the interest expense on any indebtedness incurred or continued to
purchase or carry the Short-Term Notes in an amount not exceeding the deferred
interest income, until such deferred interest income is recognized.
In addition, U.S. Holders may elect to determine the amount of discount,
referred to as acquisition discount, to be included in gross income by using
their tax basis instead of the issue price. If such an election is made, it
applies to all obligations acquired in or after the first taxable year to which
the election applies, which election may be revoked only with the consent of
the IRS. This acquisition discount constitutes ordinary income and not capital
gain.
Market Discount
If a U.S. Holder purchases a Note, other than an Original Issue Discount
Note, for an amount that is less than its stated redemption price at maturity
or, in the case of an Original Issue Discount Note, for an amount that is less
than its adjusted issue price, such U.S. Holder will be treated as having
purchased such Note at a "market discount," unless such market discount is less
than a specified de minimis amount.
Under the market discount rules, a U.S. Holder will be required to treat
any partial principal payment (or, in the case of an Original Issue Discount
Note, any payment that does not constitute qualified stated interest) on, or
any gain realized on the sale, exchange, retirement or other disposition of, a
Note as ordinary income to the extent of the lesser of (i) the amount of such
payment or realized gain or (ii) the market discount which has not previously
been included in income and is treated as having accrued on such Note at the
time of such payment or disposition. Market discount will be considered to
accrue ratably during the period from the date of acquisition to the maturity
date of the Note, unless the U.S. Holder elects to accrue market discount under
a constant-yield method.
A U.S. Holder may be required to defer the deduction of all or a portion
of the interest paid or accrued on any indebtedness incurred or maintained to
purchase or carry a Note with market discount until the maturity
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of the Note or certain earlier dispositions. A U.S. Holder may elect to include
market discount in income currently as it accrues (either ratably or under a
constant-yield method), in which case the rules described above regarding the
treatment as ordinary income of gain upon the disposition of the Note and upon
the receipt of certain cash payments and regarding the deferral of interest
deductions will not apply. Generally, such currently included market discount
is treated as ordinary interest for United States federal income tax purposes.
Such an election will apply to all debt instruments acquired by the U.S. Holder
on or after the first day of the first taxable year to which such election
applies and may be revoked only with the consent of the IRS.
Amortizable Bond Premium
On December 30, 1997, final Treasury regulations were issued relating to
the federal income tax treatment of amortizable bond premium. The final
regulations are effective for debt instruments acquired on or after March 2,
1998. However, if a holder makes an election to amortize bond premium for the
taxable year containing March 2, 1998, or any subsequent taxable year, the
regulations apply to debt instruments held on or after the first day of the
taxable year in which the election is made. The final regulations generally
apply to debt instruments acquired at a premium. Certain instruments, however,
including certain instruments providing for contingent payments, are excluded
from the application of the final regulations. The following discussion
reflects the final regulations.
A U.S. Holder who purchases a Note for an amount in excess of the sum of
all amounts, other than qualified stated interest, payable on the Note after
the purchase date will be considered to have purchased the Note at a "premium"
and, in the case of an Original Issue Discount Note, will not be required to
include any OID in income. A U.S. Holder generally may elect to amortize the
premium over the remaining term of the Note on a constant yield method. For any
Floating Rate Note that is a "variable rate debt instrument" under the OID
Regulations, that method is implemented by constructing an "equivalent fixed
rate instrument," as provided in the OID Regulations. The amount amortized in
any year reduces both the U.S. Holder's adjusted basis in the Note and interest
income from the Note. Under the final regulations, any excess bond premium
allocable to an accrual period is deductible by the holder for that accrual
period. The amount deductible, however, is limited by the amount of the
holder's prior income inclusions on the instrument, and any excess is carried
forward to the next accrual period. In addition, in the case of instruments
that have alternative payment schedules that are predicated on the unilateral
exercise of an option by the issuer or the holder, the amount of bond premium
that is amortizable in an accrual period is calculated by assuming that both
the issuer and the holder will exercise or not exercise options in a manner
that maximizes the holder's yield. Thus, under the final regulations, a holder
may be required to amortize bond premium by reference to the Stated Maturity,
even if it appears likely that the Note will be called. The final regulations
also contain rules applicable if such contingency occurs or fails to occur
contrary to the assumption utilized.
U.S. Holders not making an election to amortize bond premium are not
required to reduce the adjusted basis of their Notes and consequently may
recognize less gain or more loss upon their disposition. The election to
amortize premium, once made, applies to all debt instruments held or
subsequently acquired by the electing U.S. Holder on or after the first day of
the taxable year to which the election applies and may not be revoked without
the consent of the IRS. Holders should consult with their own tax advisors
about this election.
Election to Treat All Interest as OID
Subject to certain limitations, U.S. Holders may elect to treat all
interest and discount on Notes as OID and calculate the amount includible in
gross income under the constant-yield method described above. For purposes of
this election, interest includes stated interest, OID, de minimis OID, market
discount, acquisition discount and other unstated interest, as adjusted by any
amortizable bond premium. If a U.S. Holder makes this election for a Note with
amortizable bond premium, the election is treated also as an election under the
amortizable bond premium provisions, described above, and the electing U.S.
Holder will be required to amortize bond premium currently for all of the U.S.
Holder's other debt instruments with amortizable bond
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premium. The election is to be made for the taxable year in which the U.S.
Holder acquired the Note, and may not be revoked without the consent of the
IRS.
Sale, Exchange and Retirement of Notes
A U.S. Holder's tax basis of a Note will, in general, be the U.S.
Holder's cost therefor, increased by OID previously included in income of the
U.S. Holder but reduced by any amortizable bond premium to the extent amortized
and any payments, other than qualified stated interest, while held by the U.S.
Holder. Upon the sale, exchange, retirement or other taxable disposition of a
Note, gain or loss will be recognized equal to the difference between (i) the
amount of cash and fair market value of property received (excluding an amount
attributable to accrued and unpaid stated interest not previously included in
income, which will be taxed as ordinary income) and (ii) the U.S. Holder's tax
basis in the Note. Except as described above with respect to Short-Term Notes
and the OID, market discount and amortizable bond premium rules, the gain or
loss will be capital gain or loss and will be long-term capital gain or loss if
the Note was held for more than one year. Net capital gains of individuals are,
under certain circumstances, taxed at lower rates than items of ordinary
income, and the deductibility of capital losses of U.S. Holders is subject to
limitations.
Backup Withholding and Information Reporting
In general, information reporting requirements will apply to certain
payments of principal, interest, OID and premium on Notes and to the proceeds
of sale of a Note made to U.S. Holders other than certain exempt recipients
(such as corporations). A 31 percent backup withholding tax will apply to such
payments if the holder fails to provide its taxpayer identification number or
certification of its exempt status or fails to report in full dividend and
interest income.
The Paying Agent will report the amount of accrued OID on Original Issue
Discount Notes held of record by persons other than corporations and other
exempt holders, to the extent required by applicable law.
Any amounts withheld under the backup withholding rules generally will be
allowed as a refund or a credit against a U.S. Holder's federal income tax
liability provided the required information is furnished to the IRS.
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PLAN OF DISTRIBUTION
The Notes are being offered on a continuing basis for sale by HEI, to or
through the Agents, Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Goldman, Sachs & Co. or one or more other Agents appointed from
time to time by HEI pursuant to the terms of the Distribution Agreement
relating to the offering of the Notes. The Agents, individually or in a
syndicate, may purchase Notes, as principal, from HEI from time to time for
resale to investors and other purchasers at varying prices relating to
prevailing market prices at the time of resale as determined by the applicable
Agent, or, if so specified in the applicable pricing supplement, for resale at
a fixed offering price. If agreed to by HEI and the applicable Agent, such
Agent may utilize its reasonable efforts on an agency basis to solicit offers
to purchase the Notes at 100% of the principal amount thereof, unless the
applicable pricing supplement states otherwise. HEI will pay a commission to
each such Agent, ranging from .125 % to .750% of the principal amount of a
Note, depending upon its Stated Maturity, sold through such Agent, as agent.
The following table describes the potential proceeds HEI will receive if it
sells all of the Notes but does not include expenses payable by HEI, which are
estimated to be $250,000:
<TABLE>
<CAPTION>
Price to Agents' Commissions
Public and Discounts Proceeds to HEI
------------ ------------------- ---------------
<S> <C> <C> <C>
Per Note...... 100% .125% to .750% 99.250% to 99.875%
Total......... $300,000,000 $375,000 to $2,250,000 $297,750,000 to $299,625,000
</TABLE>
HEI may also sell the Notes directly to purchasers in those jurisdictions
in which it is permitted to do so. No commission or discount will be payable by
HEI on Notes sold directly by HEI.
Any Note sold to an Agent as principal will be purchased by such Agent at
a price equal to 100% of the principal amount thereof less a percentage of the
principal amount equal to the commission applicable to an agency sale of a Note
of identical maturity. An Agent may sell Notes it has purchased from HEI as
principal to certain dealers less a concession equal to all or any portion of
the discount it received in connection with such purchase. Such Agent may
allow, and such dealers may reallow, any portion of the discount received in
connection with such purchase. After the initial offering of Notes, the
offering price (in the case of Notes to be resold on a fixed offering price
basis), the concession and the reallowance may be changed.
HEI reserves the right to withdraw, cancel or modify the offer made
hereby without notice and may reject orders in whole or in part (whether placed
directly with HEI or through an Agent). Each Agent will have the right, in its
discretion, reasonably exercised, to reject in whole or in part any offer to
purchase Notes received by it on an agency basis.
Payment of the purchase price of the Notes will be required to be made in
immediately available funds in New York City on the date of settlement.
No Note will have an established trading market when issued. The Notes
will not be listed on any securities exchange. Each of the Agents may from time
to time purchase and sell Notes in the secondary market, but no Agent is
obligated to do so, and there can be no assurance that there will be a
secondary market for the Notes or liquidity in the secondary market if one
develops. From time to time, each of the Agents may make a market in the Notes,
but no Agent is obligated to do so and the Agents may discontinue any such
market-making activity at any time.
In connection with an offering of Notes purchased by one or more Agents
as principal on a fixed price basis, each such Agent will be permitted to
engage in certain transactions that stabilize the price of such Notes. Such
transactions may consist of bids or purchases for the purpose of pegging,
fixing or maintaining the price of such Notes. If an Agent creates a short
position in such Notes (i.e., if it sells Notes in an aggregate principal
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amount exceeding that set forth in the applicable pricing supplement), such
Agent may reduce that short position by purchasing Notes in the open market.
In general, purchases of Notes for the purpose of stabilization or to
reduce a short position could cause the price of Notes to be higher than it
might be in the absence of such purchases.
Neither HEI nor any of the Agents makes any representation or prediction
as to the direction or magnitude of any effect that the transactions described
above may have on the price of the Notes. In addition, neither HEI nor any of
the Agents makes any representation that the Agents will engage in any such
transactions or that such transactions once commenced will not be discontinued
without notice.
Each Agent may be deemed to be an "underwriter" within the meaning of the
Securities Act. HEI has agreed to indemnify the Agents against certain
liabilities, including liabilities under the Securities Act, or to contribute
to payments the Agents may be required to make in respect thereof. HEI has
agreed to reimburse each of the Agents for certain other expenses.
The Agents from time to time provide investment banking services to HEI
and may from time to time engage in transactions with and perform other
services for HEI in the ordinary course of business.
VALIDITY OF NOTES
The validity of the Notes will be passed upon for HEI by Goodsill
Anderson Quinn & Stifel, Honolulu, Hawaii, and for the Agents by Winthrop,
Stimson, Putnam & Roberts, New York, New York. The opinions of counsel will be
delivered at the commencement date for HEI's Series C medium-term note program
(and under certain circumstances at intervals thereafter) and will assume that
each future issuance of the Notes complies with the Indenture and laws,
agreements and instruments then binding on HEI. Goodsill Anderson Quinn &
Stifel will rely as to all matters of New York law upon the opinion of
Winthrop, Stimson, Putnam & Roberts, and Winthrop, Stimson, Putnam & Roberts
will rely as to all matters of Hawaii law upon the opinion of Goodsill Anderson
Quinn & Stifel.
EXPERTS
The consolidated financial statements of HEI and subsidiaries as of
December 31, 1998 and 1997, and for each of the years in the three-year period
ended December 31, 1998, included in HEI's Current Report on Form 8-K dated
February 23, 1999, incorporated by reference herein, and the consolidated
financial statements and schedule of HEI and subsidiaries as of December 31,
1997 and 1996, and for each of the years in the three-year period ended
December 31, 1997, incorporated by reference and included, respectively, in
HEI's 1997 Form 10-K, incorporated by reference herein, have been incorporated
by reference herein in reliance upon the reports of KPMG LLP, independent
certified public accountants, also incorporated by reference herein, and upon
the authority of said firm as experts in accounting and auditing.
35
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
[LOGO OF HAWAIIAN ELECTRIC INDUSTRIES, INC.]
$300,000,000
Hawaiian Electric
Industries, Inc.
Medium-Term Notes,
Series C
----------------
PROSPECTUS
----------------
Merrill Lynch & Co.
Goldman, Sachs & Co.
, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution*
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............ $ 26,132**
Legal fees and expenses........................................ 100,000
Printing and engraving expenses................................ 25,000
Accounting fees and expenses................................... 40,000
Trustee fees and expenses...................................... 3,000***
Blue Sky fees and expenses..................................... 3,500
Other.......................................................... 52,368
--------
Total...................................................... $250,000
========
</TABLE>
- --------
* All amounts other than the SEC registration fee are estimated.
** A total of $62,481 was previously paid in connection with securities
carried forward to this Registration Statement from Registration Statement
No. 333-58820 and Registration Statement Nos. 333-18809, 333-18809-01, 333-
18809-02, 333-18809-03 and 333-18809-04.
*** Does not include annual service fee.
ITEM 15. Indemnification of Directors and Officers
The Restated Articles of Incorporation of HEI provide that HEI will
indemnify any person against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred in
connection with any threatened, pending or completed action, suit or
proceeding to which such person is a party or is threatened to be made a party
by reason of being or having been a director, officer, employee or agent of
HEI, provided that such person acted in good faith and in a manner the person
reasonably believed to be in or not opposed to the best interests of HEI, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe his conduct was unlawful. With respect to an action brought by or in
the right of HEI in which such person is adjudged to be liable for negligence
or misconduct in the performance of that person's duty to HEI, indemnification
may be made only to the extent deemed fair and reasonable in view of all the
circumstances of the case by the court in which the action was brought or any
other court having jurisdiction. The indemnification provisions in the
Restated Articles of Incorporation were authorized at the time of their
adoption by the applicable provisions of the Hawaii Revised Statutes, and
substantially similar authorizing provisions are currently set forth in
Section 415-5 of the Hawaii Revised Statutes.
At HEI's annual meeting of stockholders held on April 18, 1989, the
stockholders adopted a proposal authorizing HEI to enter into written
indemnity agreements with its officers and directors. Pursuant to such
authority, HEI has entered into agreements of indemnity with certain of its
officers and directors. The agreements provide for mandatory indemnification
of officers and directors to the fullest extent authorized or permitted by
law, which could among other things protect officers and directors from
certain liabilities under the Securities Act of 1933. Indemnification under
the agreements may be provided without a prior determination that an officer
or director acted in good faith or in the best interests of HEI, and without
prior court approval of indemnification of an officer or director adjudicated
liable in a shareholder's derivative action. The agreements provide for
indemnification against expenses (including attorneys' fees), judgments, fines
and settlement amounts in connection with any action by or in the right of
HEI.
Under a directors' and officers' liability insurance policy, directors and
officers are insured against certain liabilities, including certain
liabilities under the Securities Act of 1933.
Reference is made to Section 7 of the Distribution Agreement, which
indemnifies HEI's directors and officers against certain liabilities,
including certain liabilities under the Securities Act of 1933.
II-1
<PAGE>
ITEM 16. Exhibits
The exhibits designated by an asterisk (*) are filed herein. The exhibits
not so designated are incorporated by reference to the indicated filing.
<TABLE>
<C> <S>
*1 Form of Distribution Agreement between HEI and Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Goldman,
Sachs & Co., as Agents
4(a) Indenture, dated as of October 15, 1988, between HEI and Citibank,
N.A., as Trustee (previously filed as Exhibit 4(a) to Registration
Statement on Form S-3, Regis. No. 33-58820)
4(b) First Supplemental Indenture dated as of June 1, 1993 between HEI
and Citibank, N.A., as Trustee (previously filed as Exhibit 4(a) to
HEI's Quarterly Report on Form 10-Q for the quarter ended September
30, 1993, File No. 1-8503)
*4(c) Form of Second Supplemental Indenture between HEI and Citibank,
N.A., as Trustee
*4(d) Form of Fixed Rate Note for issuance by HEI (included in Exhibit
4(c))
*4(e) Form of Floating Rate Note for issuance by HEI (included in Exhibit
4(c))
*5(a) Opinion of Goodsill Anderson Quinn & Stifel
*5(b) Opinion of Winthrop, Stimson, Putnam & Roberts
*12(a) Computation of Ratios of Earnings to Fixed Charges (excluding
interest on ASB deposits)
*12(b) Computation of Ratios of Earnings to Fixed Charges (including
interest on ASB deposits)
*23(a) Consent of KPMG LLP
*23(b) Consent of Goodsill Anderson Quinn & Stifel (included in Exhibit
5(a))
*23(c) Consent of Winthrop, Stimson, Putnam & Roberts (included in Exhibit
5(b))
*24 Power of Attorney
*25 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939
</TABLE>
ITEM 17. Undertakings
HEI hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, unless the information required to be included in
such post-effective amendment is contained in a periodic report filed by
HEI pursuant to Section 13 or Section 15(d) of the Securities Exchange Act
of 1934 and incorporated herein by reference;
(b) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement, unless the information required to be included in
such post-effective amendment is contained in a periodic report filed with
or furnished by HEI pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 and incorporated herein by reference.
Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or the
high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement; and
(c) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
II-2
<PAGE>
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
HEI hereby undertakes that, for purposes of determining any liability under
the Securities Act of 1933, each filing of HEI's annual report pursuant to
Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 that is
incorporated by reference in the registration statement shall be deemed to be
a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of HEI
pursuant to the provisions described under Item 15 above, or otherwise, HEI
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by HEI of expenses incurred
or paid by a director, officer or controlling person of HEI in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, HEI will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication
of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City and County of Honolulu, State of Hawaii, on the 2nd
day of March, 1999.
HAWAIIAN ELECTRIC INDUSTRIES, INC.
/s/ ROBERT F. MOUGEOT
By: _________________________________
Robert F. Mougeot
Financial Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<C> <S> <C>
ROBERT F. CLARKE* Chairman of the Board, March 2, 1999
____________________________________ President and Director
Robert F. Clarke (Chief Executive Officer)
ROBERT F. MOUGEOT* Financial Vice President and March 2, 1999
____________________________________ Chief Financial Officer
Robert F. Mougeot (Principal Financial
Officer)
CURTIS Y. HARADA* Controller (Principal March 2, 1999
____________________________________ Accounting Officer)
Curtis Y. Harada
DON E. CARROLL* Director March 2, 1999
____________________________________
Don E. Carroll
RICHARD HENDERSON* Director March 2, 1999
____________________________________
Richard Henderson
Director
____________________________________
Victor Hao Li
T. MICHAEL MAY* Director March 2, 1999
____________________________________
T. Michael May
BILL D. MILLS* Director March 2, 1999
____________________________________
Bill D. Mills
A. MAURICE MYERS* Director March 2, 1999
____________________________________
A. Maurice Myers
DIANE J. PLOTTS* Director March 2, 1999
____________________________________
Diane J. Plotts
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
Signatures Title Date
---------- ----- ----
<C> <S> <C>
JAMES K. SCOTT* Director March 2, 1999
____________________________________
James K. Scott
OSWALD K. STENDER* Director March 2, 1999
____________________________________
Oswald K. Stender
KELVIN H. TAKETA* Director March 2, 1999
____________________________________
Kelvin H. Taketa
JEFFREY N. WATANABE* Director March 2, 1999
____________________________________
Jeffrey N. Watanabe
/s/ ROBERT F. MOUGEOT
*By ________________________________
Robert F. Mougeot
For himself and as Attorney-in-Fact
for the above mentioned officers and
directors
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
No. Description Page
------- ----------- ------------
<C> <S> <C>
*1 Form of Distribution Agreement between HEI and Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Goldman, Sachs & Co., as Agents
4(a) Indenture, dated as of October 15, 1988, between HEI
and Citibank, N.A., as Trustee (previously filed as
Exhibit 4(a) to Registration Statement on Form S-3,
Regis. No. 33-58820)
4(b) First Supplemental Indenture dated as of June 1, 1993
between HEI and Citibank, N.A., as Trustee (previously
filed as Exhibit 4(a) to HEI's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1993,
File No. 1-8503)
*4(c) Form of Second Supplemental Indenture between HEI and
Citibank, N.A., as Trustee
*4(d) Form of Fixed Rate Note for issuance by HEI (included
in Exhibit 4(c))
*4(e) Form of Floating Rate Note for issuance by HEI
(included in Exhibit 4(c))
*5(a) Opinion of Goodsill Anderson Quinn & Stifel
*5(b) Opinion of Winthrop, Stimson, Putnam & Roberts
*12(a) Computation of Ratios of Earnings to Fixed Charges
(excluding interest on ASB deposits)
*12(b) Computation of Ratios of Earnings to Fixed Charges
(including interest on ASB deposits)
*23(a) Consent of KPMG LLP
*23(b) Consent of Goodsill Anderson Quinn & Stifel (included
in Exhibit 5(a))
*23(c) Consent of Winthrop, Stimson, Putnam & Roberts
(included in Exhibit 5(b))
*24 Power of Attorney
*25 Form T-1 Statement of Eligibility and Qualification
under the Trust Indenture Act of 1939
</TABLE>
- --------
The exhibits designated by an asterisk (*) are filed herein. The exhibits
not so designated are incorporated by reference to the indicated filing.
<PAGE>
Exhibit 1
$300,000,000
HAWAIIAN ELECTRIC INDUSTRIES, INC.
Medium-Term Notes, Series C
DISTRIBUTION AGREEMENT
----------------------
March [ ], 1999
MERRILL LYNCH & CO.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
GOLDMAN, SACHS & CO.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Hawaiian Electric Industries, Inc., a Hawaii corporation (the
"Company"), proposes to issue and sell from time to time its Medium-Term Notes,
Series C (the "Securities") in an aggregate amount of up to $300,000,000 and
confirms its agreement with each of Merrill Lynch & Co., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Goldman, Sachs & Co. (individually, an "Agent"
and, collectively, together with any others who are subsequently appointed as
agents pursuant to Section 2(d) hereof, the "Agents") with respect to such
issuance and sale as set forth in this Agreement.
Subject to the terms and conditions stated herein and subject to the
reservation by the Company of the right to sell Securities directly on its own
behalf as provided in Section 2(b) hereof and to appoint additional Agents as
provided in Section 2(d) hereof, the Company hereby agrees that Securities shall
be sold exclusively to or through the Agents. This Agreement
<PAGE>
provides for both the sale of Securities by the Company to the Agents as
principal for resale to investors and other purchasers and for the sale of
Securities by the Company directly to investors (as may from time to time be
agreed to by the Company and the Agents), in which case the Agents shall act as
agents of the Company in soliciting offers for the purchase of Securities,
subject to the Company's right to solicit, sell and accept offers to purchase
Securities directly on its own behalf as provided in Section 2(b) hereof. The
Agents shall not have any obligation to purchase Securities from the Company as
principal. Any such purchase of Securities as principal shall be made in
accordance with Section 2(a) hereof.
The Securities shall be issued under an indenture, dated as of October
15, 1988, between the Company and Citibank, N.A., as trustee (the "Trustee"), as
previously supplemented, and as to be further supplemented by a Second
Supplemental Indenture dated as of March 1, 1999 (such indenture, as so
supplemented, being hereinafter referred to as the "Indenture"). The Securities
shall have the maturity dates (between nine months and thirty years from date of
issue), interest rates, if any, redemption and repayment provisions and other
terms as set forth in the Prospectus referred to below as it may be amended or
supplemented from time to time. The Securities shall be issued, and the terms
and rights thereof established, from time to time by the Company in accordance
with the Indenture.
1. The Company represents and warrants to, and agrees with, each
Agent that as of the date hereof, as of the date of each acceptance by the
Company of an offer for the purchase of Securities (whether to such Agent as
principal or through such Agent as agent), as of the date of each delivery of
Securities (whether to such Agent as principal or through such Agent as agent)
(the date of each such delivery to such Agent as principal is referred to herein
as a "Time of Delivery"), and as of any time that the Registration Statements
(as hereinafter defined) or the Prospectus (as hereinafter defined) shall be
amended or supplemented (each of the times referenced above is referred to
herein as a "Representation Date"), except as may be disclosed in the Prospectus
(including any documents incorporated by reference therein and any supplements
thereto) or otherwise in writing by the Company to the Agents on or before a
Representation Date:
(a) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3
(Registration No. 33-58820), which registration statement, as amended (the
"1993 Registration Statement"), has been declared effective by the
Commission for the registration of various securities under the Securities
Act of 1933, as amended (the "Act"), of which $6,000,000 aggregate
principal amount remains unissued and unsold. The Company (and affiliated
entities) have also filed with the Commission a registration statement on
Form S-3 (Registration Nos. 33-18809, 33-18809-01, 33-18809-02, 33-18809-03
and 33-18809-04), which registration statement, as amended (the "1996
Registration Statement"), has been declared effective by the Commission,
for the registration of various securities under the Act, of which
$200,000,000 aggregate principal amount/offering price remains unissued and
unsold. The Company has also filed with the Commission a registration
statement on Form S-3 (Registration No. 333-_____) (the "1999 Registration
Statement") for the registration of $94,000,000 aggregate principal amount
of, and the redesignation of $206,000,000 aggregate principal
amount/offering price of securities remaining unissued and unsold under the
1993 Registration Statement and the 1996 Registration Statement as,
Securities under the Act and the offering thereof from time to time
pursuant to Rule 415
2
<PAGE>
promulgated by the Commission under the Act. The 1999 Registration
Statement has been declared effective by the Commission. The 1993
Registration Statement, the 1996 Registration Statement and the 1999
Registration Statement and the combined prospectus constituting a part of
the 1999 Registration Statement and relating, pursuant to Rule 429
promulgated by the Commission under the Act, to $300,000,000 aggregate
principal amount of Securities, and any Pricing Supplement relating to a
particular issuance of the Securities (each, a "Pricing Supplement"),
including all documents incorporated or deemed to be incorporated therein
by reference pursuant to Item 12 of Form S-3 under the Act, in each case,
as from time to time amended or supplemented, are referred to herein as the
"Registration Statements" and the "Prospectus," respectively, except that
if any revised prospectus is provided to the Agents by the Company for use
in connection with the offering of the Securities that is not required to
be filed by the Company pursuant to Rule 424(b) promulgated by the
Commission under the Act, the term "Prospectus" shall refer to such revised
prospectus from and after the time it is first provided to an Agent for
such use. As used in this Agreement, the terms "amendment" or "supplement"
when applied to the Registration Statements or the Prospectus shall be
deemed to include the filing by the Company with the Commission of any
document under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), after the date hereof that is or is deemed to be
incorporated therein by reference.
(b) The documents incorporated or deemed to be incorporated by
reference in the Prospectus, at the time they were or hereafter are filed
with the Commission under the Exchange Act, conformed and will conform in
all material respects to the requirements of the Exchange Act and the rules
and regulations of the Commission promulgated thereunder, and none of such
documents contained or will contain at such time an untrue statement of a
material fact or omitted or will omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(c) No stop order suspending the effectiveness of any of the
Registration Statements has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission. The Registration
Statements, as of the Effective Date, conformed or will conform in all
material respects to the requirements of the Act and the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act"), and the rules and
regulations of the Commission promulgated thereunder and, as of the
Effective Date, does not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and the
Prospectus, as of its original issue date, as of the date of any filing of
a Pricing Supplement thereto pursuant to Rule 424(b) promulgated by the
Commission under the Act and as of the date of any other amendment or
supplement thereto (each, an "Issue Date"), conforms or will conform in all
material respects to the requirements of the Act and the Trust Indenture
Act and the rules and regulations of the Commission promulgated thereunder
and, as of such respective dates, does not and will not contain an untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided, however, that this representation
-------- -------
and warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information
3
<PAGE>
furnished in writing to the Company by any Agent expressly for use in the
Prospectus (it being agreed that, for purposes of this subsection (c) and
Section 7 hereof, the only information so furnished by any Agent as of the
date hereof consists of the sixth, seventh and eighth paragraphs under
"Plan of Distribution" therein). As used herein, with respect to each of
the Registration Statements, the term "Effective Date" means, as of a
specified time, the later of (i) the date that such Registration Statement
or the most recent post-effective amendment thereto was or is declared
effective by the Commission under the Act and (ii) the date that the
Company's Annual Report on Form 10-K for its most recently completed fiscal
year is filed with the Commission under the Exchange Act.
(d) Otherwise than as set forth in or contemplated by the
Prospectus, neither the Company nor any Subsidiaries (as hereinafter
defined) has sustained since the date of the most recent audited financial
statements incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, which loss or interference
would have a material adverse effect on the consolidated financial
position, stockholders' equity or results of operations of the Company and
Subsidiaries taken as a whole; and, since the respective dates as of which
information is given in the Registration Statements and the Prospectus,
there has not been any change in the capital stock of the Company or any
Significant Subsidiary (as hereinafter defined) (except for (i) issuances
of capital stock of the Company pursuant to dividend reinvestment, stock
purchase, stock option, director or employee benefit plans, (ii) issuances
of capital stock (x) by Hawaiian Electric Company, Inc. ("HECO") or its
subsidiaries that have been approved by the Public Utilities Commission of
the State of Hawaii, (y) by any other Significant Subsidiary to the Company
or any Subsidiary or (z) that have been disclosed in writing to the Agents
and (iii) redemptions by HECO, Hawaii Electric Light Company, Inc.
("HELCO") and Maui Electric Company, Limited ("MECO") of their respective
preferred stock in accordance with the terms thereof), or any material
adverse change, or any development involving a prospective material adverse
change, in or affecting the general affairs, management, financial
position, stockholders' equity or results of operations of the Company and
Subsidiaries taken as a whole, otherwise than as set forth in or
contemplated by the Prospectus.
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Hawaii, with corporate power and authority to own or lease its properties
and conduct its business as described in the Prospectus; the Company does
not itself conduct any business or own or lease any property in any
jurisdiction outside the State of Hawaii that would require it to qualify
to do business as a foreign corporation and where the failure to be so
qualified would subject the Company to any material liability or
disability. Each Significant Subsidiary of the Company, other than
American Savings Bank, F.S.B. ("ASB"), has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation. As used in this Agreement, the term
"Subsidiary" means each corporation, at least a majority of the outstanding
voting stock of which is owned by the Company, by one or more Subsidiaries
or by the Company and one or more Subsidiaries.
4
<PAGE>
(f) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable; all of the issued shares of capital stock of each
Significant Subsidiary have been duly and validly authorized and issued and
are fully paid and non-assessable; and all of such shares, other than
shares of preferred stock (including the existing preferred stock of HECO
and its subsidiaries) are owned directly or indirectly by the Company, free
and clear of any liens, encumbrances or security interests, except as
described in the Prospectus.
(g) The Indenture has been duly authorized, executed and
delivered by the Company and qualified under the Trust Indenture Act and
constitutes a valid and binding instrument of the Company enforceable
against the Company in accordance with its terms, except as may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting enforcement of creditors' rights and by general equitable
principles (regardless of whether considered in a proceeding in equity or
at law); the Securities have been duly authorized by the Company for
issuance, offer and sale pursuant to this Agreement and, when duly
executed, authenticated, issued and delivered pursuant to the provisions of
this Agreement and the Indenture against payment of the consideration
therefor, the Securities will constitute valid and legally binding
obligations of the Company enforceable against the Company in accordance
with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
enforcement of creditors' rights and by general equitable principles
(regardless of whether considered in a proceeding in equity or at law); the
Securities and the Indenture will conform in all material respects to all
statements relating thereto contained in the Prospectus; and the Securities
will be entitled to the benefits provided by the Indenture.
(h) The issuance and sale of the Securities, the compliance by
the Company with all of the provisions of the Securities, the Indenture,
this Agreement, and the consummation of the transactions contemplated
herein and therein do not and will not conflict with or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, or result in the imposition of a lien or security interest under,
any material indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any Significant Subsidiary
is a party or by which the Company or any Significant Subsidiary is bound
or to which any of the property or assets used in the conduct of the
business of the Company or any Significant Subsidiary is subject, nor will
such action result in any violation of the provisions of the articles of
incorporation or the by-laws of the Company or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any Significant Subsidiary or any of their
properties; and no consent, approval, authorization, order, registration or
qualification of or with any court or governmental agency or body is
required for the consummation by the Company of the transactions
contemplated by this Agreement or the Indenture or in connection with the
issuance and sale of the Securities hereunder, except such as have been, or
will have been prior to the Commencement Date (as defined in Section 3
hereof), obtained under the Act, the Trust Indenture Act or otherwise and
such consents, approvals, authorizations,
5
<PAGE>
orders, registrations or qualifications as may be required under state
securities or blue sky laws, as the case may be.
(i) Other than as set forth in or contemplated by the
Prospectus, there are no legal or governmental proceedings pending or, to
the knowledge of the Company, threatened to which the Company or any
Subsidiary is a party or to which any property of the Company or any
Subsidiary is the subject that is reasonably expected to have a material
adverse effect on the Company and the Subsidiaries taken as a whole.
(j) Immediately after any sale of Securities by the Company
hereunder, the aggregate amount of Securities that has been issued and sold
by the Company hereunder will not exceed the aggregate principal amount of
Securities registered under the 1999 Registration Statement (in this
regard, the Company acknowledges and agrees that the Agents shall have no
responsibility for maintaining records with respect to the aggregate
principal amount of Securities sold, or of otherwise monitoring the
availability of Securities for sale, under the 1999 Registration
Statement).
(k) ASB has been duly formed and is validly existing as a
federal savings bank duly chartered and in good standing under the laws of
the United States; and, since the respective dates as of which information
is given in the Prospectus, there have not been any increases in total non-
accruing loans or the provision for loan losses of ASB and its
subsidiaries, which increase or increases, individually or in the
aggregate, would have a material adverse effect on the consolidated
financial position, stockholders' equity or results of operations of the
Company and Subsidiaries taken as a whole.
(l) The Company and each of HECO, HELCO, MECO, and (to the
extent they are Subsidiaries of the Company at any time relevant
hereunder), HEI Diversified Inc., ASB and HEI Power Corp. (each, a
"Significant Subsidiary") have all requisite power and authority, and
possess all necessary authorizations, approvals, orders, licenses,
franchises, certificates and permits of and from, and to the extent
required by law are duly registered with, all governmental and regulatory
officials, commissions, departments and bodies in, and are in compliance
with all applicable laws, rules and regulations of or under, each
jurisdiction in which any of them owns properties or assets or conducts any
business as described in the Prospectus, where the failure to possess such
authorization, approval, order, license, franchise, certificate or permit,
or where the failure so to register or so to comply, would have a material
adverse effect on the consolidated financial position, stockholders' equity
or results of operations of the Company and the Subsidiaries taken as a
whole; each such authorization, approval, order, license, franchise,
certificate and permit is valid and in full force and effect, and there is
no proceeding pending or, to the Company's knowledge, threatened that may
lead to the revocation, termination, suspension or non-renewal of any such
authorization, approval, order, license, franchise, certificate or permit;
the Company and Significant Subsidiaries have taken appropriate action to
maintain in effect or renew each such authorization, approval, order,
license, franchise, certificate or permit; the Company and Significant
Subsidiaries own, or possess adequate rights to use, all patents,
trademarks, service marks and rights necessary for or material to the
conduct of their respective business as described in the Prospectus; and
the Company and Significant Subsidiaries possess
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adequate easements, rights-of-way and other rights to use of land not owned
by the Company and Significant Subsidiaries, with such exceptions and
defects as are described in the Prospectus or as do not materially
interfere with the use made of such land by the Company and Significant
Subsidiaries or as do not have a material adverse effect on the
consolidated financial position, stockholders' equity or results of
operations of the Company and the Subsidiaries taken as a whole.
(m) The Company and HECO are holding companies within the
meaning of the Public Utility Holding Company Act of 1935, as amended;
however, by virtue of having filed an appropriate application under the
provisions of Section 3(a) of such Act, the Company and HECO are exempt
from all of the provisions of such Act, except Section 9(a)(2) thereof, and
will remain so exempt, subject to future timely filing of annual exemption
statements and such filings as are required by Section 33 of such Act with
respect to interests of the Company or any of the Subsidiaries in any
foreign utility company, unless and except insofar as the Commission finds
such exemption detrimental to the public interest or the interest of
investors or consumers.
(n) Neither the Company nor HEI Investment Corp. ("HEIIC") is an
"investment company", nor is either, nor upon issuance of the Securities
will either become, "controlled" by an "investment company", in each case
within the meaning of the Investment Company Act of 1940, as amended (the
"1940 Act").
(o) This Agreement has been duly authorized, executed and
delivered by the Company.
(p) The accountants who have audited the consolidated financial
statements of the Company that are incorporated by reference into the
Prospectus are independent certified public accountants as required by the
Act and the rules and regulations of the Commission promulgated thereunder.
(q) The Medium-Term Note Program under which the Securities are
issued (the "Program") is rated Baa2 by Moody's Investors Service, Inc.,
BBB by Standard & Poor's Ratings Service or such other rating as to which
the Company has most recently notified the Agents pursuant to Section 4(a)
hereof.
Any certificate signed by any officer of the Company and delivered to
one or more Agents or to counsel for the Agents in connection with an offering
of Securities to one or more Agents as principal or through an Agent as agent
shall be deemed a representation and warranty by the Company to such Agent or
Agents as to the matters covered thereby on the date of such certificate.
2. (a) If agreed to by an Agent and the Company, Securities shall be
purchased by such Agent as principal. Such purchases shall be made in
accordance with terms agreed upon by such Agent and the Company (which terms,
unless otherwise agreed to, shall, to the extent applicable, include those terms
specified in Annex I hereto and be agreed upon orally, with written confirmation
prepared by such Agent and delivered to the Company). Any Agent's commitment to
purchase Securities as principal shall be deemed to have been made on the basis
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of the representations and warranties of the Company herein contained and shall
be subject to the terms and conditions herein set forth. Unless the context
otherwise requires, references herein to "this Agreement" shall include the
applicable agreement of one or more Agents to purchase Notes from the Company as
principal. Each purchase of Securities by an Agent as principal, unless
otherwise agreed, shall be at a discount from the principal amount of each such
Security equivalent to the applicable commission set forth in Schedule A hereto.
The Agents may engage the services of any broker or dealer in connection with
the resale of the Securities purchased as principal and may allow all or any
portion of the discount received from the Company in connection with such
purchases to such brokers and dealers. At the time of each purchase of
Securities from the Company by one or more Agents as principal, such Agent or
Agents shall specify the requirements for the Stand-Off Agreement (as defined in
Section 4(f) hereof), officer's certificate, opinions of counsel and comfort
letter pursuant to Sections 4(f), 6(b), 6(c), 6(d) and 6(g) hereof.
If the Company and two or more Agents enter into an agreement pursuant to which
such Agents agree to purchase Securities from the Company as principal,
severally and not jointly as set forth in such agreement, and one or more of
such Agents fails at the Time of Delivery to purchase the Securities that it or
they are obligated to purchase (the "Defaulted Securities"), then the
nondefaulting Agents shall have the right, within 24 hours thereafter, to make
arrangements for one of them or one or more other Agents or underwriters to
purchase all, but not less than all, of the Defaulted Securities in such amounts
as may be agreed upon and upon the terms herein set forth; provided, however,
that if such arrangements have not been completed within such 24-hour period,
then:
(i) if the aggregate principal amount of Defaulted Securities does
not exceed 10% of the aggregate principal amount of Securities to be so
purchased by all of such Agents at the Time of Delivery, the nondefaulting
Agents shall be obligated, severally and not jointly, to purchase the full
amount thereof in the proportions that their respective initial
underwriting obligations bear to the underwriting obligations of all
nondefaulting Agents; or
(ii) if the aggregate principal amount of Defaulted Securities
exceeds 10% of the aggregate principal amount of Securities to be so
purchased by all of such Agents at the Time of Delivery, such agreement
shall terminate without liability on the part of any nondefaulting Agent.
No action taken pursuant to this paragraph shall relieve any defaulting Agent
from liability in respect of its default pursuant to this Section 2(a). In the
event of any such default pursuant to this Section 2(a) that does not result in
a termination of such agreement, each of the nondefaulting Agents and the
Company shall have the right to postpone the Time of Delivery for a period not
exceeding seven days in order to effect any required changes in the Registration
Statements or the Prospectus or in any other documents or arrangements.
(b) On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, when agreed
by the Company and an Agent, such Agent, as agent of the Company, upon receipt
of instructions from the Company, shall use its reasonable efforts to solicit
offers for the purchase of Securities upon the terms set forth in the
Prospectus. Unless otherwise agreed upon by the Company and an Agent, all
Securities sold
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<PAGE>
through such Agent as agent shall be sold at 100% of their principal amount. The
Company reserves the right to sell, and may solicit and accept offers to
purchase, the Securities directly on its own behalf, and, in the case of any
such sale not resulting from a solicitation made by any Agent, no commission
shall be payable with respect to such sale.
The Company reserves the right, in its sole discretion, to instruct
the Agents to suspend at any time, for any period of time or permanently, the
solicitation of offers to purchase the Securities. As soon as practicable, but
in any event not later than one business day in New York City, after receipt of
notice from the Company, the Agents shall suspend solicitation of offers for the
purchase of Securities from the Company until such time as the Company has
advised the Agents that such solicitation may be resumed.
Each Agent, in soliciting offers for the purchase of Securities from
the Company as agent and in performing the other obligations of an Agent
hereunder, is acting solely as agent for the Company and not as principal. Such
Agent will communicate to the Company, orally, each offer for the purchase of
Securities solicited by it on an agency basis other than those offers rejected
by such Agent. Such Agent shall have the right, in its discretion reasonably
exercised, to reject any offer for the purchase of Securities, in whole or in
part, and any such rejection shall not be deemed a breach of its agreement
contained herein. The Company may accept or reject any offer for the purchase
of Securities, in whole or in part. Each Agent shall make reasonable efforts to
assist the Company in obtaining performance by each purchaser whose offer to
purchase Securities from the Company was solicited by it on an agency basis and
has been accepted by the Company, but such Agent shall not have any liability to
the Company in the event such purchase is not consummated for any reason. If
the Company defaults on its obligation to deliver Securities to a purchaser
whose offer has been solicited by such Agent on an agency basis and accepted by
the Company, the Company shall (i) hold each Agent harmless against any loss,
claim or damage arising from or as a result of such default by the Company and
(ii) notwithstanding such default, pay to the Agent that solicited such offer
any commission to which it would otherwise be entitled absent such default.
The Company agrees to pay each Agent a commission (which may be in the
form of a discount), at the time of settlement of any sale of a Security by the
Company as a result of a solicitation made by such Agent, in an amount equal to
the applicable percentage of the principal amount of such Security sold as set
forth in Schedule A hereto.
(c) The purchase price, interest rate or formula, maturity date and
other terms of the Securities (as applicable) specified in Annex I hereto shall
be agreed upon by the Company and such Agent and set forth in the applicable
Pricing Supplement to be prepared in connection with each sale of Securities.
Except as may be otherwise provided in the applicable Pricing Supplement, the
Securities shall be issued in denominations of $1,000 or any larger amount that
is an integral multiple of $1,000.
Procedural details relating to the issue and delivery of Securities,
the solicitation of offers for the purchase of Securities and the payment in
each case therefor shall be as set forth in the Administrative Procedures
attached hereto as Annex II as they may be amended from time to time by written
agreement between the Agents and the Company (the "Administrative Procedures").
Each Agent and the Company agree to perform their respective duties and
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<PAGE>
obligations specifically provided to be performed by them in the Administrative
Procedures. The Company will furnish to the Trustee a copy of the
Administrative Procedures as from time to time in effect.
(d) The Company may appoint additional agents in connection with the
offering and sale of the Securities from time to time or in connection with a
single offering and sale of the Securities, whether as agent or principal,
provided that, in any such case, the Company gives the Agents at least five (5)
days' prior notice of such appointment and any such additional agent enters into
an agreement with the Company making such additional agent an Agent under this
Agreement with respect to such offering and sale of the Securities from time to
time or solely for the purpose of such single offering and sale of the
Securities, as the case may be.
3. The documents required to be delivered pursuant to Section 6
hereof on the Commencement Date (as defined below) shall be delivered to the
Agents at the offices of Merrill Lynch & Co. in New York, New York at 10:00
a.m., New York time, or at such other places or times as the parties agree, on
the date of this Agreement, which date and time of such delivery may be
postponed by agreement between the Agents and the Company but in no event shall
be later than the day prior to the date of any agreement by the Agents to
purchase Securities, as principal, or on which solicitation of offers for the
purchase of Securities is commenced by the Agents, as agents (such time and date
being referred to herein as the "Commencement Date").
4. The Company covenants and agrees with each Agent as follows:
(a)(i) To make no amendment or supplement to the Registration
Statements or the Prospectus (A) prior to the Commencement Date that is
reasonably disapproved by any Agent promptly after reasonable notice
thereof or (B) after the date of an agreement by an Agent to purchase
Securities as principal and prior to the related Time of Delivery that is
reasonably disapproved by any Agent so purchasing as principal promptly
after reasonable notice thereof; (ii) to prepare, with respect to any
Securities to be sold through or to such Agent pursuant to this Agreement,
a Pricing Supplement with respect to such Securities in a form previously
approved by such Agent and to file such Pricing Supplement pursuant to Rule
424(b) promulgated by the Commission under the Act within the time period
required thereby; (iii) to make no amendment or supplement to the
Registration Statements or the Prospectus (other than any Pricing
Supplement and any document filed under the Exchange Act (provided that the
Company furnishes such documents to the Agents at or before the time they
are filed with the Commission and, in the case of Current Reports on Form
8-K, the Company notifies the Agents (or Agents' counsel) a reasonable time
in advance of filing such documents with the Commission)) at any time prior
to having afforded each Agent a reasonable opportunity to review and
comment thereon; (iv) to file promptly all reports and any definitive proxy
or information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act for so long as the delivery of a prospectus is required under the Act
or under the blue sky or securities laws of any jurisdiction in connection
with the offering or sale of the Securities, and during such same period to
advise such Agent, promptly after the Company receives notice thereof, of
the time when any amendment to any of the Registration Statements has been
filed or has become
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<PAGE>
effective or any supplement to the Prospectus or any amended Prospectus
(other than any Pricing Supplement that relates to Securities not purchased
through or by such Agent) has been filed with the Commission, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any prospectus relating to the Securities, of the
suspension of the qualification of the Securities for offering or sale in
any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, of any request by the Commission for the amendment or
supplement of any of the Registration Statements or the Prospectus or for
additional information or of any change in the rating assigned by any
nationally recognized statistical rating organization to the Program or any
debt securities (including the Securities) of the Company, or the public
announcement by any nationally recognized statistical rating organization
that it has under surveillance or review, with possible negative
implications, its rating of the Program or any such debt securities, or the
withdrawal by any nationally recognized statistical rating organization of
its rating of the Program or any such debt securities; and (v) in the event
of the issuance of any such stop order or of any such order preventing or
suspending the use of any such prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
(b) Promptly from time to time to take such action as such Agent may
reasonably request to cooperate with such Agent in the qualification of the
Securities for offering and sale under the blue sky or securities laws of
such jurisdictions within the United States of America and its territories
as such Agent may request and to use its best efforts to comply with such
laws so as to permit the continuance of sales and dealings therein for as
long as may be necessary to complete the distribution or sale of the
Securities; provided, however, that in connection therewith the Company
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shall not be required to qualify as a foreign corporation or to file a
general consent to service of process in any jurisdiction;
(c) To furnish such Agent with copies of the Registration Statements
and each amendment thereto, and with copies of the Prospectus and each
amendment or supplement thereto other than any Pricing Supplement (except
as provided in the Administrative Procedures), in the form in which it is
filed with the Commission pursuant to the Act or Rule 424(b) promulgated by
the Commission under the Act, both in such quantities as such Agent may
reasonably request from time to time; and, if the delivery of a prospectus
is required under the Act or under the blue sky or securities laws of any
jurisdiction at any time in connection with the offering or sale of the
Securities (including Securities purchased from the Company by such Agent
as principal) and if at such time any event has occurred as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it is necessary during such
same period to amend or supplement the Prospectus or to file under the
Exchange Act any document incorporated by reference in the Prospectus in
order to comply with the Act, the Exchange Act or the Trust Indenture Act,
to notify such Agent and request such Agent, in its capacity as agent of
the Company, to suspend solicitations of offers to purchase Securities from
the Company (and, if so notified, such Agent shall cease such
11
<PAGE>
solicitations as soon as practicable, but in any event not later than one
business day later); and if the Company decides to amend or supplement any
of the Registration Statements or the Prospectus as then amended or
supplemented, to advise such Agent promptly by telephone (with confirmation
in writing) and to prepare and cause to be filed promptly with the
Commission an amendment or supplement to any of the Registration Statements
or the Prospectus as then amended or supplemented that will correct such
statement or omission or effect such compliance; provided, however, that if
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during such same period such Agent continues to own Securities purchased
from the Company by such Agent as principal or such Agent is otherwise
required to deliver a prospectus in respect of transactions in the
Securities, the Company shall promptly prepare and file with the Commission
such an amendment or supplement;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the
effective date of the registration statement (as defined in Rule 158(c)
promulgated by the Commission under the Act), an earning statement of the
Company and the Subsidiaries (which need not be audited) complying with
Section 11(a) of the Act and the rules and regulations of the Commission
promulgated thereunder (including, the option of the Company to file
periodic reports in order to make generally available such earning
statement, to the extent that it is required to file such reports under
Section 13 or Section 15(d) of the Exchange Act, pursuant to Rule 158
promulgated by the Commission under the Act);
(e) So long as any Securities are outstanding, to furnish to such
Agent (in paper or electronic format) copies of all publicly available
reports or other communications (financial or other) furnished generally to
stockholders and filed with the Commission pursuant to the Exchange Act,
and deliver to such Agent (i) promptly after they are available, copies of
any publicly available reports and financial statements furnished to or
filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed; and (ii) such additional
publicly available information concerning the business and financial
condition of the Company as such Agent may from time to time reasonably
request (such financial statements to be on a consolidated basis to the
extent the accounts of the Company and its Subsidiaries are consolidated in
reports furnished to its stockholders generally or to the Commission);
(f) That, if specified by an Agent in connection with a purchase
as principal, from the date of any agreement by such Agent to purchase
Securities as principal and continuing to and including the earlier of (i)
the termination of the trading restrictions for the Securities purchased
thereunder, as notified to the Company by such Agent and (ii) the related
Time of Delivery, not to offer, sell, contract to sell or otherwise dispose
of any debt securities of the Company that mature more than 9 months after
such Time of Delivery and are substantially similar to the Securities,
without the prior written consent of such Agent (each, a "Stand-Off
Agreement");
(g) That each acceptance by the Company of an offer for the
purchase of Securities and each delivery of Securities (including in each
case any purchase by such Agent as principal) shall be deemed to be (i) an
affirmation to such Agent that the representations and warranties of the
Company contained in or made pursuant to this
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<PAGE>
Agreement are true and correct as of the date of such acceptance or of such
delivery, as the case may be, as though made at and as of each such date,
except as may be disclosed in the Prospectus (including any documents
incorporated by reference therein and any supplements thereto) or otherwise
in writing by the Company to the Agents on or before said date of
acceptance or date of delivery, as the case may be, and (ii) an undertaking
that the Company will advise such Agent if any of such representations and
warranties will not be true and correct as of the settlement date for the
Securities relating to such acceptance or as of the date of such delivery
relating to such sale, as the case may be, as though made at and as of each
such date (except that such representations and warranties shall be deemed
to relate to the Registration Statements and the Prospectus as amended and
supplemented relating to such Securities);
(h) That reasonably in advance of each time that any of the
Registration Statements or the Prospectus is amended or supplemented (other
than by a Pricing Supplement or, unless reasonably requested by the Agents
within 30 days of the filing thereof with the Commission, a Current Report
on Form 8-K), including by means of an Annual Report on Form 10-K or a
Quarterly Report on Form 10-Q filed with the Commission under the Exchange
Act and incorporated or deemed to be incorporated by reference into the
Prospectus, except in either case during periods in which the Company has
suspended solicitation of offers pursuant to Section 2(b) hereof (it being
understood that the Company may not resume such solicitation until this
provision is complied with) or except as an Agent otherwise elects, and
each time the Company sells Securities to such Agent as principal pursuant
to an agreement to purchase Securities as principal and such agreement
specifies the delivery of an opinion or opinions by Winthrop, Stimson,
Putnam & Roberts (or other counsel selected by the Agents), counsel to the
Agents, as a condition to the purchase of Securities pursuant to such
agreement, the Company shall as soon as practicable thereafter furnish to
such counsel such papers and information as they may reasonably request to
enable them to furnish to such Agent the opinion or opinions referred to in
Section 6(b) hereof;
(i) That each time any of the Registration Statements or the
Prospectus is amended or supplemented (other than by a Pricing Supplement
or, unless reasonably requested by the Agents within 30 days of the filing
thereof with the Commission, a Current Report on Form 8-K), including by
means of an Annual Report on Form 10-K or a Quarterly Report on Form 10-Q
filed with the Commission under the Exchange Act and incorporated or deemed
to be incorporated by reference into the Prospectus, except in either case
during periods in which the Company has suspended solicitation of offers
pursuant to Section 2(b) hereof (it being understood that the Company may
not resume such solicitation until this provision is complied with) or
except as an Agent otherwise elects, and each time the Company sells
Securities to such Agent as principal pursuant to an agreement to purchase
Securities as principal and such agreement specifies the delivery of an
opinion under this Section 4(i) as a condition to the purchase of
Securities pursuant to such agreement, the Company shall as soon as
practicable thereafter furnish or cause to be furnished forthwith to such
Agent a written opinion of Goodsill Anderson Quinn & Stifel (or other
counsel satisfactory to the Agents), counsel for the Company, dated the
date of such amendment, supplement, incorporation or Time of Delivery
relating to such sale, as the case may be, in form
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<PAGE>
reasonably satisfactory to such Agent, to the effect that such Agent may
rely on the opinion of such counsel referred to in Section 6(c) hereof that
was last furnished to such Agent to the same extent as though it were dated
the date of such letter authorizing reliance (except that the statements in
such last opinion shall be deemed to relate to the Registration Statements
and the Prospectus as amended and supplemented to such date) or, in lieu of
such opinion, an opinion of the same tenor as the opinion of such counsel
referred to in Section 6(c) hereof but modified to relate to the
Registration Statements and the Prospectus as amended and supplemented to
such date;
(j) That each time any of the Registration Statements or the
Prospectus is amended or supplemented, including by means of an Annual
Report on Form 10-K, a Quarterly Report on Form 10-Q or a Current Report on
Form 8-K filed with the Commission under the Exchange Act and incorporated
or deemed to be incorporated by reference into the Prospectus, in either
case to set forth financial information included in or derived from the
Company's consolidated financial statements or accounting records, except
in either case during periods in which the Company has suspended
solicitation of offers pursuant to Section 2(b) hereof (it being understood
that the Company may not resume such solicitation until this provision is
complied with) or except as an Agent otherwise elects, and each time the
Company sells Securities to such Agent as principal pursuant to an
agreement to purchase Securities as principal and such agreement specifies
the delivery of a letter under this Section 4(j) as a condition to the
purchase of Securities pursuant to such agreement, the Company shall as
soon as practicable thereafter cause the independent certified public
accountants who have audited the financial statements of the Company and
its Subsidiaries included or incorporated by reference in the Registration
Statements forthwith to furnish to such Agent a letter, dated the date of
such amendment, supplement, incorporation or Time of Delivery relating to
such sale, as the case may be, in form reasonably satisfactory to such
Agent, of the same tenor as the letter referred to in Section 6(d) hereof
but modified to relate to the Registration Statements and the Prospectus as
amended or supplemented to the date of such letter, with such changes as
may be necessary to reflect changes in the financial statements and other
information derived from the accounting records of the Company, to the
extent such financial statements and other information are available as of
a date not more than five business days prior to the date of such letter;
provided, however, that, with respect to any financial information or other
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matter, such letter may reconfirm as true and correct at such date as
though made at and as of such date, rather than repeat, statements with
respect to such financial information or other matters made in the letter
referred to in Section 6(d) hereof that was last furnished to such Agent;
(k) That each time any of the Registration Statements or the
Prospectus is amended or supplemented (other than by a Pricing Supplement
or, unless reasonably requested by the Agents within 30 days of the filing
thereof with the Commission, a Current Report on Form 8-K), including by
means of an Annual Report on Form 10-K or a Quarterly Report on Form 10-Q
filed with the Commission under the Exchange Act and incorporated or deemed
to be incorporated by reference into the Prospectus, except in either case
during periods in which the Company has suspended solicitation of offers
pursuant to Section 2(b) hereof (it being understood that the Company may
not resume such solicitation until this provision is complied with) or
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<PAGE>
except as an Agent otherwise elects, and each time the Company sells
Securities to such Agent as principal and the applicable agreement to
purchase Securities as principal specifies the delivery of a certificate
under this Section 4(k) as a condition to the purchase of Securities
pursuant to such agreement, the Company shall as soon as practicable
thereafter furnish or cause to be furnished forthwith to such Agent a
certificate, dated the date of such supplement, amendment, incorporation or
Time of Delivery relating to such sale, as the case may be, in such form
and executed by such officers of the Company as is reasonably satisfactory
to such Agent, to the effect that the statements contained in the
certificate referred to in Section 6(g) hereof that was last furnished to
such Agent are true and correct at such date as though made at and as of
such date (except that such statements shall be deemed to relate to the
Registration Statements and the Prospectus as amended and supplemented to
such date) or, in lieu of such certificate, certificates of the same tenor
as the certificates referred to in said Section 6(g) but modified to relate
to the Registration Statements and the Prospectus as amended and
supplemented to such date; and
(l) To offer to any person who has agreed to purchase Securities
as the result of an offer to purchase solicited by such Agent the right to
refuse to purchase and pay for such Securities if, on the related
settlement date fixed pursuant to the Administrative Procedures, any
condition set forth in Section 6(a), 6(e) or 6(f) hereof has not been
satisfied (it being understood that the judgment of such person with
respect to the impracticability or inadvisability of such purchase of
Securities shall be substituted, for purposes of this Section 4(l), for the
respective judgments referred to therein of an Agent with respect to
certain matters referred to in such Sections 6(a), 6(e) and 6(f), and that
such Agent shall have no duty or obligation whatsoever to exercise the
judgment permitted under such Sections 6(a), 6(e) and 6(f) on behalf of any
such person).
5. The Company covenants and agrees with each Agent that the Company
shall pay or cause to be paid the following: (i) the fees, disbursements and
expenses of the Company's counsel and accountants in connection with the
preparation, printing and filing of the Registration Statements, the Prospectus
and any Pricing Supplements and all other amendments and supplements thereto and
the mailing and delivering of copies thereof to such Agent; (ii) the reasonable
fees, disbursements and expenses of counsel for the Agents in connection with
the establishment of the Program, any opinions to be rendered by such counsel
hereunder and ongoing services in connection with the transactions contemplated
hereunder including advice and services in connection with purchases by the
Agents or any Agent pursuant to Section 2(a) hereof; (iii) the cost of printing,
preparing by word processor or reproducing this Agreement, any other agreement
to purchase Securities as principal, the Indenture, any blue sky survey and any
other documents in connection with the offering, purchase, sale and delivery of
the Securities; (iv) all expenses (not to exceed an aggregate of $7,500 for all
sales hereunder) in connection with the qualification of the Securities for
offering and sale under state securities laws as provided in Section 4(b)
hereof, including the fees and disbursements of counsel for the Agents in
connection with such qualification and in connection with the blue sky survey;
(v) any fees charged by securities rating services for rating the Securities;
(vi) any filing fees incident to any required review by the National Association
of Securities Dealers, Inc. of the terms of the sale of the Securities; (vii)
the cost of preparing the Securities; (viii) the fees and expenses of any
Trustee and any agent of a Trustee and any transfer or paying agent of the
Company and the fees
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and disbursements of counsel for any Trustee or such agent in connection with
the Indenture and the Securities; (ix) any advertising expenses connected with
the solicitation of offers to purchase and the sale of Securities so long as
such advertising expenses have been approved in advance by the Company; (x) the
Agents' reasonable out-of-pocket expenses incurred in connection with the
transactions contemplated hereunder; (xi) the cost of providing any CUSIP or
other identification numbers for the Securities; (xii) the fees and expenses of
any depositary and any nominees thereof in connection with the Securities; and
(xiii) all other costs and expenses incident to the performance of the Company's
obligations hereunder that are not otherwise specifically provided for in this
Section. Except as provided in this Section 5 and in Sections 7 and 2(b) hereof,
each Agent shall pay all other expenses it incurs.
6. The obligation of any Agent, as agent of the Company, at any time
(each, a "Solicitation Time") to solicit offers to purchase Securities and the
obligation of any Agent to purchase Securities as principal, pursuant to any
agreement, shall in each case be subject, in such Agent's discretion, to the
condition that all representations and warranties and other statements of the
Company herein are true and correct at and as of the Commencement Date and any
applicable date referred to in Section 4(k) hereof that is prior to such
Solicitation Time or Time of Delivery, as the case may be, and at and as of such
Solicitation Time or Time of Delivery, as the case may be, the condition that
prior to such Solicitation Time or Time of Delivery, as the case may be, the
Company shall have performed all of its obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) (i) With respect to any Securities sold at or prior to such
Solicitation Time or Time of Delivery, as the case may be, the Prospectus
as amended and supplemented (including the Pricing Supplement) with respect
to such Securities shall have been filed with the Commission pursuant to
Rule 424(b) promulgated by the Commission under the Act within the
applicable time period prescribed for such filing by the rules and
regulations promulgated by the Commission under the Act and in accordance
with Section 4(a) hereof; (ii) no stop order suspending the effectiveness
of any of the Registration Statements shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission; and (iii) all requests for additional information on the part
of the Commission shall have been complied with to the reasonable
satisfaction of such Agent;
(b) Winthrop, Stimson, Putnam & Roberts, counsel to the Agents,
or other counsel selected by the Agents and reasonably satisfactory to the
Company, shall have furnished to such Agent (i) such opinion or opinions,
dated the Commencement Date, with respect to this Agreement, the validity
of the Indenture and the Securities, the Registration Statements, the
Prospectus as amended or supplemented, and other related matters as such
Agent may reasonably request, and (ii) if and to the extent requested by
such Agent, with respect to each applicable date referred to in Section
4(h) hereof that is on or prior to such Solicitation Time or Time of
Delivery, as the case may be, but excluding dates in periods in which the
Company has suspended solicitation of offers pursuant to Section 2(b)
hereof, an opinion or opinions, dated such applicable date, to the effect
that such Agent may rely on the opinion or opinions that were last
furnished to such Agent pursuant to this Section 6(b) to the same extent as
though it or they were dated the date of such letter authorizing reliance
(except that the statements in such last
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opinion or opinions shall be deemed to relate to the Registration
Statements and the Prospectus as amended and supplemented to such date) or,
in any case, in lieu of such an opinion or opinions, an opinion or opinions
of the same tenor as the opinion or opinions referred to in clause (i) but
modified to relate to the Registration Statements and the Prospectus as
amended and supplemented to such date; and in each case such counsel shall
have received such papers and information as they may reasonably request to
enable them to pass upon such matters;
(c) Goodsill Anderson Quinn & Stifel, counsel for the Company, or
other counsel selected by the Company and reasonably satisfactory to the
Agents, shall have furnished to such Agent their written opinions, dated
the Commencement Date and each applicable date referred to in Section 4(i)
hereof that is on or prior to such Solicitation Time or Time of Delivery,
as the case may be, but excluding dates in periods in which the Company has
suspended solicitation of offers pursuant to Section 2(b) hereof, in form
and substance satisfactory to such Agent, to the effect that:
(i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Hawaii, with corporate power and authority to own its properties
and conduct its business as described in the Prospectus as amended or
supplemented;
(ii) the Company has an authorized equity capitalization as
set forth in the Prospectus as amended or supplemented and all of the
issued and outstanding shares of capital stock of the Company have
been duly and validly authorized and issued and are fully paid and
non-assessable;
(iii) to such counsel's knowledge, the Company does not
itself conduct any business or own or lease any property in any
jurisdiction outside the State of Hawaii that would require it to
qualify to do business as a foreign corporation and where the failure
to be so qualified would subject the Company to any material liability
or disability;
(iv) each Significant Subsidiary, other than ASB, has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation; ASB has
been duly formed and is duly chartered as a federal savings bank under
the laws of the Untied States; all of the issued and outstanding
shares of capital stock of each Significant Subsidiary have been duly
and validly authorized and issued and are fully paid and non-
assessable; and, to such counsel's knowledge, all of such shares,
other than shares of preferred stock (including the existing preferred
stock of HECO and its subsidiaries), are owned directly or indirectly
by the Company, free and clear of any perfected encumbrance or
security interest or any other encumbrance, claim or equity, and with
such exceptions as are described in the Prospectus as amended or
supplemented or as are otherwise disclosed to the Agents;
(v) the Company and HECO are holding companies within the
meaning of the Public Utility Holding Company Act of 1935; however, by
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virtue of having filed an appropriate application under the provisions
of Section 3(a) of such Act, the Company and HECO are exempt from all
of the provisions of such Act except Section 9(a)(2) thereof, and will
remain so exempt, subject to the future timely filings of annual
exemption statements and such filings as are required by Section 33 of
such Act with respect to interests of the Company or Subsidiaries in
any foreign utility company, unless and except insofar as the
Commission finds such exemption detrimental to the public interest or
the interest of investors or consumers;
(vi) except as indicated in the Prospectus as amended or
supplemented, to such counsel's knowledge, (a) neither the Company nor
any Significant Subsidiary is engaged in, or threatened with, any
litigation, and (b) there are no proceedings, or any proceedings
threatened, with respect to the Company or any Significant Subsidiary
or their property, that, in the case of either clause (a) or (b)
above, such counsel (or other counsel as to litigation or proceedings
that are not principally handled by their firm) has concluded is
reasonably expected to have a material adverse effect on the Company
and Subsidiaries taken as a whole;
(vii) this Agreement has been duly authorized, executed
and delivered by the Company;
(viii) the Securities have been duly authorized by the
Company for issuance, offer and sale pursuant to the provisions of
this Agreement and, when duly executed, authenticated, issued and
delivered pursuant to the provisions of this Agreement and the
Indenture against payment of the consideration therefor, will
constitute valid and legally binding obligations of the Company
enforceable against the Company in accordance with their respective
terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting enforcement
of mortgagees' and other creditors' rights and by general equitable
principles (regardless of whether considered in a proceeding in equity
or at law) and will be entitled to the benefits provided by the
Indenture; and the Indenture and the Securities conform to the
descriptions thereof in the Prospectus as amended or supplemented;
(ix) the Indenture has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution
and delivery by the Trustee, constitutes a valid and legally binding
instrument of the Company, enforceable against the Company in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
enforcement of creditors' rights and by general equitable principles
(regardless of whether considered in a proceeding in equity or at
law); and the Indenture has been duly qualified under the Trust
Indenture Act;
(x) the issuance and sale of the Securities, the compliance
by the Company with all of the provisions of the Securities, the
Indenture, this Agreement and the consummation of the transactions
contemplated herein and
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therein will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument known to such counsel to which the Company or any
Significant Subsidiary is a party or by which the Company or any
Significant Subsidiary is bound or to which any of the material
property or assets of the Company or any Significant Subsidiary is
subject, nor will such action result in any violation of the
provisions of the charter or the by-laws of the Company or any statute
or any order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or
any of its properties, except that such counsel need not express an
opinion with respect to compliance with state securities or blue sky
laws in connection with the solicitation by the Agents of offers for
the purchase of Securities from the Company, with any resulting
purchases of Securities and with any purchases of Securities by an
Agent as principal, as the case may be, in each case in the manner
contemplated hereby;
(xi) no consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body is required for the solicitation of offers to purchase
Securities, the issuance and sale of the Securities or the
consummation by the Company of the other transactions contemplated by
this Agreement or the Indenture, except such as have been obtained or
made under the Act and the Trust Indenture Act or otherwise and such
consent, approvals, authorizations, registrations, or qualifications
as may be required under state securities or blue sky laws in
connection with the solicitation by the Agents of offers for the
purchase of Securities from the Company, with any resulting purchases
of securities and with any purchases of Securities by an Agent as
principal, as the case may be, in each case in the manner contemplated
hereby;
(xii) neither the Company nor HEIIC is an "investment
company", nor is either "controlled" by an "investment company", in
each case within the meaning of the 1940 Act;
(xiii) the documents incorporated by reference in the
Prospectus as amended or supplemented, when they were filed with the
Commission, complied as to form in all material respects with the
requirements of the Exchange Act, and the rules and regulations of the
Commission promulgated thereunder; and nothing has come to the
attention of such counsel that causes them to believe that any of such
documents, when they were so filed, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made when the documents were so filed, not
misleading; and
(xiv) the Registration Statements, as of the Effective
Date, and the Prospectus, as of its Issue Date, comply as to form in
all material respects with the requirements of the Act and the Trust
Indenture Act and the rules and regulations of the Commission
promulgated thereunder; to such counsel's knowledge, each of the
Registration Statements has been declared, and as of the date
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<PAGE>
of such opinion is, effective under the Act and no proceedings for a
stop order with respect thereto are threatened or pending under
Section 8 of the Act; nothing has come to the attention of such
counsel that causes them to believe that the Registration Statements,
as of the Effective Date, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that,
as of its Issue Date and as of the date of such opinion, the
Prospectus (as most recently amended and supplemented), contained or
contains an untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and they do
not know of any contracts or other documents of a character required
to be filed as an exhibit to any of the Registration Statements or
required to be incorporated by reference into the Prospectus as
amended or supplemented or required to be described in any of the
Registration Statements or the Prospectus as amended or supplemented
that are not filed or incorporated by reference or described as
required.
In rendering such opinion, (A) such counsel may state that it is
expressing an opinion only as to the federal laws of the United States and
the laws of the State of Hawaii, (B) such counsel may rely, as to matters
involving the application of the laws of the State of New York, upon the
opinion or opinions of counsel for the Agents, (C) such counsel may rely,
as to matters of good standing and valid existence and as to matters of
fact, upon certificates of government officials (provided that copies of
such certificates will be furnished to counsel for the Agents), (D) such
counsel may rely, as to matters of fact, upon certificates and
representations of officers and employees of the Company (provided that
copies of such certificates will be furnished to counsel for the Agents
upon its reasonable request), (E) such counsel may rely, with respect to
matters involving litigation or proceedings not principally handled by such
counsel's firm, upon opinions and information upon which such counsel has
been permitted to rely by other counsel representing the Company in such
litigation or proceedings (provided that copies of such opinions are
delivered to counsel for the Agents, other than opinions of counsel who do
not consent to such delivery if, in such case, the Company makes such
counsel reasonably available to discuss such litigation or proceedings with
counsel for the Agents), (F) for purposes of the opinion expressed in
paragraph (vi) above, "material" shall mean $15,000,000, (G) such counsel
may state that it has not been requested to, and does not, express any
opinion with respect to the financial statements and notes thereto and the
schedules and other financial and statistical data and information included
or incorporated by reference in the Registration Statements and the
Prospectus, (H) such counsel may state, with respect to the matters set
forth in paragraphs (xiii) and (xiv) above, that they have not
independently verified and assume no responsibility for the accuracy,
completeness or fairness of the statements in the Prospectus or in any
document incorporated by reference therein, except insofar as such
statements relate to such counsel or as set forth in paragraph (viii)
above, (I) such counsel may state that, whenever such opinion is qualified
by the phrases "known to such counsel," "to the best of our knowledge," "to
our knowledge" or "nothing has come to our attention," or other phrases of
similar import, such phrases are intended to mean the actual knowledge of
information by the lawyers in such counsel's firm who have been principally
involved in drafting the Prospectus and supervising the issuance, sale and
delivery of the Securities and
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<PAGE>
preparing the pertinent documents and the lawyers having supervisory
responsibility for the client relationship with the Company and general
transaction representation, but does not include other information that
might be revealed if there were to be undertaken a canvass of all lawyers
in such counsel's firm, a general search of all files or any other type of
independent investigation (other than, with respect to the matters set
forth in paragraph (vi) above, such review of internal litigation files or
inquiries of other counsel as such counsel deems necessary), and (J) such
counsel may include therein such other customary qualifications reasonably
acceptable to the Agents and counsel for the Agents;
(d) Not later than 10:00 A.M., New York City time, on the
Commencement Date, and not later than 10:00 A.M., New York City time, on
each applicable date referred to in Section 4(j) hereof that is on or prior
to such Solicitation Time or Time of Delivery, as the case may be, but
excluding dates in periods during which the Company has suspended
solicitation of offers pursuant to Section 2(b) hereof, the independent
certified public accountants who have audited the financial statements of
the Company and its Subsidiaries included or incorporated by reference in
the Registration Statements shall have furnished to such Agent a letter,
dated the Commencement Date or such applicable date, as the case may be, in
form and substance satisfactory to such Agent, to the effect set forth in
Annex III hereto;
(e) (i) Neither the Company nor any Subsidiary shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus as amended or
supplemented any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus as amended or
supplemented and (ii) since the respective dates as of which information is
given in the Prospectus as amended or supplemented or since the date of any
agreement of any Agent to purchase Securities as principal there shall not
have been any change in the capital stock of the Company or any Subsidiary
or any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and
Subsidiaries taken as a whole, the effect of which, in any such case
described in clause (i) or (ii), is in the judgment of such Agent so
material and adverse as to make it impracticable or inadvisable to proceed
with the solicitation by such Agent of offers for the purchase of
Securities from the Company or the purchase by such Agent of such
Securities from the Company as principal, as the case may be;
(f) There shall not have occurred (and be continuing in the case
of occurrences under clause (i) and (ii) below) any of the following: (i)
a suspension or material limitation in trading in securities of the Company
or in securities generally on the New York Stock Exchange; (ii) a general
moratorium on commercial banking activities in New York or Hawaii declared
by either federal or New York or Hawaii State authorities; (iii) after an
Agent has agreed to purchase Securities from the Company as principal, any
material adverse change in the financial markets in the United States, any
outbreak or escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war or any
change or development involving a
21
<PAGE>
prospective change in national or international political, financial or
economic conditions, if the effect of any such event specified in this
clause (iii) in the judgment of such Agent makes it impracticable or
inadvisable to proceed with the purchase of such Securities from the
Company as principal; or (iv) after an Agent has agreed to purchase
Securities from the Company as principal, any downgrading in the rating
accorded the Program or the Company's debt securities by any "nationally
recognized statistical rating organization", as that term is defined by the
Commission for purposes of Rule 436(g)(2) promulgated under the Act, or any
public announcement by any such organization that it has under surveillance
or review, with possible negative implications, its rating of the Program
or any of the Company's debt securities; and
(g) The Company shall have furnished or caused to be furnished to
such Agent certificates of officers of the Company dated the Commencement
Date and each applicable date referred to in Section 4(k) hereof that is on
or prior to such Solicitation Time or Time of Delivery, as the case may be,
but excluding dates in periods during which the Company has suspended
solicitation of offers pursuant to Section 2(b) hereof, in such form and
executed by such officers of the Company as are reasonably satisfactory to
such Agent, as to the accuracy of the representations and warranties of the
Company herein at and as of the Commencement Date or such applicable date,
as the case may be, as to the performance by the Company of all of its
obligations hereunder to be performed at or prior to the Commencement Date
or such applicable date, as the case may be, as to the matters set forth in
subsections (a) and (e) of this Section 6, and as to such other matters as
such Agent may reasonably request.
7. (a) The Company shall indemnify and hold harmless each Agent and
each person, if any, who controls each Agent within the meaning of Section 15 of
the Act and Section 20 of the Exchange Act against any losses, claims, damages
or liabilities, joint or several, to which such Agent or such person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
of the Registration Statements, the Prospectus, the Prospectus as amended or
supplemented or any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and to the
extent of the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, provided that
(subject to Section 7(d) hereof) any such settlement is effected with the
written consent of the Company, and shall reimburse such Agent or such person
for any legal or other expenses reasonably incurred by it in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
-------- -------
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in any of the Registration Statements, the Prospectus, the
Prospectus as amended or supplemented or any other prospectus relating to the
Securities, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by such Agent
expressly for use therein; and provided, further, that the Company shall not be
-------- -------
required to
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reimburse any Agent or such person for fees and expenses of counsel other than
one counsel for all Agents and one counsel for all Agents in each jurisdiction
in which proceedings are or are threatened to be brought or of which matters of
law are or may be at issue, unless and to the extent that there are actual or
potential conflicts of interest between or among Agents or defenses available to
one or more Agents that are not available to other Agents; and provided,
--------
further, that the indemnification contained in this Section 7(a) with respect to
- -------
the Prospectus shall not inure to the benefit of any Agent (or to the benefit of
any person controlling such Agent) on account of any such loss, claim, damage,
liability or expense arising from the sale of the Securities, or arrangement
thereof, by such Agent to any person if the Company has established that a copy
of the most recent Prospectus (excluding documents incorporated by reference)
has not been delivered or sent to such person within the time required by the
Act and the rules and regulations of the Commission promulgated thereunder,
provided that the Company has delivered such Prospectus to such Agent in
requisite quantity on a timely basis to permit such delivery or sending.
(b) Each Agent shall indemnify and hold harmless the Company, each of
the directors and each of the officers of the Company who signed any of the
Registration Statements, and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities, joint or several, to which
the Company, such directors, such officers or such persons may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
of the Registration Statements, the Prospectus, the Prospectus as amended or
supplemented or any other prospectus relating to the Securities, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and to the
extent of the aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue statement or
omission, or any such alleged untrue statement or omission, provided that
(subject to Section 7(d) hereof) any such settlement is effected with the
written consent of such Agent, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in any of the Registration Statements, the Prospectus,
the Prospectus as amended or supplemented or any other prospectus relating to
the Securities, or any such amendment or supplement, in reliance upon and in
conformity with written information furnished to the Company by such Agent
expressly for use therein; and shall reimburse the Company, such directors, such
officers or such persons for any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending any such action or
claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under Section 7(a)
or (b) hereof of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under Section 7(a) or (b) hereof, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability that it may have to
any indemnified party unless and only to the extent that such indemnifying party
is prejudiced by such omission nor relieve it from any liability that it may
have to any indemnified party otherwise than under Section 7(a) or (b) hereof.
In case any such action is brought against any indemnified party and such
indemnified party notifies the indemnifying party of the commencement thereof,
the
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indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such indemnified party
(who shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under Section
7(a) or (b) hereof for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by such indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 7 (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent (i)
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim and (ii) does
not include a statement as to or an admission of fault, culpability or a failure
to act by or on behalf of any indemnified party.
(d) If at any time an indemnified party has requested an indemnifying
party to reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a) or Section 7(b) hereof, as the case may be,
effected without its written consent if (i) such settlement is entered into more
than 45 days after receipt by such indemnifying party of the aforesaid request,
(ii) such indemnifying party has received notice of the terms of such settlement
at least 30 days prior to such settlement being entered into and (iii) such
indemnifying party has not reimbursed such indemnified party in accordance with
such request prior to the date of such settlement.
(e) If the indemnification provided for in this Section 7 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 7(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and each Agent on the
other from the offering of the Securities to which such loss, claim, damage or
liability (or action in respect thereof) relates. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under Section
7(c) above and such indemnifying party was prejudiced by such omission, then
each indemnifying party shall contribute to such amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company on the one hand and
each Agent on the other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and each Agent on the other
shall be deemed to be in the same proportion as the total net proceeds from the
sale of Securities (before deducting expenses) received by the Company bear to
the total commissions or discounts received by such Agent in respect thereof.
The relative fault shall be determined by reference to, among other things,
whether the untrue
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<PAGE>
statement of a material fact or the omission or alleged omission to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading relates to information supplied by the Company
on the one hand or by any Agent on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and each Agent agree that it would not be
just and equitable if contribution pursuant to this Section 7(e) were determined
by per capita allocation (even if all Agents were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to above in this Section 7(e). The amount paid
or payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section
7(e) shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 7(e), an Agent
shall not be required to contribute any amount in excess of the amount by which
the total public offering price at which the Securities purchased by or through
it were sold exceeds the amount of any damages that such Agent has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of each of the Agents under this Section 7(e)
to contribute are several in proportion to the respective purchases made by or
through it to which such loss, claim, damage or liability (or action in respect
thereof) relates and are not joint. The obligations of the Company and the
Agents under this Section 7 shall be in addition to any liability that the
Company and the Agents may otherwise have. For purposes of this Section 7(e),
each person, if any, who controls an Agent within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such agent, and each director of the Company, each officer of
the Company who signed any of the Registration Statements, and each person, if
any, who controls the Company within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act shall have the same rights to contribution as the
Company.
8. The respective indemnities, agreements, representations,
warranties and other statements by any Agent and the Company set forth in or
made pursuant to this Agreement shall remain in full force and effect regardless
of any investigation (or any statement as to the results thereof) made by or on
behalf of any Agent or any controlling person of any Agent or the Company, or
any officer or director or any controlling person of the Company, and shall
survive each delivery of and payment for any of the Securities.
9. The provisions of the Agreement relating to the solicitation of
offers for the purchase of Securities from the Company may be suspended or
terminated at any time by the Company as to any Agent or by any Agent as to such
Agent upon the giving of written notice of such suspension or termination to
such Agent or the Company, as the case may be. In the event of such suspension
or termination with respect to any Agent, (a) this Agreement shall remain in
full force and effect with respect to any Agent as to which such suspension or
termination has not occurred, (b) this Agreement shall remain in full force and
effect with respect to the rights and obligations of any party that have
previously accrued or that relate to Securities that have already been issued or
agreed to be issued or are the subject of a pending offer at the time of such
suspension or termination and (c) in any event, this Agreement shall remain in
full force and effect insofar as the third and fourth paragraphs of Section
2(b), Section 4(d), Section 4(e),
25
<PAGE>
Section 5, Section 7 and Section 8 hereof are concerned.
10. Except as otherwise specifically provided herein or in the
Administrative Procedures, all statements, requests, notices and advices
hereunder shall be in writing, or by telephone if promptly confirmed in writing,
and if to Merrill Lynch & Co. shall be sufficient in all respects when delivered
or sent by facsimile transmission or registered mail to Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, World Financial Center,
North Tower - 10th Floor, New York, New York 10281-1310, Facsimile Transmission
No. (212) 449-2234, Attention: MTN Product Management, and if to Goldman, Sachs
& Co. shall be sufficient in all respects when delivered or sent by facsimile
transmission or registered mail to Goldman, Sachs & Co., 85 Broad Street, New
York, New York 10004, Facsimile Transmission No. (212) 357-8680, Attention:
Credit Department, and if to the Company shall be sufficient in all respects
when delivered or sent by facsimile transmission or registered mail to 900
Richards Street, Honolulu, Hawaii 96813, Facsimile Transmission No. (808) 543-
7966, Attention: Treasurer.
11. This Agreement shall be binding upon, and inure solely to the
benefit of, each Agent and the Company, and to the extent provided in Section 7
and Section 8 hereof, the officers and directors of the Company and any person
who controls any Agent or the Company, and their respective personal
representatives, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. No purchaser of any of the
Securities through or from any Agent hereunder shall be deemed a successor or
assign by reason of such purchase.
12. Time shall be of the essence of this Agreement. As used herein,
except as otherwise noted the term "business day" shall mean any day when the
office of the Commission in Washington, D.C. is normally open for business.
13. This Agreement shall be governed by, and construed in accordance
with, the internal laws of the State of New York.
14. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be an original, but
all of such respective counterparts shall together constitute one and the same
instrument.
26
<PAGE>
If the foregoing is in accordance with the Agents' understanding,
please sign and return to the Company all counterparts hereof, whereupon this
letter and the acceptance by each of you thereof shall constitute a binding
agreement between the Company and each of you in accordance with its terms.
Very truly yours,
HAWAIIAN ELECTRIC INDUSTRIES, INC.
By: _______________________________
Title:
By: _______________________________
Title:
Accepted in New York, New York,
as of the date hereof:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
By: ___________________________
Title:
_______________________________
(GOLDMAN, SACHS & CO.)
27
<PAGE>
SCHEDULE A
As compensation for the services of the Agents hereunder, the Company shall
pay the applicable Agent, on a discount basis, a commission for the sale of each
Security equal to the principal amount of such Security multiplied by the
appropriate percentage set forth below:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------
PERCENT OF PRINCIPAL
MATURITY RANGES AMOUNT
============================================================================
<S> <C>
From 9 months to less than 1 year .125%
- ----------------------------------------------------------------------------
From 1 year to less than 18 months .150
- ----------------------------------------------------------------------------
From 18 months to less than 2 years .200
- ----------------------------------------------------------------------------
From 2 years to less than 3 years .250
- ----------------------------------------------------------------------------
From 3 years to less than 4 years .350
- ----------------------------------------------------------------------------
From 4 years to less than 5 years .450
- ----------------------------------------------------------------------------
From 5 years to less than 6 years .500
- ----------------------------------------------------------------------------
From 6 years to less than 7 years .550
- ----------------------------------------------------------------------------
From 7 years to less than 10 years .600
- ----------------------------------------------------------------------------
From 10 years to less than 15 years .625
- ----------------------------------------------------------------------------
From 15 years to less than 20 years .700
- ----------------------------------------------------------------------------
From 20 years to 30 years .750
- ----------------------------------------------------------------------------
</TABLE>
28
<PAGE>
ANNEX I
The following terms, to the extent applicable, shall be agreed to by the
applicable Agent and the Company in connection with each sale of Securities:
Name of Agent: _____________________
Acting as principal [_]
Acting as agent for the Company [_]
Principal Amount: $______________________
Price to Public: ___% of the principal amount, plus accrued interest, if
any, from ______
Commission (or Discount): ___% of the principal amount
Purchase Price: ____%, plus accrued interest, if any, from _________
Interest Rate:
If Fixed Rate Note:
Interest Rate:
Interest Payment Date(s):
If Floating Rate Note:
Base Rate:
If LIBOR:
LIBOR Reuters Page:
LIBOR Telerate Page:
Initial Interest Rate:
Spread or Spread Multiplier, if any:
Initial Interest Reset Date:
Interest Reset Date(s):
Interest Payment Date(s):
Interest Determination Date(s):
Index Maturity:
Maximum Interest Rate, if any:
Minimum Interest Rate, if any:
Interest Reset Period:
Interest Payment Period:
Calculation Agent:
If Original Issue Discount Note, terms:
If Redeemable:
Redemption Commencement Date:
Initial Redemption Percentage:
Annual Redemption Percentage Reduction:
If Repayable:
Optional Repayment Date(s):
Repayment Provisions, if any:
29
<PAGE>
Original Issue Date:
Stated Maturity Date:
Settlement Date and Time:
Additional Terms:
Also, in connection with the purchase of Securities by one or more Agents
as principal, agreement as to whether the following will be required:
Officer's Certificate pursuant to Section 6(g) of the Distribution
Agreement.
Legal Opinions pursuant to Sections 6(b) and (c) of the Distribution
Agreement.
Comfort Letter pursuant to Section 6(d) of the Distribution Agreement.
Stand-Off Agreement pursuant to Section 4(f) of the Distribution Agreement.
30
<PAGE>
ANNEX II
Hawaiian Electric Industries, Inc.
ADMINISTRATIVE PROCEDURES
for Fixed Rate and Floating Rate Medium-Term Notes, Series C
Due From Nine Months to 30 Years From Date of Issue
(Dated as of March ___, 1999)
Medium-Term Notes, Series C Due From Nine Months to 30 Years From Date of
Issue (the "Notes") are to be offered on a continuous basis by Hawaiian Electric
Industries, Inc., a Hawaii corporation (the "Company"), to or through Merrill
Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Goldman,
Sachs & Co., and any other agent or agents appointed by the Company from time to
time (each, an "Agent" and, collectively, the "Agents"), pursuant to a
Distribution Agreement, dated March __, 1999 (the "Distribution Agreement"), by
and among the Company and the Agents. The Distribution Agreement provides both
for the sale of Notes by the Company to one or more of the Agents as principal
for resale to investors and other purchasers and for the sale of Notes by the
Company directly to investors (as may from time to time be agreed to by the
Company and the related Agent or Agents), in which case each such Agent will act
as an agent of the Company in soliciting purchases of Notes.
If agreed upon by the related Agent or Agents and the Company, Notes shall
be purchased by such Agent or Agents as principal. Such purchases will be made
in accordance with terms agreed upon by the related Agent or Agents and the
Company (which terms, unless otherwise agreed to, shall, to the extent
applicable, include those terms specified in Annex I to the Distribution
Agreement, and be agreed upon orally, with written confirmation prepared by such
Agent or Agents and mailed or sent by facsimile transmission to the Company).
If agreed upon by any Agent or Agents and the Company, the Agent or Agents,
acting solely as agent or agents for the Company, and not as principal, will use
reasonable efforts to solicit offers to purchase the Notes. Only those
provisions in these Administrative Procedures that are applicable to the
particular role to be performed by the related Agent or Agents shall apply to
the offer and sale of the relevant Notes.
The Notes will be issued under an Indenture, dated as of October 15, 1998,
as amended, supplemented or modified from time to time, including by a Second
Supplemental Indenture thereto dated as of March 1, 1999 relating to the Notes
(collectively, the "Indenture"), between the Company and Citibank, N.A., as
trustee (the "Trustee"). The Company has filed Registration Statements (as
defined in the Distribution Agreement) with the Securities and Exchange
Commission (the "Commission") registering the Notes. A pricing supplement to
the Prospectus (as defined in the Distribution Agreement) setting forth the
purchase price, interest rate or formula, maturity date and other terms of any
Notes (as applicable) is herein referred to as a "Pricing Supplement."
The Notes will either be issued (a) in book-entry form (each, a "Book-Entry
Note") and represented by one or more fully registered Notes without coupons
(each, a "Global Note")
<PAGE>
delivered to the Trustee, as agent for The Depository Trust Company, New York,
New York ("DTC"), and recorded in the book-entry system maintained by DTC, or
(b) in certificated form (each, a "Certificated Note") delivered to the investor
or other purchaser thereof or a person designated by such investor or other
purchaser. Except in the limited circumstances described in the Prospectus or a
Pricing Supplement, owners of beneficial interests in Book-Entry Notes will not
be entitled to physical delivery of Certificated Notes equal in principal amount
to their respective beneficial interests.
General procedures relating to the issuance of all Notes are set forth in
Part I hereof. Book-Entry Notes will be issued in accordance with the procedures
set forth in Part II hereof and Certificated Notes will be issued in accordance
with the procedures set forth in Part III hereof. Capitalized terms used but
not otherwise defined herein shall have the meanings ascribed thereto in the
Prospectus, the Indenture or the Notes, as the case may be.
<TABLE>
<CAPTION>
PART I: PROCEDURES OF GENERAL APPLICABILITY
<S> <C>
Date of Issuance/Authentication: Each Note will be dated as of the date of its
authentication by the Trustee. Each Note
shall also bear an original issue date (the
"Original Issue Date"). The Original Issue
Date shall remain the same for all Notes
subsequently issued upon transfer, exchange or
substitution of an original Note regardless of
their dates of authentication.
Maturities: Each Note will mature on a date selected by
the purchaser and agreed to by the Company
that is not less than nine months nor more
than thirty years from its Original Issue Date
(the "Stated Maturity Date").
Currency/Denominations: Notes will be denominated in, and payments of
principal, premium, if any, and interest, if
any, in respect thereof will be made in, U.S.
dollars and the Notes will be issued in
denominations of $1,000 and integral multiples
thereof.
Registration: The Notes will be issued only in fully
registered form.
Base Rates Applicable to Unless otherwise provided in the applicable
Floating Rate Notes: Pricing Supplement, Floating Rate Notes will
bear interest at a rate or rates determined by
reference to the CD Rate, the Commercial
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Paper Rate, the Federal Funds Rate, LIBOR, the
Prime Rate, the Treasury Rate, or such other
interest rate basis or formula as may be set forth
in the applicable Pricing Supplement, or by
reference to two or more such rates, as adjusted
by the Spread and/or Spread Multiplier, if any,
applicable to such Floating Rate Notes.
Redemption/Repayment: The Notes will be subject to redemption by the
Company on and after their respective
Redemption Commencement Dates, if any.
Redemption Commencement Dates, if any, will be
fixed at the time of sale and set forth in the
applicable Pricing Supplement and in the
applicable Note. If no Redemption
Commencement Dates are indicated with respect
to a Note, such Note will not be redeemable at
the option of the Company prior to its Stated
Maturity Date.
The Notes will be subject to repayment at the
option of the Holders thereof in accordance
with the terms of the Notes on their
respective Optional Repayment Dates, if any.
Optional Repayment Dates, if any, will be
fixed at the time of sale and set forth in the
applicable Pricing Supplement and in the
applicable Note. If no Optional Repayment
Dates are indicated with respect to a Note,
such Note will not be repayable at the option
of the Holder prior to its Stated Maturity
Date.
Calculation of Interest: In the case of Fixed Rate Notes, interest
(including payments for partial periods) will
be calculated and paid on the basis of a
360-day year of twelve 30-day months.
The interest rate on each Floating Rate Note
will be calculated by reference to the
specified Base Rate or Rates plus or minus the
applicable Spread, if any, and/or multiplied
by the applicable Spread Multiplier, if any.
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Unless otherwise provided in the applicable
Pricing Supplement, accrued interest on each
Floating Rate Note will be calculated by
multiplying its principal amount by an accrued
interest factor. Such accrued interest factor
is computed by adding the interest factors
calculated for each day in the period for
which accrued interest is being calculated.
Unless otherwise provided in the applicable
Pricing Supplement, the interest factor for
each such day is computed by dividing the
interest rate applicable to such day by 360 if
the CD Rate, Commercial Paper Rate, Federal
Funds Rate, LIBOR or Prime Rate is an
applicable Base Rate, or by the actual number
of days in the year if the Treasury Rate is an
applicable Base Rate. The interest factor for
Floating Rate Notes for which the interest
rate is calculated with reference to two or
more Base Rates will be calculated in each
period in the same manner as if only the
lowest, highest or average of the applicable
Base Rates applied as specified in the
applicable Pricing Supplement.
Interest: General. Each Note will bear interest in
-------
accordance with its terms. Unless otherwise
provided in the applicable Pricing Supplement,
interest on each Note will accrue from and
including the Original Issue Date of such Note
for the first interest period or from and
including the most recent Interest Payment
Date to which interest has been paid or duly
made available for payment for all subsequent
interest periods, to but excluding the
applicable Interest Payment Date or the Stated
Maturity Date, Redemption Date or Optional
Repayment Date (each Stated Maturity Date,
Redemption Date or Optional Repayment Date is
referred to herein as a "Maturity"). Interest
on Notes will be payable in arrears to the
Holders of such Notes as of the Regular Record
Date for each Interest Payment Date and at
Maturity to the Person to whom the
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
principal of such Notes is payable.
If an Interest Payment Date or the Maturity
with respect to any Fixed Rate Note falls on a
day that is not a Business Day, the required
payment to be made on such day need not be
made on such day, but may be made on the next
succeeding Business Day with the same force
and effect as if made on such day and no
interest shall accrue on such payment for the
period from and after such day to the next
succeeding Business Day. If an Interest
Payment Date (other than at Maturity) with
respect to any Floating Rate Note would
otherwise fall on a day that is not a Business
Day, such Interest Payment Date will be
postponed to the next succeeding Business Day,
except that in the case of a LIBOR Note, if
such next succeeding Business Day falls in the
next succeeding calendar month, such Interest
Payment Date will be the immediately preceding
Business Day. If the Maturity of a Floating
Rate Note falls on a day that is not a
Business Day, the required payment need not be
made on such day, but may be made on the next
succeeding Business Day as if made on the date
such payment was due, and no interest on such
payment shall accrue for the period from and
after such Maturity to the date of such
payment on the next succeeding Business Day.
Regular Record Dates. Unless otherwise
--------------------
specified in an applicable Pricing Supplement,
the Regular Record Date with respect to any
Interest Payment Date for any Note shall be
the date 15 calendar days (whether or not a
Business Day) preceding such Interest Payment
Date.
Interest Payment Dates. Interest payments
----------------------
will be made at Maturity and on each Interest
Payment Date commencing with the first
Interest Payment Date following the Original
Issue Date; provided, however, the first
-------- -------
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
payment of interest on any Note originally
issued between a Regular Record Date and an
Interest Payment Date will occur on the
Interest Payment Date following the next
succeeding Regular Record Date.
6
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Fixed Rate Notes. Interest payments on Fixed
----------------
Rate Notes (other than Original Issue Discount
Notes) will be made semiannually on April 10th
and October 10th of each year and at Maturity.
Floating Rate Notes. Interest payments on
-------------------
Floating Rate Notes will be made as specified
in the Floating Rate Note.
Acceptance and Rejection of Offers If agreed upon by any Agent and the Company,
from Solicitations as Agents: then such Agent acting solely as agent for the
Company and not as principal will solicit
purchases of the Notes. Each Agent will
communicate to the Company, orally or in
writing, each reasonable offer to purchase
Notes solicited by such Agent on an agency
basis, other than those offers rejected by
such Agent. Each Agent has the right, in its
discretion reasonably exercised, to reject any
proposed purchase of Notes, as a whole or in
part, and any such rejection shall not be a
breach of such Agent's agreement contained in
the Distribution Agreement. The Company has
the sole right to accept or reject any
proposed purchase of Notes, in whole or in
part, and any such rejection shall not be a
breach of the Company's agreement contained in
the Distribution Agreement. Each Agent has
agreed to make reasonable efforts to assist
the Company in obtaining performance by each
purchaser whose offer to purchase Notes has
been solicited by such Agent and accepted by
the Company.
Preparation of Pricing Supplement: If any offer to purchase a Note is accepted by
the Company, the Company will promptly prepare
a Pricing Supplement reflecting the terms of
such Note. Information to be included in the
Pricing Supplement shall include:
1. the name of the Company;
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
2. the title of the Notes;
3. the date of the Pricing Supplement and the
date of the Prospectus to which the Pricing
Supplement relates;
4. the name of the Presenting Agent (as
defined below);
5. whether such Notes are being sold to the
Presenting Agent as principal or to an
investor or other purchaser through the
Presenting Agent acting as agent for the
Company;
6. with respect to Notes sold to the
Presenting Agent as principal, whether such
Notes will be resold by the Presenting Agent
to investors and other purchasers at (i) a
fixed public offering price of a specified
percentage of their principal amount or (ii)
at varying prices related to prevailing market
prices at the time of resale to be determined
by the Presenting Agent;
7. with respect to Notes sold to an investor
or other purchaser through the Presenting
Agent acting as agent for the Company, whether
such Notes will be sold at (i) 100% of their
principal amount or (ii) a specified
percentage of their principal amount;
8. the Presenting Agent's discount or
commission;
9. net proceeds to the Company;
10. the information with respect to the terms
of the Notes set forth below (whether or not
the applicable Note is a Book-Entry Note)
under "Procedures for Book-Entry Notes
Settlement Procedures," items (ii), (iii),
(vii), (viii) and (ix); and
11. any other terms of the Notes material to
</TABLE>
8
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
investors or other purchasers of the Notes not
otherwise specified in the Prospectus.
The Company shall use its reasonable best
efforts to send such Pricing Supplement by
electronic mail, telecopy or overnight express
(for delivery by the close of business on the
applicable trade date, but in no event later
than noon, New York City time, on the Business
Day next following the trade date) to the
Agent that made or presented the offer to
purchase the applicable Note (the "Presenting
Agent") at the following address:
If to Merrill Lynch & Co.:
Tritech Services
40 Colonial Drive
Piscataway, New Jersey 08854
Attn: Prospectus Operations/Nachman
Kimerling
Tel: (908) 885-2758
Telecopy: (908) 885-2774/5/6
also, for record keeping purposes, please send
a copy to:
Merrill Lynch & Co., Merrill Lynch,
Pierce, Fenner & Smith Incorporated
World Financial Center
North Tower, 10th Floor
New York, New York 10281-1310
Attn: MTN Product Management
Telephone: (212) 449-7476
Telecopy: (212) 449-2234
E-Mail Address: [email protected]
with a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004
Attention: David P. Falck, Esq.
Telecopy: (212) 858-1500
E-Mail Address: [email protected]
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
If to Goldman, Sachs & Co.:
Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attn: Karen Robertson
27th Floor
Telephone: (212) 902-1482
Telecopy: (212) 902-0658
In each instance that a Pricing Supplement is
prepared, the Presenting Agent will provide a
copy of such Pricing Supplement to each
investor or purchaser of the relevant Notes or
its agent. Pursuant to Rule 434 ("Rule 434")
of the Securities Act of 1933, as amended, the
Pricing Supplement may be delivered separately
from the Prospectus. Outdated Pricing
Supplements (other than those retained for
files) will be destroyed.
Settlement: The receipt of immediately available funds by
the Company in payment for a Note and the
authentication and delivery of such Note
shall, with respect to such Note, constitute
"settlement." Offers accepted by the Company
will be settled in three Business Days, or at
such time as the purchaser, the applicable
Agent and the Company shall agree, pursuant to
the timetable for settlement set forth in
Parts II and III hereof under "Settlement
Procedures" with respect to Book-Entry Notes
and Certificated Notes, respectively (each
such date fixed for settlement is hereinafter
referred to as a "Settlement Date"). If
procedures A and B of the applicable
Settlement Procedures with respect to a
particular offer are not completed on or
before the time set forth under the
"Settlement Procedures Timetable," such offer
shall not be settled until the Business Day
following the completion of Settlement
Procedures A and B or such later date as the
purchaser and the Company shall agree.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
In the event of a purchase of Notes by an
Agent as principal, appropriate settlement
details will be pursuant to the timetable for
settlement set forth in Parts II and III
hereof under "Settlement Procedures" with
respect to Book-Entry Notes and Certificated
Notes, respectively, or otherwise as agreed
between the Agent and the Company.
Procedure for Changing Rates or When a decision has been reached to change the
Other Variable Terms: interest rate or any other variable term on
any Notes being sold by the Company, the
Company will promptly advise the Agents by
facsimile transmission and such Agents will
forthwith suspend solicitation of offers to
purchase such Notes. The Agent or Agents will
telephone the Company with recommendations as
to the changed interest rates or other
variable terms. At such time as the Company
advises the Agents of the new interest rates
or other variable terms, such Agents may
resume solicitation of offers to purchase such
Notes. Until such time only "indications of
interest" may be recorded. Immediately after
acceptance by the Company of an offer to
purchase Notes at a new interest rate or new
variable term, the Company, the Presenting
Agent and the Trustee shall follow the
procedures set forth under the "Settlement
Procedures."
Suspension of Solicitation; Amendment or The Company may instruct the Agents to suspend
Supplement: solicitation of offers to purchase Notes at
any time. Each Agent receiving such
instructions will forthwith suspend
solicitation of offers to purchase Notes from
the Company until such time as the Company has
advised the Agents that solicitation of offers
to purchase may be resumed. If the Company
decides to amend or supplement any of the
Registration Statements (including
incorporating any documents by reference
therein) or the Prospectus (other than to
change interest rates or other variable terms
with respect to the
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
offering of the Notes), it will promptly advise
each Agent and will furnish each Agent and
counsel to the Agents with copies of the proposed
amendment or supplement (including any document
proposed to be incorporated by reference therein but
excluding any Pricing Supplements unless
otherwise provided herein). One copy of such
filed document, along with a copy of the cover
letter sent to the Commission, will be
delivered, mailed, telecopied or e-mailed to
Merrill Lynch & Co. at MTN Product Management,
North Tower, World Financial Center, 10th
Floor, New York, New York 10281-1310,
Telecopy: (212) 449-2234, E-Mail Address:
[email protected] and to Goldman, Sachs & Co.
at Credit Department, Credit Control-Medium
Term Notes, 85 Broad Street, New York, New
York 10004, Telecopy: (212) 902-3000. For
record keeping purposes, one copy of each such
amendment or supplement shall also be
delivered, mailed, telecopied or e-mailed to
Winthrop, Stimson, Putnam & Roberts, One
Battery Park Plaza, New York, New York 10004,
Attention: David P. Falck, Esq., Telecopy:
(212) 858-1500, E-Mail Address:
[email protected].
In the event that at the time the solicitation
of offers to purchase Notes from the Company
is suspended (other than to change interest
rates or other variable terms) there are any
offers to purchase Notes that have been
accepted by the Company that have not been
settled, the Company will promptly advise the
Agents and the Trustee whether such offers may
be settled and whether copies of the
Prospectus as theretofore amended and/or
supplemented as in effect at the time of the
suspension may be delivered in connection with
the settlement of such offers. The Company
will have the sole responsibility for such
decision and for any arrangements that may be
made in the event that the Company determines
that such offers may not be settled or that
copies of such
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Prospectus may not be so delivered.
Delivery of Prospectus and Applicable A copy of the most recent Prospectus and the
Pricing Supplement: applicable Pricing Supplement, which pursuant
to Rule 434 may be delivered separately from
the Prospectus, must accompany or precede the
earlier of (a) the written confirmation of a
sale sent to an investor or other purchaser or
his agent and (b) the delivery of Notes to an
investor or other purchaser or his agent.
Authenticity of Signatures: The Agents will have no obligation or
liability to the Company or the Trustee in
respect of the authenticity of the signature
of any officer, employee or agent of the
Company or the Trustee on any Note.
Documents Incorporated by Reference: The Company shall supply the Agents with an
adequate supply of all documents incorporated
by reference in the Registration Statements
and the Prospectus.
Business Day: "Business Day" means, unless otherwise
specified in the applicable Pricing
Supplement, any day other than a Saturday or
Sunday, or any other day on which banks in The
City of New York (and, with respect to LIBOR
Notes, is also a London Business Day), are
generally required or authorized by law or
executive order to close. "London Business
Day" means any day on which dealings in
deposits in U.S. dollars are transacted in the
London interbank market.
</TABLE>
PART II: PROCEDURES FOR BOOK-ENTRY NOTES
In connection with the qualification of Book-Entry Notes for eligibility in
the book-entry system maintained by DTC, the Trustee will perform the custodial,
document control and administrative functions described below, in accordance
with its respective obligations under a Letter of Representations from the
Company and the Trustee to DTC, dated February [ ], 1999, and a Medium-Term
Note Certificate Agreement, dated June 11, 1993, between the Trustee and DTC
(the "Certificate Agreement"), and its obligations as a participant in DTC,
including DTC's Same-Day Funds Settlement System ("SDFS").
13
<PAGE>
<TABLE>
<S> <C>
Issuance: All Fixed Rate Notes issued as Book-Entry
Notes having the same Original Issue Date,
interest rate, Stated Maturity Date and
redemption and/or repayment terms
(collectively, the "Fixed Rate Terms") will be
represented initially by a single Global Note
and all Floating Rate Notes issued as
Book-Entry Notes having the same Original
Issue Date, Base Rate (which may be the
Commercial Paper Rate, the Treasury Rate,
LIBOR, the CD Rate, the Federal Funds Rate,
the Prime Rate or any other rate set forth in
the applicable Pricing Supplement by the
Company), Initial Interest Rate, Index
Maturity, Spread or Spread Multiplier, if any,
Minimum Interest Rate, if any, Maximum
Interest Rate, if any, Stated Maturity Date,
redemption and/or repayment terms, if any,
Initial Interest Reset Date, Interest Reset
Date(s) and Interest Determination Date(s)
(collectively, the "Floating Rate Terms") will
be represented initially by a single Global
Note.
For other variable terms with respect to the
Fixed Rate Notes and Floating Rate Notes, see
the Prospectus and the applicable Pricing
Supplement.
Identification: The Company has arranged with the CUSIP
Service Bureau of Standard & Poor's (the
"CUSIP Service Bureau") for the reservation of
one series of CUSIP numbers, which series
consists of approximately 900 CUSIP numbers
which have been reserved for and relating to
Book-Entry Notes and the Company has delivered
to the Trustee and DTC such list of such CUSIP
numbers. The Company will assign CUSIP
numbers to Book-Entry Notes as described below
under Settlement Procedure B. DTC will notify
the CUSIP Service Bureau periodically of the
CUSIP numbers that the Company has assigned to
Book-Entry Notes. The Trustee will notify the
Company at any
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
time when fewer than 100 of the reserved CUSIP
numbers remain unassigned to Book-Entry
Notes, and, if it deems necessary, the Company
will reserve additional CUSIP numbers for
assignment to Book-Entry Notes. Upon
obtaining such additional CUSIP numbers,
the Company will deliver a list of such
additional numbers to the Trustee and DTC.
Book-Entry Notes having an aggregate principal
amount in excess of $200,000,000 and otherwise
required to be represented by the same Global
Note will instead be represented by two or
more Global Notes that shall all be assigned
the same CUSIP number.
Registration: Each Global Note will be registered in the
name of Cede & Co., as nominee for DTC, on the
register maintained by the Trustee under the
Indenture. The beneficial owner of a
Book-Entry Note (i.e., an owner of a
----
beneficial interest in a Global Note) (or one
or more indirect participants in DTC
designated by such owner) will designate one
or more participants in DTC (with respect to
such Book-Entry Note, the "Participants") to
act as agent for such beneficial owner in
connection with the book-entry system
maintained by DTC, and DTC will record in
book-entry form, in accordance with
instructions provided by such Participants, a
credit balance with respect to such Book-Entry
Note in the account of such Participants. The
ownership interest of such beneficial owner in
such Book-Entry Note will be recorded through
the records of such Participants or through
the separate records of such Participants and
one or more indirect participants in DTC.
Transfers: Transfers of beneficial interests in a Global
Note will be accomplished by book entries made
by DTC and, in turn, by Participants (and in
certain cases, one or more indirect
participants in DTC) acting on behalf of
beneficial transferors and transferees of such
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Global Note.
Exchanges: The Trustee may deliver to DTC and the CUSIP
Service Bureau at any time a written notice
specifying (a) the CUSIP numbers of two or
more Global Notes outstanding on such date
that represent Book-Entry Notes having the
same Fixed Rate Terms or Floating Rate Terms,
as the case may be (but not the same Original
Issue Dates), and for which interest has been
paid to the same date; (b) a date, occurring
at least 30 days after such written notice is
delivered and at least 30 days before the next
Interest Payment Date for the related
Book-Entry Notes, on which such Global Notes
shall be exchanged for a single replacement
Global Note; and (c) a new CUSIP number,
obtained from the Company, to be assigned to
such replacement Global Note. Upon receipt of
such a notice, DTC will send to its
Participants (including the Trustee) a written
reorganization notice to the effect that such
exchange will occur on such date. Prior to
the specified exchange date, the Trustee will
deliver to the CUSIP Service Bureau written
notice setting forth such exchange date and
the new CUSIP number and stating that, as of
such exchange date, the CUSIP numbers of the
Global Notes to be exchanged will no longer be
valid. On the specified exchange date, the
Trustee will exchange such Global Notes for a
single Global Note bearing the new CUSIP
number and the CUSIP numbers of the exchanged
Global Notes will, in accordance with CUSIP
Service Bureau procedures, be cancelled and
not immediately reassigned. Notwithstanding
the foregoing, if the Global Notes to be
exchanged exceed $200,000,000 in aggregate
principal amount, one replacement Global Note
will be authenticated and issued to represent
$200,000,000 in aggregate principal amount of
the exchanged Global Notes and an additional
Global Note or Notes will be authenticated and
issued to represent any remaining principal
amount of such Global
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Notes (see "Denominations" below).
Denominations: Book-Entry Notes will be issued in
denominations of $1,000 and integral multiples
in excess thereof of $1,000 unless otherwise
set forth in the applicable Prospectus
Supplement. Global Notes will be denominated
in principal amounts not in excess of
$200,000,000. If one or more Book-Entry Notes
having an aggregate principal amount in excess
of $200,000,000 would, but for the preceding
sentence, be represented by a single Global
Note, then one Global Note will be issued to
represent $200,000,000 principal amount of
such Book-Entry Note or Notes and an
additional Global Note or Notes will be issued
to represent any remaining principal amount of
such Book-Entry Note or Notes. In such a
case, each of the Global Notes representing
such Book-Entry Note or Notes shall be
assigned the same CUSIP number.
Payments of Principal, Premium, Payments of Interest Only. Promptly after
-------------------------
if any, and Interest: each Regular Record Date, the Trustee will
deliver to the Company and DTC a written
notice specifying by CUSIP number the amount
of interest to be paid on each Book-Entry Note
on the following Interest Payment Date (other
than an Interest Payment Date coinciding with
Maturity) and the total of such amounts. DTC
will confirm the amount payable on each
Book-Entry Note on such Interest Payment Date
by reference to the daily bond reports
published by Standard & Poor's. On such
Interest Payment Date, the Company will pay to
the Trustee in immediately available funds,
and the Trustee in turn will pay to DTC, such
total amount of interest due (other than at
Maturity), at the times and in the manner set
forth below under "Manner of Payment."
Notice of Interest Rates. Promptly after each
------------------------
Interest Determination Date for Floating Rate
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Notes issued as Book-Entry Notes, the
Calculation Agent will notify each of Moody's
Investors Service, Inc. and Standard & Poor's
of the interest rates determined as of such
Interest Determination Date.
Payments at Maturity. On or about the first
--------------------
Business Day of each month, the Trustee will
deliver to the Company and DTC a written list
of principal, interest and premium, if any, to
be paid on each Book-Entry Note maturing or
otherwise becoming due in the following month.
The Trustee, the Company and DTC will confirm
the amounts of such principal, premium and
interest payments with respect to a Book-Entry
Note on or about the fifth Business Day
preceding the Maturity of such Book-Entry
Note. At such Maturity, the Company will pay
to the Trustee in immediately available funds,
and the Trustee in turn will pay to DTC, the
principal amount of such Note, together with
interest and premium, if any, due at such
Maturity, at the times and in the manner set
forth below under "Manner of Payment."
Promptly after payment to DTC of the
principal, interest and premium, if any, due
at the Maturity of such Book-Entry Note, the
Trustee will cancel the Global Note
representing such Book-Entry Note and deliver
it to the Company with an appropriate debit
advice. On the first Business Day of each
month, the Trustee will deliver to the Company
a written statement indicating the total
principal amount of outstanding Book-Entry
Notes as of the immediately preceding Business
Day.
Manner of Payment. The total amount of any
-----------------
principal, premium, if any, and interest due
on Book-Entry Notes on any Interest Payment
Date or at Maturity shall be paid by the
Company to the Trustee in funds available for
use by the Trustee no later than noon, New
York City time, on such date. The Company
will make such payment on such Book-Entry
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Notes by instructing the Trustee to withdraw
funds from an account maintained by the
Company at the Trustee or by making such
payment to an account specified by the
Trustee. The Company will confirm such
instructions in writing to the Trustee. As
soon as possible thereafter, the Trustee will
pay by separate wire transfer (using Fedwire
message entry instructions in a form
previously specified by DTC) to an account at
the Federal Reserve Bank of New York
previously specified by DTC, in funds
available for immediate use by DTC, each
payment of interest, principal and premium, if
any, due on a Book-Entry Note on such date.
Thereafter on such date, DTC will pay, in
accordance with its SDFS operating procedures
then in effect, such amounts in funds
available for immediate use to the respective
Participants in whose names such Book-Entry
Notes are recorded in the book-entry system
maintained by DTC. Neither the Company nor
the Trustee shall have any responsibility or
liability for the payment by DTC of the
principal of, premium, if any, or interest on,
the Book-Entry Notes to such Participants.
Withholding Taxes. The amount of any taxes
-----------------
required under applicable law to be withheld
from any interest payment on a Book-Entry Note
will be determined and withheld by the
Participant, indirect participant in DTC or
other Person responsible for forwarding
payments and materials directly to the
beneficial owner of such Book-Entry Note.
Settlement Procedures: Settlement Procedures with regard to each
Book-Entry Note sold by an Agent, as agent of
the Company, or purchased by an Agent, as
principal, will be as follows:
A. The Presenting Agent will advise the
Company by telephone, confirmed by facsimile,
of the following settlement information:
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
1. Taxpayer identification number of the
purchaser.
2. Principal amount.
3. Fixed Rate Notes:
(a) interest rate;
(b) interest payment dates; and
(c) whether such Fixed Rate Note is being
issued as an Original Issue Discount Note and,
if so, the terms thereof.
Floating Rate Notes:
(a) base rate;
(b) initial interest rate;
(c) spread or spread multiplier, if any;
(d) interest rate reset dates;
(e) interest rate reset period;
(f) interest payment dates;
(g) interest payment period;
(h) index maturity;
(i) calculation agent;
(j) maximum interest rate, if any;
(k) minimum interest rate, if any;
(l) calculation date;
(m) interest determination dates; and
(n) whether such Floating Rate Note is being
issued as an Original Issue
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Discount Note and, if so, the terms
thereof.
4. Price to public of such Book-Entry Note
(or whether such Note is being offered at
varying prices relating to prevailing market
prices at time of resale as determined by the
Presenting Agent).
5. Trade Date.
6. Settlement Date (Original Issue Date).
7. Stated Maturity Date.
8. Redemption provisions, if any,
including:Redemption Commencement Date,
Initial Redemption Percentage and Annual
Redemption Percentage Reduction.
9. Optional Repayment Date(s) and repayment
provisions, if any.
10. Net proceeds to the Company.
11. Presenting Agent's discount or commission
(determined in accordance
with Schedule A to the Distribution
Agreement).
12. Name of Presenting Agent (and whether
such Note is being sold to the Presenting
Agent as principal or to an investor or other
purchaser through the Presenting Agent acting
as agent for the Company).
13. Such other information specified with
respect to such Note (whether by Addendum or
otherwise).
B. The Company will assign a CUSIP number to
the Global Note representing such Book-Entry
Note and then advise the
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Trustee by facsimile transmission or other
electronic transmission of the above settlement
information received from the Presenting Agent,
such CUSIP number and the name of the
Presenting Agent.
C. The Trustee will communicate to DTC and
the Presenting Agent through DTC's Participant
Terminal System, a pending deposit message
specifying the following settlement
information:
1. The information set forth in Settlement
Procedure A.
2. Identification numbers of the participant
accounts maintained by DTC on behalf of the
Trustee and the Presenting Agent.
3. Identification of the Global Note as a
Fixed Rate Note or Floating Rate Note.
4. Initial Interest Payment Date for such
Global Note, number of days by which such date
succeeds the related record date for DTC
purposes (or, in the case of Floating Rate
Notes which reset daily or weekly, the date
five calendar days preceding the Interest
Payment Date) and, if then calculable, the
amount of interest payable on such Interest
Payment Date (which amount shall have been
confirmed by the Trustee).
5. CUSIP number of the Global Note
representing such Book-Entry Note.
6. Whether such Global Note represents any
other Book-Entry Notes.
7. The Company or the Trustee will advise the
Presenting Agent by telephone of the CUSIP
number of the Global Note representing such
Book-
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Entry Note.
DTC will arrange for each pending deposit
message described above to be transmitted to
Standard & Poor's, which will use the
information in the message to include certain
terms of the related Book-Entry Note in the
appropriate daily bond report published by
Standard & Poor's.
D. The Company will complete and deliver to
the Trustee a Global Note representing such
Book-Entry Note in a form that has been
approved by authorized officers of the Company
pursuant to the Indenture, the Agents and the
Trustee.
E. The Trustee will authenticate the Global
Note representing such Book-Entry Note.
F. DTC will credit such Book-Entry Note to
the participant account of the Trustee
maintained by DTC.
G. The Trustee will enter an SDFS deliver
order through DTC's Participant Terminal
System instructing DTC (i) to debit such
Book-Entry Note to the Trustee's participant
account and credit such Book-Entry Note to the
participant account of the Presenting Agent
maintained by DTC and (ii) to debit the
settlement account of the Presenting Agent and
credit the settlement account of the Trustee
maintained by DTC, in an amount equal to the
price of such Book-Entry Note less such
Presenting Agent's discount or commission.
Any entry of such a deliver order shall be
deemed to constitute a representation and
warranty by the Trustee to DTC that (i) the
Global Note representing such Book-Entry Note
has been issued and authenticated and (ii) the
Trustee is holding such Global Note pursuant
to the Certificate Agreement.
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
H. In the case of Book-Entry Notes sold
through the Presenting Agent, as agent, the
Presenting Agent will enter an SDFS deliver
order through DTC's Participant Terminal
System instructing DTC (i) to debit such
Book-Entry Note to the Presenting Agent's
participant account and credit such Book-Entry
Note to the participant account of the
Participants maintained by DTC and (ii) to
debit the settlement accounts of such
Participants and credit the settlement account
of the Presenting Agent maintained by DTC in
an amount equal to the initial public offering
price of such Book-Entry Note.
I. Transfers of funds in accordance with SDFS
deliver orders described in Settlement
Procedures G and H will be settled in
accordance with SDFS operating procedures in
effect on the Settlement Date.
J. Upon receipt of such funds, the Trustee
will credit to an account of the Company
maintained at the Trustee or pay to an account
otherwise specified by the Company funds
available for immediate use in the amount
transferred to the Trustee in accordance with
Settlement Procedure G.
K. The Trustee will send a copy of the Global
Note by first class mail to the Company
together with a statement setting forth the
total principal amount of Notes of each series
that have been issued under the Indenture
(whether or not Outstanding) as of the related
Settlement Date, the principal amount of Notes
Outstanding as of the related Settlement Date
after giving effect to such transaction and
all other offers to purchase Notes of which
the Company has advised the Trustee but that
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
have not yet been settled.
L. In the case of Book-Entry Notes sold
through the Presenting Agent, as agent, the
Presenting Agent will confirm the purchase of
such Book-Entry Note to the investor or other
purchaser either by transmitting to the
Participant with respect to such Book-Entry
Note a confirmation order through DTC's
Participant Terminal System or by mailing a
written confirmation to such investor or other
purchaser.
Settlement Procedures Timetable: For offers to purchase Book-Entry Notes
accepted by the Company, Settlement Procedures
"A" through "L" set forth above shall be
completed as soon as possible but not later
than the respective times (New York City time)
set forth below:
</TABLE>
<TABLE>
<CAPTION>
<S> <C>
Settlement
Procedure Time
--------- ------
A 11:00 a.m. on the trade
date or within one
hour following the trade
B 12:00 noon on the trade
date or within one
hour following the trade
C No later than the close
of business on the
trade date
D 3:00 p.m. on the Business
Day before the
Settlement Date
E 9:00 a.m. on Settlement Date
F 10:00 a.m. on Settlement Date
G-H No later than 2:00 p.m. on
Settlement Date
I 4:00 p.m. on Settlement Date
J-L 5:00 p.m. on Settlement Date
</TABLE>
25
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
If a sale is to be settled more than one
Business Day after the trade date, Settlement
Procedures A, B, and C may, if necessary, be
completed at any time prior to the specified
times on the first Business Day after such
trade date. In connection with a sale that is
to be settled more than one Business Day after
the trade date, if the Initial Interest Rate
for a Floating Rate Note is not known at the
time that Settlement Procedure A is completed,
Settlement Procedures B and C shall be
completed as soon as such rates have been
determined, but no later than noon and 2:00
p.m., New York City time, respectively, on the
second Business Day before the Settlement
Date. Settlement Procedure I is subject to
extension in accordance with any extension of
Fedwire closing deadlines and in the other
events specified in the SDFS operating
procedures in effect on the Settlement Date.
If settlement of a Book-Entry Note is
rescheduled or cancelled, the Trustee will
deliver to DTC, through DTC's Participant
Terminal System, a cancellation message to
such effect by no later than 5:00 p.m., New
York City time, on the Business Day
immediately preceding the scheduled Settlement
Date.
Failure to Settle: If the Trustee fails to enter an SDFS deliver
order with respect to a Book-Entry Note
pursuant to Settlement Procedure G, the
Trustee may deliver to DTC, through DTC's
Participant Terminal System, as soon as
practicable a withdrawal message instructing
DTC to debit such Book-Entry Note to the
participant account of the Trustee maintained
at DTC. DTC will process the withdrawal
message, provided that such participant
account contains a principal amount of the
Global Note representing such Book-Entry Note
that is at least equal to the principal amount
to be debited. If withdrawal messages
</TABLE>
26
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
are processed with respect to all the Book-Entry
Notes represented by a Global Note, the
Trustee will mark such Global Note
"cancelled", make appropriate entries in its
records and send such cancelled Global Note to
the Company. The CUSIP number assigned to
such Global Note shall, in accordance with
CUSIP Service Bureau procedures, be cancelled
and not immediately reassigned. If withdrawal
messages are processed with respect to a
portion of the Book-Entry Notes represented by
a Global Note, the Trustee will exchange such
Global Note for two Global Notes, one of which
shall represent the Book-Entry Notes for which
withdrawal messages are processed and shall be
cancelled immediately after issuance, and the
other of which shall represent the other
Book-Entry Notes previously represented by the
surrendered Global Note and shall bear the
CUSIP number of the surrendered Global Note.
In the case of any Book-Entry Note sold
through the Presenting Agent, as agent, if the
purchase price for any Book-Entry Note is not
timely paid to the Participants with respect
to such Book-Entry Note by the beneficial
purchaser thereof (or a person, including an
indirect participant in DTC, acting on behalf
of such purchaser), such Participants and, in
turn, the related Presenting Agent may enter
SDFS deliver orders through DTC's Participant
Terminal System reversing the orders entered
pursuant to Settlement Procedures G and H,
respectively. Thereafter, the Trustee will
deliver the withdrawal message and take the
related actions described in the preceding
paragraph. If such failure has occurred for
any reason other than default by the
applicable Presenting Agent to perform its
obligations hereunder or under the
Distribution Agreement, the Company will
reimburse such Presenting Agent on an
equitable basis for its loss of the use of
funds during the period when the funds were
credited to the account of the
</TABLE>
27
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Company.
Notwithstanding the foregoing, upon any
failure to settle with respect to a Book-Entry
Note, DTC may take any actions in accordance
with its SDFS operating procedures then in
effect. In the event of a failure to settle
with respect to a Book-Entry Note that was to
have been represented by a Global Note also
representing other Book-Entry Notes, the
Trustee will provide, in accordance with
Settlement Procedures D and E, for the
authentication and issuance of a Global Note
representing such remaining Book-Entry Notes
and will make appropriate entries in its
records.
PART III: PROCEDURES FOR CERTIFICATED NOTES
Denominations: Certificated Notes will be issued in
denominations of $1,000 and integral multiples
of $1,000 in excess thereof unless otherwise
indicated in the applicable Pricing Supplement.
Payments of Principal, Premium, Upon presentment and delivery of the
if any, and Interest: Certificated Note, the Trustee upon receipt of
immediately available funds from the Company
will pay the principal amount of each
Certificated Note at Maturity and premium, if
any, and the final installment of interest in
immediately available funds. All interest
payments on a Certificated Note, other than
interest due at Maturity, will be made at the
Corporate Trust Office; provided, however,
that such payment of interest may be made, at
the option of the Company by check to the
address of the person entitled thereto as such
address shall appear in the Security Register.
Notwithstanding the foregoing, holders of ten
million dollars or more in aggregate principal
amount of Certificated Notes having the same
Interest Payment Dates shall, at the option of
the Company, be entitled to receive payments
of interest (other than at Maturity) by wire
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
transfer of immediately available funds if
appropriate wire transfer instructions have
been received in writing by the Trustee not
less than 15 days prior to the applicable
Interest Payment Date (any such wire transfer
instructions received by the Trustee shall
remain in effect until revoked by such Holder).
The Trustee will provide monthly to the
Company a list of the principal, premium, if
any, and interest to be paid on Certificated
Notes maturing in the next succeeding month.
The Trustee will be responsible for
withholding taxes on interest paid as required
by applicable law, but shall be relieved from
any such responsibility if it acts in good
faith and in reliance upon an opinion of
counsel.
Certificated Notes presented to the Trustee at
Maturity for payment will be cancelled by the
Trustee. All cancelled Certificated Notes
held by the Trustee shall be destroyed, and
the Trustee shall furnish to the Company a
certificate with respect to such destruction.
Settlement Procedures: Settlement Procedures with regard to each
Certificated Note purchased by an Agent, as
principal, or through an Agent, as agent,
shall be as follows:
A. The Presenting Agent will advise the
Company by telephone, confirmed by facsimile,
of the following settlement information with
regard to each Certificated Note:
1. Exact name in which the Certificated
Note(s) is (are) to be registered (the
"Registered Owner").
2. Exact address or addresses of the
Registered Owner for delivery, notices and
payments of principal, premium, if any, and
interest.
</TABLE>
29
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
3. Taxpayer identification number of the
Registered Owner.
4. Principal amount.
5. Authorized denomination.
6. Fixed Rate Notes:
(a) interest rate;
(b) interest payment dates; and
(c) whether such Fixed Rate Note is being
issued as an Original Issue Discount Note,
if so, the terms thereof.
Floating Rate Notes:
(a) base rate;
(b) initial interest rate;
(c) spread or spread multiplier, if any;
(d) interest rate reset dates;
(e) interest rate reset period;
(f) interest payment dates;
(g) interest payment period;
(h) index maturity;
(i) calculation agent;
(j) maximum interest rate, if any;
(k) minimum interest rate, if any;
(l) calculation date;
(m) interest determination dates; and
(n) whether such Floating Rate Note
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
is being issued as an Original Issue Discount
Note and, if so, the terms thereof.
7. Price to public of such Certificated Note
(or whether such Note is being offered at
varying prices relating to prevailing market
prices at time of resale as determined by the
Presenting Agent).
8. Trade Date.
9. Settlement Date (Original Issue Date).
10. Stated Maturity Date.
11. Net proceeds to the Company.
12. Presenting Agent's discount or commission
(determined in accordance with Schedule A to
the Distribution Agreement).
13. Redemption provisions, if any, including:
Redemption Commencement Date, Initial
Redemption Percentage and Annual Redemption
Percentage Reduction.
14. Optional Repayment Date(s) and repayment
provisions, if any.
15. Name of Presenting Agent (and whether
such Note is being sold to the Presenting
Agent as principal or to an investor or other
purchaser through the Presenting Agent acting
as agent for the Company).
16. Such other information specified with
respect to such Note (whether by Addendum or
otherwise).
B. After receiving such settlement
information from the Presenting Agent, the
Company
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
will advise the Trustee of the above
settlement information by facsimile
transmission confirmed by telephone. The
Company will cause the Trustee to issue,
authenticate and deliver the Certificated
Notes.
C. The Trustee will complete the preprinted
4-ply Certificated Note packet containing the
following documents in forms approved by the
Company, the Presenting Agent and the Trustee
consistent with the Indenture, and will make
three copies thereof (herein called "Stub 1,"
"Stub 2" and "Stub 3"):
1. Certificated Note with the Presenting
Agent's confirmation, if traded on a principal
basis, or the Presenting Agent's customer
confirmation, if traded on an agency basis.
2. Stub 1 - for Trustee.
3. Stub 2 - for Presenting Agent.
4. Stub 3 - for the Company.
D. With respect to each trade, the Trustee
will deliver the Certificated Notes and Stub 2
thereof to the Presenting Agent at the
following applicable address: If to Merrill
Lynch & Co. to Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Merrill Lynch Money
Markets Clearance, 55 Water Street, Concourse
Level, N.S.C.C. Window, New York, New York
10041, Attention: Al Mitchell, and if to
Goldman, Sachs & Co. to Goldman, Sachs & Co.,
85 Broad Street, New York, New York 10004,
Michael Mosely, 6th Floor. The Trustee will
keep Stub 1. The Presenting Agent will
acknowledge receipt of the Certificated Note
through a broker's receipt and will keep Stub
2. Delivery of the Certificated Note will be
made only against such
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
acknowledgment of receipt. Upon determination
that the Certificated Note has been authorized,
delivered and completed as aforementioned, the
Presenting Agent will wire the net proceeds of
the Certificated Note after deduction of its
applicable discount or commission to the
Company pursuant to standard wire instructions
given by the Company.
E. In the case of Certificated Notes sold
through the Presenting Agent, as agent, the
Presenting Agent will deliver the Certificated
Note (with confirmations), as well as a copy
of the Prospectus and the applicable Pricing
Supplement or Supplements received from the
Trustee to the purchaser against payment in
immediately available funds.
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
F. The Trustee will send Stub 3 to the
Company.
Settlement Procedures Timetable: For offers to purchase Certificated Notes
accepted by the Company, Settlement Procedures
"A" through "F" set forth above shall be
completed as soon as possible following the
trade but not later than the respective times
(New York City time) set forth below:
Settlement
Procedure Time
--------- ------
A 11:00 a.m. on the trade date or
within one hour following the trade
B 12:00 noon on the trade date or
within one hour following the trade
C-D 2:15 p.m. on Settlement Date
E 3:00 p.m. on Settlement Date
F 5:00 p.m. on Settlement Date
Failure to Settle: In the case of Certificated Notes sold through
the Presenting Agent, as agent, in the event
that a purchaser of a Certificated Note from
the Company either fails to accept delivery of
or make payment for a Certificated Note on the
Settlement Date, the Presenting Agent will
forthwith notify the Trustee and the Company
by telephone, confirmed in writing, and return
such Certificated Note and related stub to the
Trustee.
The Trustee, upon receipt of the Certificated
Note and related stub from the Presenting
Agent, will immediately advise the Company
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
and the Company will promptly arrange to credit
the account of the Presenting Agent in an
amount of immediately available funds equal to
the amount previously paid by such Presenting
Agent in settlement for such Certificated
Note. Such credits will be made on the
Settlement Date if possible, and in any event
not later than the Business Day following the
Settlement Date; provided that the Company has
received notice on the same day. If such
failure has occurred for any reason other than
failure by such Presenting Agent to perform
its obligations hereunder or under the
Distribution Agreement, the Company will
reimburse such Presenting Agent on an
equitable basis for its loss of the use of
funds during the period when the funds were
credited to the account of the Company.
Immediately upon receipt of the Certificated
Note in respect of which the failure occurred,
the Trustee will cancel and destroy the
Certificated Note (and related stubs), make
appropriate entries in its records to reflect
the fact that the Certificated Note was never
issued, and accordingly notify in writing the
Company.
</TABLE>
35
<PAGE>
ANNEX III
Accountants' Letter
-------------------
Pursuant to Section 4(j) and Section 6(d), as the case may be, of the
Distribution Agreement, the Company's independent certified public accountants
shall furnish letters to the effect that:
(i) They are independent certified public accountants with respect to the
Company and its subsidiaries within the meaning of the Act and the applicable
published rules and regulations thereunder.
(ii) In their opinion, the consolidated financial statements and financial
statement schedules audited by them and incorporated by reference in the
Registration Statements or the Prospectus comply as to form in all material
respects with the applicable accounting requirements of the Act and the Exchange
Act and the related published rules and regulations thereunder.
(iii) On the basis of limited procedures, not constituting an audit in
accordance with generally accepted auditing standards, consisting of a reading
of the unaudited financial statements and other information referred to below, a
reading of the latest available interim financial statements of the Company and
its subsidiaries, inspection of the minute books of the Company and its
subsidiaries since the date of the latest audited financial statements included
or incorporated by reference in the Prospectus, inquiries of officials of the
Company and its subsidiaries responsible for financial and accounting matters
and such other inquiries and procedures as may be specified in such letter,
nothing came to their attention that caused them to believe that:
(A) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included or incorporated by reference in the Company's Quarterly Reports on
Form 10-Q incorporated by reference in the Prospectus do not comply as to
form in all material respects with the applicable accounting requirements
of the Act and the Exchange Act as it applies to Form 10-Q and the related
published rules and regulations thereunder or that any material
modifications should be made for them to be in conformity with generally
accepted accounting principles;
(B) any unaudited pro forma consolidated condensed financial
statements included or incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations thereunder
or the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
<PAGE>
(C) as of the date of the latest available financial statements
of the Company and at a subsequent date not more than five business days
prior to the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock under the
Company's Dividend Reinvestment and Stock Purchase Plan, Employee Stock
Ownership Plan, Retirement Savings Plan, Stock Option and Incentive Plans
or other similar plans, and the incurrence of capital stock issuance
expenses) of the Company or in the preferred stock or other securities of
the Company's subsidiaries, or any increase in the consolidated long-term
debt of the Company and its subsidiaries or any decreases in consolidated
net assets of the Company and its subsidiaries or other items specified by
the Agents, or any increases in any items specified by the Agents, in each
case as compared with the amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus, except in each
case for changes, increases or decreases that the Prospectus discloses have
occurred or may occur or that are described in such letter; and
(D) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus ending
as of the date of the latest available financial statements of the Company
and at a subsequent date referred to in clause (C) there were any decreases
in consolidated revenues or operating profit or basic per share amounts of
consolidated net income of the Company or other items specified by the
Agents, or any increases in any items specified by the Agents, in each case
as compared with the comparable period of the preceding year and with any
other period of corresponding length specified by the Agents, except in
each case for increases or decreases that the Prospectus discloses have
occurred or may occur or that are described in such letter;
(v) In addition to the audit referred to in their report(s) included or
incorporated by reference in the Prospectus and the limited procedures,
inspection of minute books, inquiries and other procedures referred to in
paragraphs (iii) and (iv) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally accepted
auditing standards, with respect to certain amounts, percentages and financial
information specified by the Agents that are derived from the general accounting
records of the Company and its subsidiaries, that appear in the Prospectus
(excluding documents incorporated by reference), or in Part II of, or in
exhibits and schedules to, any of the Registration Statements specified by the
Agents or in documents incorporated by reference in the Prospectus specified by
the Agents, and have compared certain of such amounts, percentages and financial
information with the accounting records of the Company and its subsidiaries and
have found them to be in agreement.
All references in this Annex III to the Prospectus shall be deemed to
refer to the Prospectus (including the documents incorporated by reference
therein) as defined in the Distribution Agreement as of the Commencement Date
referred to in Section 6(d) thereof and to the Prospectus as amended or
supplemented (including the documents incorporated by reference therein) as of
the date of the amendment, supplement, incorporation or the Time of Delivery
2
<PAGE>
relating to an agreement to purchase Securities as principal requiring the
delivery of such letter under Section 4(j) thereof.
3
<PAGE>
EXHIBIT 4(c)
- --------------------------------------------------------------------------------
HAWAIIAN ELECTRIC INDUSTRIES, INC.
TO
CITIBANK, N.A.
Trustee
______________
SECOND SUPPLEMENTAL INDENTURE
Dated as of March 1, 1999
to
INDENTURE
Dated as of October 15, 1988
______________
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
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Page
----
<S> <C>
RECITALS..................................................................1
ARTICLE ONE
DEFINITIONS
Section 1.01 Terms from the Indenture....................................2
Section 1.02 Definitions of New Terms....................................2
ARTICLE TWO
CREATION OF SERIES C NOTES
Section 2.01 Creation of the Series C Notes..............................3
Section 2.02 Particulars of the Series C Notes...........................3
ARTICLE THREE
ADDITIONAL COVENANT
Section 3.01 Additional Covenant for Series C Notes......................7
Restrictions On Sales of HECO...............................7
ARTICLE FOUR
MISCELLANEOUS
Section 4.01 Counterparts............................................8
Section 4.02 Other Sections of Indenture not Affected................8
Section 4.03 Severability............................................8
Section 4.04 Administrative Procedures...............................8
EXHIBIT A FORM OF SERIES C NOTE--FIXED RATE
EXHIBIT B FORM OF SERIES C NOTE--FLOATING RATE
</TABLE>
<PAGE>
SECOND SUPPLEMENTAL INDENTURE, dated as of March 1, 1999, between
Hawaiian Electric Industries, Inc., a corporation duly organized and existing
under the laws of the State of Hawaii (herein called the "Company"), having its
principal office at 900 Richards Street, Honolulu, Hawaii 96813, and Citibank,
N.A., a national banking association duly organized and existing under the laws
of the United States, as Trustee (herein called the "Trustee"), having its
principal corporate trust office at 120 Wall Street, New York, New York 10043.
RECITALS OF THE COMPANY
WHEREAS, the Company has heretofore executed and delivered to the
Trustee an Indenture dated October 15, 1988 (herein called the "Original
Indenture"), to provide for the issuance from time to time of its unsecured
debt, notes or other evidences of indebtedness (in the Original Indenture and
herein called the "Securities"), to be issued in one or more series as in the
Original Indenture provided; and
WHEREAS, the Original Indenture, as the same hereby is or from time to
time in the future may be amended or supplemented by indentures supplemental
thereto, is hereinafter referred to as the "Indenture"; and
WHEREAS, under the Indenture, $60,000,000 aggregate principal amount
of the Company's Medium-Term Notes, Series A ("Series A Notes"), and
$244,000,000 aggregate principal amount of the Company's Medium-Term Notes,
Series B ("Series B Notes"), have been executed, authenticated, delivered and
issued by the Company; and
WHEREAS, Section 901 of the Indenture provides that without the
consent of any Holders under the Indenture, the Company and the Trustee may
enter into an indenture supplemental to the Indenture for, among other things,
the purpose of establishing the form or terms of the Securities of any series as
contemplated in Sections 201 and 301 of the Indenture, including, without
limitation, adding to the covenants of the Company for the benefit of the
Holders of all Securities under the Indenture; and
WHEREAS, the Company by action duly taken has authorized the issuance
of a series of Securities to be designated as "Medium-Term Notes, Series C" (the
"Series C Notes"), which series is limited in aggregate principal amount to
$300,000,000 and is subject to such provisions as are set forth in this Second
Supplemental Indenture to the Indenture; and
WHEREAS, the Company, in the exercise of the powers and authority
conferred upon and reserved to it under Section 901 of the Indenture and
pursuant to appropriate action of its Board of Directors or committees thereof,
has fully resolved and determined to make, execute and deliver to the Trustee a
Second Supplemental Indenture in the form hereof for the purposes herein
provided; and
WHEREAS, all conditions have been complied with, all actions have been
taken and all things have been done which are necessary to make the Series C
Notes, when executed by the Company and authenticated by or on behalf of the
Trustee, and when delivered as herein and
<PAGE>
in the Indenture provided, the valid obligations of the Company and to make this
Second Supplemental Indenture a valid and binding supplemental indenture.
NOW, THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Series C Notes by the Holders thereof, it is mutually covenanted and agreed, for
the equal and proportionate benefit of all Holders of the Series C Notes, as
follows:
ARTICLE ONE
DEFINITIONS
Section 1.01 Terms from the Indenture. For all purposes of this Second
------------------------
Supplemental Indenture, except as otherwise expressly provided or unless the
context otherwise requires:
(1) terms used herein in capitalized form and defined in the
Original Indenture shall have the meanings specified in the Original Indenture;
(2) the words "herein," "hereof" and "hereto" and other words of
similar import used in this Second Supplemental Indenture refer to this Second
Supplemental Indenture as a whole and not to any particular section or other
subdivision of this Second Supplemental Indenture.
Except as otherwise expressly provided or unless the context otherwise
requires, "Second Supplemental Indenture" means this instrument as originally
executed or, if amended or supplemented pursuant to the applicable provisions of
the Indenture, as so amended or supplemented.
Section 1.02 Definitions of New Terms. The following terms used
------------------------
herein shall have the following meanings in this Second Supplemental Indenture:
"Capital Stock" means, with respect to any Person, any and all
corporate stock, shares, interests, participations or other equivalents (however
designated) of corporate stock of such Person.
"HECO" shall mean Hawaiian Electric Company, Inc., a corporation duly
organized under the laws of the Kingdom of Hawaii and duly existing under the
laws of the State of Hawaii, and any surviving, resulting or transferee
corporation.
"Voting Shares" means the shares of Capital Stock of any Person of any
class or classes ordinarily having voting power for the election of directors of
such Person.
2
<PAGE>
"Wholly-Owned Subsidiary" means a Person 100% of whose Voting Shares
are at the time owned by the Company directly or indirectly through other
Wholly-Owned Subsidiaries.
ARTICLE TWO
CREATION OF SERIES C NOTES
Section 2.01 Creation of the Series C Notes. There is hereby created
------------------------------
a new series of Securities to be issued under the Indenture and this Second
Supplemental Indenture designated as "Medium-Term Notes, Series C" (the "Series
C Notes").
The Series C Notes shall constitute a single series of Securities
under the Indenture and shall be in the forms of Fixed Rate Note or Floating
Rate Note attached hereto as Exhibit A and Exhibit B, respectively.
Section 2.02 Particulars of the Series C Notes. In accordance with
---------------------------------
Section 301 of the Indenture, the Series C Notes shall have the following terms
(the numbered clauses set forth below corresponding to the numbered subsections
of said Section 301):
1. The title of the Notes of the series is "Medium-Term Notes, Series
C".
2. The limit upon the aggregate principal amount of the Series C
Notes which may be authenticated and delivered under the Indenture (except for
Series C Notes authenticated and delivered upon registration of transfer of, or
in exchange for, or in lieu of, other Series C Notes pursuant to Section 304,
305, 306, 906 or 1107 of the Indenture) is $300,000,000. Subject to the
foregoing, the aggregate principal amount of the Series C Notes to be issued and
sold from time to time shall be as agreed to by an Agent and the Company as
described in the Distribution Agreement, dated March 1, 1999, among the
Company and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Goldman, Sachs & Co. (the "1999 Distribution Agreement"). The
Company will notify the Trustee of such aggregate principal amount, as well as
the other terms and provisions thereof, in accordance with the Administrative
Procedures (the "Administrative Procedures") attached as Annex II to the 1999
Distribution Agreement.
3. Interest payments in respect of Series C Notes will be in an
amount equal to the interest accrued from and including the immediately
preceding Interest Payment Date in respect of which interest has been paid or
duly made available for payment (or from and including the Original Issue Date
(as defined herein), if no interest has been paid or duly made available for
payment) to but excluding the applicable Interest Payment Date or Maturity, as
the case may be. Interest shall be payable with respect to a Series C Note to
the Person in whose name such Series C Note is registered at the close of
business on the Regular Record Date for each Interest Payment Date, provided,
however, that interest payable at Maturity will be payable to the person to whom
principal shall be payable. The first payment of interest on any Series C Note
originally issued between a Regular Record Date and the related Interest Payment
Date will be made on the
3
<PAGE>
Interest Payment Date immediately following the next succeeding Regular Record
Date to the Holder on such next succeeding Regular Record Date.
4. The date on which the principal of each of the Series C Notes is
payable shall be any Business Day from nine months to thirty years from the date
of issuance agreed to and established on behalf of the Company by any two of the
President, any Vice President, the Treasurer, the Controller and any Assistant
Treasurer (the "Authorized Officers") from time to time pursuant to the 1999
Distribution Agreement and the Administrative Procedures and shall be set forth
in a related pricing supplement (each, a "Pricing Supplement") to the Prospectus
dated March____, 1999 (the "Prospectus") relating to the Series C Notes and in
the Series C Notes.
5. Each of the Series C Notes shall bear interest either at a fixed
rate, in which event the attached form of Fixed Rate Note shall be utilized, or
at a floating rate, in which event the attached form of Floating Rate Note shall
be utilized. Unless otherwise specified in the applicable Floating Rate Note,
the floating rate of interest may be calculated by reference to the Commercial
Paper Rate, the Prime Rate, LIBOR, the Treasury Rate, the CD Rate or the Federal
Funds Rate, as set forth in the attached form of Floating Rate Note (each, a
"Base Rate"), plus or minus a "Spread" and/or multiplied by a Spread Multiplier,
in each case as and to the extent set forth in the applicable Floating Rate Note
and Pricing Supplement. The rate (fixed or floating) at which each of the Series
C Notes shall bear interest shall be determined and established by any two
Authorized Officers of the Company from time to time pursuant to the
Administrative Procedures and shall be set forth in a Pricing Supplement to the
Prospectus and in the applicable Series C Notes. Such rate shall also be the
rate at which interest shall accrue on any overdue principal and premium and (to
the extent that the payment of such interest shall be legally enforceable) on
any overdue installment of interest. Each interest-bearing Series C Note will
bear interest from the date of issuance of such Series C Note (the "Original
Issue Date") at the rate per annum, in the case of a Fixed Rate Note, or
pursuant to the interest rate formula, in the case of a Floating Rate Note, in
each case as set forth in such Series C Note and the applicable Pricing
Supplement, until the principal thereof is paid or made available for payment.
Unless otherwise indicated in the applicable Series C Note and Pricing
Supplement, the "Regular Record Date" with respect to any Fixed Rate Note and
any Floating Rate Note shall be the date (whether or not a Business Day) 15
calendar days prior to the related Interest Payment Date.
Except as otherwise set forth in the Prospectus for the Series C
Notes, the applicable Pricing Supplement or the applicable Series C Note,
interest on the Series C Notes shall be payable, in the case of Fixed Rate
Notes, semi-annually on April 10 and October 10 in each year; in the case of
Floating Rate Notes which reset daily, weekly, or monthly, on the third
Wednesday of each month or on the third Wednesday of March, June, September and
December of each year (as specified in the applicable Pricing Supplement and in
such Floating Rate Note); in the case of Floating Rate Notes which reset
quarterly, on the third Wednesday of March, June, September and December of each
year; in the case of Floating Rate Notes which reset semi-annually, on the third
Wednesday of the two months of each year specified in the applicable Pricing
Supplement and in such Floating Rate Note; and in the case of Floating Rate
Notes which reset annually, on the third Wednesday of the month of each year
specified in the applicable Pricing Supplement and in
4
<PAGE>
such Floating Rate Note (each, an "Interest Payment Date"); and in each case, at
Maturity with respect to the principal then maturing. If any Interest Payment
Date or the Maturity of a Fixed Rate Note falls on a day that is not a Business
Day, the related payment of principal, premium, if any, or interest to be made
on such day need not be made on such day, but may be made on the next succeeding
Business Day as if made on the date such payment was due, and no interest will
accrue on the amount so payable for the period from and after such Interest
Payment Date or Maturity, as the case may be, to the date of such payment on the
next succeeding Business Day. If an Interest Payment Date for any Floating Rate
Note (other than an Interest Payment Date at Maturity) falls on a day that is
not a Business Day, such Interest Payment Date will be postponed to the next
succeeding day that is a Business Day, and no interest will accrue on the amount
so payable for the period from and after such Interest Payment Date to the date
of such payment on the next succeeding Business Day; provided, however, that if
the Base Rate on a Floating Rate Note is LIBOR and such next succeeding Business
Day falls in the next succeeding calendar month, such Interest Payment Date will
be the immediately preceding day that is a Business Day. If the Maturity of a
Floating Rate Note falls on a day that is not a Business Day, the required
payment of principal, premium, if any, and interest need not be made on such
day, but may be made on the next succeeding Business Day as if made on the date
such payment was due, and no interest on such payment shall accrue for the
period from and after such Maturity to the date of such payment on the next
succeeding Business Day. As used herein, "Business Day" means any day other than
a Saturday or Sunday or any other day on which banks in The City of New York are
generally authorized or obligated by law or executive order to close, and with
respect to Floating Rate Notes as to which LIBOR is an applicable Base Rate, is
also a London Business Day. As used herein, "London Business Day" means any day
on which dealings in deposits in United States dollars are transacted in the
London interbank market.
6. The place or places where the principal of (and premium, if any)
and interest on Series C Notes, if issued in certificated form, shall be payable
and where the Series C Notes, if issued in certificated form, are to be
surrendered for registration of transfer or exchange, shall be at the offices
and agencies of the Company maintained for that purpose in the Borough of
Manhattan in The City of New York, which shall be the Corporate Trust Office of
the Trustee, or at such other location selected by the Company, agreed to by the
Trustee and consistent with the Indenture (a "Place of Payment"). Payments of
the principal (and premium, if any) and interest due with respect to Series C
Notes issued in book-entry form will be made by the Company through the Trustee
to The Depository Trust Company, or other depositary selected by the Company,
consistent with procedures agreed to by the Company and such depositary.
Payments of the principal (and premium, if any) and interest due at Maturity
with respect to any Series C Note, if issued in certificated form, will be made
in immediately available funds upon presentation and surrender of such Series C
Note (and, in the case of any repayment on an Optional Repayment Date, upon
submission of a duly completed election form in accordance with the provisions
described below) at the Corporate Trust Office or other Place of Payment,
provided, however, that such Series C Note is presented to the Trustee or other
- -------- -------
Paying Agent in time for the Trustee or other Paying Agent to make such payments
in such funds in accordance with its normal procedures. Payments of interest
other than at Maturity with respect to such Series C Note will be made at the
Corporate Trust Office; provided, however, that the payment of such interest may
-------- -------
be made at the option of the Company by check mailed to the address of the
5
<PAGE>
Person entitled thereto as such address shall appear in the Security Register.
Notwithstanding the foregoing, a Holder of $10,000,000 or more in aggregate
principal amount of such Series C Notes, if issued in certificated form, having
the same Interest Payment Dates will be entitled to receive interest payments
(other than at Maturity) by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received in writing by the
Trustee not less than 15 calendar days prior to the applicable Interest Payment
Date (any such wire transfer instructions received by the Trustee shall remain
in effect until revoked by such Holder).
7. The Series C Notes are not redeemable by the Company prior to
Maturity unless otherwise specified pursuant to the Administrative Procedures
and set forth in the related Pricing Supplement to the Prospectus, and unless a
Redemption Commencement Date and an Initial Redemption Percentage are
specified in the Series C Notes. Such redemption of any Series C Note may be
made in whole or in part at the discretion of the Company, upon not less than 30
nor more than 60 calendar days' notice, provided that if such redemption could
result in a Series C Note remaining Outstanding in a denomination of less than
the applicable minimum denomination, such Series C Note shall be redeemed in
whole. The Series C Notes, if provided for in an applicable Pricing Supplement
and in the Series C Notes, will be subject to repayment at the option of the
Holders thereof, on not less than 30 nor more than 60 calendar days' notice, in
accordance with the terms of such Series C Notes on their respective optional
repayment date, if any, as agreed upon by the Company and the purchasers thereof
at the time of sale (each, an "Optional Repayment Date"). If no Optional
Repayment Date is indicated with respect to a Series C Note, such Note will not
be repayable at the option of the Holder thereof prior to its Stated Maturity.
8. Unless otherwise specified pursuant to the Administrative
Procedures and set forth in the related Pricing Supplement to the Prospectus,
there is no obligation of the Company to redeem or purchase the Series C Notes
pursuant to any sinking fund or analogous provision, or at the option of a
Holder thereof.
9. The Series C Notes will be denominated in, and payments of
principal, premium, if any, and interest, if any, in respect thereof will be
made in, United States dollars. Each Series C Note will be issued in fully
registered book-entry form or certificated form and the denominations in which
the Series C Notes shall be issuable are $1,000 and any amount in excess thereof
which is an integral multiple of $1,000.
10. No covenants, agreements or warranties, other than those set forth
in the Original Indenture and this Second Supplemental Indenture, shall apply to
the Series C Notes.
11. Section 403 of the Indenture shall apply to the Series C Notes.
12. Section 1101 of the Indenture shall apply to the Series C Notes.
13. Upon declaration of acceleration of the Maturity of the Series C
Notes pursuant to Section 502 of the Indenture, the entire principal amount of
the Series C Notes (other than Discount Notes) shall be payable.
6
<PAGE>
ARTICLE THREE
ADDITIONAL COVENANT
Section 3.01 Additional Covenant for Series C Notes. Subject to
--------------------------------------
Section 1010 of the Indenture, the following covenant shall be an additional
covenant so long as any Series C Notes are Outstanding:
Restrictions On Sales of HECO. The Company will not sell, transfer or
-----------------------------
otherwise dispose of, or permit HECO to issue, sell, transfer or otherwise
dispose of, other than to the Company or to a Wholly-Owned Subsidiary, Voting
Shares of HECO; provided, however, that this covenant shall not restrict
-------- -------
consolidations of HECO with or mergers of HECO with or into (i) the Company or
any Wholly-Owned Subsidiary or (ii) any other corporation if the corporation
formed by such consolidation or merger shall be a Wholly-Owned Subsidiary of the
Company.
ARTICLE FOUR
MISCELLANEOUS
Section 4.01 Counterparts. This instrument may be executed in any
------------
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
Section 4.02 Other Sections of Indenture not Affected. All Articles,
----------------------------------------
Sections and portions of Sections of the Original Indenture other than those
supplemented and amended as provided above are hereby ratified, confirmed and
continued in full force and effect in their entirety and are not hereby
supplemented or amended in any way.
Section 4.03 Severability. If any provisions of this Second
------------
Supplemental Indenture shall be invalid, inoperative or unenforceable as applied
in any particular case in any jurisdiction or jurisdictions or in all
jurisdictions, or in all cases because it conflicts with any other provision or
provisions hereof or any constitution or statute or rule of public policy, or
for any other reason, such circumstances shall not have the effect of rendering
the provisions in question inoperative or unenforceable in any other case or
circumstance, or of rendering any other provision or provisions herein contained
invalid, inoperative, or unenforceable to any extent whatever.
Section 4.04 Administrative Procedures. The Trustee shall comply
-------------------------
with the Administrative Procedures, as they may be amended from time to time in
accordance with the 1999 Distribution Agreement.
7
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the date and year first above written.
HAWAIIAN ELECTRIC INDUSTRIES, INC.
[CORPORATE SEAL]
By:__________________________________
Name: Robert F. Mougeot
Attest: Title: Financial Vice President
and Chief Financial Officer
By:__________________________________
Name: Constance H. Lau
Title: Treasurer
CITIBANK, N.A., as Trustee
[CORPORATE SEAL]
By:__________________________________
Attest: Name:
Title:
By:_____________________________
Name:
Title:
8
<PAGE>
STATE OF HAWAII )
) ss.:
CITY & COUNTY OF HONOLULU )
On the ___ day of ________, 1999, before me personally came Robert F.
Mougeot and Constance H. Lau, to me known, who, being by me duly sworn, do
depose and say that they are the Financial Vice President and Chief Financial
Officer and Treasurer of Hawaiian Electric Industries, Inc., one of the
corporations described in and which executed the foregoing instrument; that they
know the seal of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of the Board of
Directors of said corporation; and that they signed by their name thereto by
like authority.
___________________________________________
Notary Public, State of Hawaii
My commission expires:
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the ______ day of _________________, 1999, before me personally
came ____________________, to me known, who, being by me duly sworn, did depose
and say that he is __________________of Citibank, N.A., one of the corporations
described in and which executed the foregoing instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is such corporate
seal; that it was so affixed by authority of the Board of Directors of said
corporation, and that he signed his name thereto by like authority.
___________________________________________
Notary Public, State of New York
My commission expires:
<PAGE>
Exhibit A
---------
FORM OF FIXED RATE NOTE
(Except as otherwise indicated, the bracketed language
applies only to Notes held in book-entry form through DTC)
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY (THE "DEPOSITARY") TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
HAWAIIAN ELECTRIC INDUSTRIES, INC.
MEDIUM-TERM NOTE, SERIES C
(Fixed Rate)
CUSIP No. Principal Amount: $
FXR No. Stated Maturity Date:
Original Issue Date: Redemption Commencement Date:
Interest Rate: Initial Redemption Percentage:
Interest Payment Date(s): Annual Redemption Percentage Reduction:
[ ] Check if a Discount Note Other Provisions:
Issue Price:
Addendum Attached: [ ] Yes[ ] No
Optional Repayment Date(s):
<PAGE>
HAWAIIAN ELECTRIC INDUSTRIES, INC., a corporation duly organized and
existing under the laws of Hawaii (hereinafter called "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to
, or registered assigns, the principal sum of
DOLLARS
on the Stated Maturity Date specified above (except to the extent redeemed or
repaid prior to the Stated Maturity Date), and to pay interest thereon from the
Original Issue Date specified above or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, on the Interest
Payment Date or Dates specified above, commencing with the first such Interest
Payment Date next succeeding the Original Issue Date specified above, and on the
Stated Maturity Date (or any Redemption Date or any Optional Repayment Date with
respect to which such option has been exercised, each such Stated Maturity Date,
Redemption Date and Optional Repayment Date being hereinafter referred to as a
"Maturity" with respect to the principal repayable on such date), at the
Interest Rate per annum set forth above, until the principal hereof is paid or
made available for payment, and at the Interest Rate per annum set forth above
on any overdue premium and (to the extent that the payment of such interest
shall be legally enforceable) on any overdue installment of interest; provided,
--------
however, that if such Original Issue Date is after the Regular Record Date and
- -------
before the Interest Payment Date immediately following such Regular Record Date,
interest payments will commence on the second Interest Payment Date following
the Original Issue Date to the Holder of this Note on the Regular Record Date
with respect to such second Interest Payment Date. Interest on this Note will
be computed on the basis of a 360-day year of twelve 30-day months.
Notwithstanding the foregoing, if an Addendum is attached hereto or
"Other Provisions" apply to this Note as specified above, this Note will be
subject to the terms set forth in such Addendum or such "Other Provisions."
Interest on this Note will accrue from and including the immediately
preceding Interest Payment Date in respect of which interest has been paid or
duly made available for payment (or from and including the Original Issue Date
if no interest has been paid or duly made available for payment) to, but
excluding, the applicable Interest Payment Date or Maturity, as the case may be.
If any Interest Payment Date or Maturity of this Note falls on a day that is not
a Business Day, the related payment of principal, premium, if any, or interest
to be made on such day need not be made on such day, but may be made on the next
succeeding Business Day as if made on the date such payment was due, and no
interest will accrue on the amount so payable for the period from and after such
Interest Payment Date or Maturity, as the case may be, to the date of such
payment on the next succeeding Business Day. The interest so payable, and
punctually paid or duly made available for payment, on any Interest Payment Date
will, as provided in such Indenture, be paid to the Person in whose name this
Note (or one or more Predecessor Notes) is registered at the close of business
on the Regular Record Date for each Interest Payment Date, which date
2
<PAGE>
(whether or not a Business Day), shall be 15 calendar days next preceding each
such Interest Payment Date; provided, however, that interest payable at Maturity
will be payable to the Person to whom the principal hereof will be payable. Any
such interest not so punctually paid or duly provided for will forthwith cease
to be payable to the Holder on such Regular Record Date and may either be paid
to the Person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest to be fixed by the Trustee, notice whereof shall be
given to Holders of Notes not less than 10 calendar days prior to such Special
Record Date, or be paid at any time in any other lawful manner not inconsistent
with the requirements of any securities exchange on which the Notes of this
series may be listed, and upon such notice as may be required by such exchange,
all as more fully provided in said Indenture. As used herein, "Business Day"
means any day other than a Saturday or Sunday or any other day on which banks in
The City of New York are generally authorized or obligated by law or executive
order to close.
This Note is one of a duly authorized issue of securities of the
Company (herein called the "Securities", and the series thereof to which this
Note belongs being herein called the "Notes"), issued and to be issued in one or
more series under an Indenture dated as of October 15, 1988, as supplemented by
a Second Supplemental Indenture, dated as of March 1, 1999 (as so supplemented,
hereinafter called the "Indenture"), between the Company and Citibank, N.A., as
trustee (herein called the "Trustee", which term includes any successor trustee
under the Indenture), to which Indenture and all Indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee and the
Holders of the Notes and of the terms upon which the Notes are, and are to be,
authenticated and delivered. This Note is one of the series designated above.
The Notes of this series may be issued from time to time at varying maturities
(from nine months to thirty years from the Original Issue Date specified above)
and interest rates and in an aggregate principal amount up to $300,000,000.
Payments of the principal (and premium, if any) and interest due with
respect to this Note, if issued in book-entry form, will be made by the Company
through the Trustee to The Depository Trust Company, or other depositary
selected by the Company, consistent with procedures agreed to by the Company and
such depositary. Payments of the principal (and premium, if any) and interest
due at Maturity with respect to this Note, if issued in certificated form, will
be made in immediately available funds upon presentation and surrender of such
Note (and, in the case of any repayment on an Optional Repayment Date, upon
submission of a duly completed election form in accordance with the provisions
described herein) at the Corporate Trust Office or the Trustee or other Paying
Agent, provided, however, that this Note is presented to the Trustee or other
-------- -------
Paying Agent in time for the Trustee or other Paying Agent to make such payments
in such funds in accordance with its normal procedures. Payments of interest
other than at Maturity with respect to this Note, if issued in certificated
form, will be made at the Corporate Trust Office; provided, however, that the
-------- -------
payment of such interest may be made at the option of the Company by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register. Notwithstanding the foregoing, a Holder of
$10,000,000 or more in aggregate principal amount of Notes issued in
certificated form having
3
<PAGE>
the same Interest Payment Dates will be entitled to receive interest payments
(other than at Maturity) by wire transfer of immediately available funds if
appropriate wire transfer instructions have been received in writing by the
Trustee not less than 15 calendar days prior to the applicable Interest Payment
Date (any such wire transfer instructions received by the Trustee to remain in
effect until revoked in writing by such Holder).
This Note will not be subject to any sinking fund and, unless
otherwise specified in this Note in accordance with the provisions of the
following two paragraphs, will not be redeemable or repayable prior to the
Stated Maturity Date.
If a Redemption Commencement Date and an Initial Redemption
Percentage are specified in this Note, this Note will be subject to redemption
at the option of the Company prior to the Stated Maturity Date on any date on or
after the Redemption Commencement Date specified in this Note, in whole or from
time to time in part in increments of $1,000 or the minimum authorized
denomination (provided that any remaining principal amount hereof will be at
least $1,000 or such minimum authorized denomination), at the Redemption Price
together with unpaid interest accrued thereon to the date fixed for redemption
(each, a "Redemption Date"), on notice given no less than 30 nor more than 60
calendar days prior to the Redemption Date and in accordance with the provisions
of the Indenture. The "Redemption Price" will initially be the Initial
Redemption Percentage specified in this Note (as adjusted by the Annual
Redemption Percentage Reduction, if applicable) multiplied by the unpaid
principal amount of this Note to be redeemed. The Initial Redemption Percentage
will decline at each anniversary of the Redemption Commencement Date by the
Annual Redemption Percentage Reduction, if any, specified in this Note until the
Redemption Price is equal to 100% of the unpaid principal amount to be redeemed.
In the event of redemption of this Note in part only, a new Note of like tenor
for the unredeemed portion hereof and otherwise having the same terms as this
Note will be issued in the name of the Holder hereof upon the presentation and
surrender hereof.
If one or more Optional Repayment Dates are specified in this Note,
this Note will be subject to repayment by the Company at the option of the
Holder hereof prior to the Stated Maturity Date on the Optional Repayment
Date(s) specified in this Note, in whole or in part in increments of $1,000 or
the minimum authorized denomination (provided that any remaining principal
amount hereof will be at least $1,000 or such minimum authorized denomination),
at a repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, this Note must be
received, together with the form hereon entitled "Option to Elect Repayment"
duly completed, by the Trustee at its corporate trust office not less than 30
nor more than 60 calendar days prior to the Repayment Date. Exercise of such
repayment option by the Holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note will be issued
in the name of the Holder hereof upon the presentation and surrender hereof.
If this Note is a Discount Note as specified herein,
the amount payable to the Holder of this Note in the event of redemption,
repayment or acceleration of maturity of this Note will be equal to the sum of
(i) the Issue Price specified in this Note
4
<PAGE>
(increased by any accruals of the Discount) and, in the event of any redemption
of this Note (if applicable), multiplied by the Initial Redemption Percentage
(as adjusted by the Annual Redemption Percentage Reduction, if applicable) and
(ii) any unpaid interest on this Note accrued from the Original Issue Date to
the Redemption Date, Optional Repayment Date or date of acceleration of
maturity, as the case may be. The difference between the Issue Price and 100% of
the principal amount of this Note, if a Discount Note, is referred to herein as
the "Discount."
For purposes of determining the amount of Discount that has accrued as
of any Redemption Date, Optional Repayment Date or date of acceleration of
maturity of this Note, such Discount will be accrued so as to cause the yield on
the Note to be constant. The constant yield will be calculated using a 30-day
month, 360-day year convention, a compounding period that, except for the
Initial Period, corresponds to the shortest period between Interest Payment
Dates (with ratable accruals within a compounding period), a coupon rate equal
to the initial interest rate applicable to this Note and an assumption that the
maturity of this Note will not be accelerated. If the period from the Original
Issue Date to the initial Interest Payment Date (the "Initial Period") is
shorter than the compounding period for this Note, a proportionate amount of the
yield for an entire compounding period will be accrued. If the Initial Period
is longer than the compounding period, then such period will be divided into a
regular compounding period and a short period, with the short period being
treated as provided in the preceding sentence.
The Indenture contains provisions for defeasance at any time of (a)
the entire indebtedness of this Note and (b) certain restrictive covenants, in
each case upon compliance by the Company with certain conditions set forth
therein, which provisions apply to this Note.
If an Event of Default with respect to Notes of this series shall
occur and be continuing, the principal of the Notes of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Company and the right of the Holders of the Securities of each series to be
affected under the Indenture at any time by the Company and the Trustee with the
consent of the Holders of 66-2/3% in principal amount of the Securities at the
time Outstanding of each series to be affected. The Indenture also contains
provisions permitting the Holders of specified percentages in principal amount
of the Securities of each series at the time Outstanding, on behalf of the
Holders of all Securities of such series, to waive compliance by the Company
with certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder of
this Note shall be conclusive and binding upon such Holder and upon all future
Holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof, whether or not notation of such
consent or waiver is made upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and
5
<PAGE>
unconditional, to pay the principal of (and premium, if any) and interest on
this Note at the times, places and rate, and in the coin or currency, herein
prescribed.
As provided in the Indenture and subject to certain limitations
therein and herein set forth, the transfer of this Note is registrable in the
Security Register upon surrender of this Note for registration of transfer at
the office or agency of the Company in any place where the principal of (and
premium, if any) and interest on this Note are payable, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar, duly executed by the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes of this
series of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.
Unless otherwise set forth above, the Notes of this series are
issuable only in registered form, without coupons, in minimum denominations of
$1,000 and any amount in excess thereof that is an integral multiple of $1,000.
As provided in the Indenture and subject to certain limitations therein and
herein set forth, Notes of this series are exchangeable for a like aggregate
principal amount of Notes of this series of like tenor of a different authorized
denomination, as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the owner hereof for all
purposes, whether or not this Note is overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
This Note will for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.
6
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
HAWAIIAN ELECTRIC INDUSTRIES, INC.
[CORPORATE SEAL]
By:________________________________________
Name:
Title:
By:________________________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within mentioned Indenture.
CITIBANK, N.A., as Trustee
By:__________________________________
Authorized Officer
7
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount to be repaid together
with unpaid accrued interest to the Optional Repayment Date, to the undersigned,
at _________________________________________________________________________
_____________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at the Corporate
Trust Office, ____________________________, New York, New York __________, or at
such other place or places of which the Company shall from time to time notify
the Holder of this Note, not less than 30 nor more than 60 days prior to an
Optional Repayment Date, if any, specified in this Note, this Note with this
"Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be in increments of $1,000) which the
Holder elects to have repaid and specify the denomination or denominations
(which shall be $1,000 or an integral multiple of $1,000 in excess of $1,000) of
the Notes to be issued to the Holder for the portion of this Note not being
repaid (in the absence of any such specification, one such Note will be issued
for the portion not being repaid).
----------------------------------------
Principal Amount
to be Repaid: $________________ NOTICE: The signature(s) on this Option
to Elect Repayment must correspond with
the name as specified in this Note in
every particular, without alteration or
enlargement or any change whatsoever.
Denomination(s) of Note(s) To Be
Issued for Portion of Note Not Repaid
(if applicable): $_______________
Date: ______________________
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription specified in
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM -- as tenants in common
UNIF GIFT MIN ACT -- ..............Custodian..........................
(Minor)
Under Uniform Gifts to Minors Act
.................................
(State)
TEN ENT-- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above
list.
<PAGE>
-----------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfers unto
Please Insert Social Security or Other
Identifying Number of-Assignee:
--------------------
- --------------------------------------------------------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS
INCLUDING ZIP CODE OF ASSIGNEE:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
the within Note and all rights hereunder, hereby irrevocably constituting and
appointing
_____________________________________________________________________________
attorney to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated: _______________________________ ____________________________________
NOTICE: The signature to this assignment must correspond with the name as
specified in the within instrument in every particular, without alteration or
enlargement, or any change whatsoever.
<PAGE>
Exhibit B
---------
FORM OF FLOATING RATE NOTE
(Except as otherwise indicated, the bracketed language applies
only to Notes held in book-entry form through DTC)
[UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR NOTES IN
CERTIFICATED FORM, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE
DEPOSITARY (THE "DEPOSITARY") TO A NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF
THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE
DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH
SUCCESSOR DEPOSITARY. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY AND ANY PAYMENT IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
HAWAIIAN ELECTRIC INDUSTRIES, INC.
MEDIUM-TERM NOTE, SERIES C
(Floating Rate)
CUSIP No.: Principal Amount: $
FLR No. Stated Maturity Date:
Original Issue Date: Interest Payment Date(s):
Base Rate(s): Interest Determination Date(s):
Spread (indicate Plus or Minus): Interest Reset Date(s):
Spread Multiplier: Initial Interest Reset Date:
Initial Interest Rate:
<PAGE>
Maximum Interest Rate: In LIBOR:
[ ] LIBOR Reuters
Minimum Interest Rate: [ ] LIBOR Telerate
[ ] Check if a Discount Note Calculation Agent (if other
Issue Price: than the Trustee):
Index Maturity: Optional Repayment Date(s):
Redemption Commencement Date: Other Provisions:
Initial Redemption Percentage: Addendum Attached: [ ] Yes [ ] No
Annual Redemption Percentage Reduction:
HAWAIIAN ELECTRIC INDUSTRIES, INC. a corporation duly organized and
existing under the laws of Hawaii (hereinafter called the "Company", which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay to
, or registered assigns, the principal sum of
DOLLARS
on the Stated Maturity Date specified above (except to the extent redeemed or
repaid prior to the Stated Maturity Date), and to pay interest thereon from the
Original Issue Date specified above or from the most recent Interest Payment
Date to which interest has been paid or duly provided for, periodically on each
Interest Payment Date, commencing with the first such Interest Payment Date next
succeeding the Original Issue Date specified above, and on the Stated Maturity
Date (or any Redemption Date or any Optional Repayment Date with respect to
which such option has been exercised, each such Stated Maturity Date, Redemption
Date and Optional Repayment Date being hereinafter referred to as a "Maturity"
with respect to the principal repayable on such date), at the rate of interest
to be determined in accordance with the following provisions (the "Floating
Interest Rate"), until the principal hereof is paid or made available for
payment, and at the Floating Interest Rate on any overdue premium and (to the
extent that the payment of such interest shall be legally enforceable) on any
overdue installment of interest; provided, however, that if such Original Issue
-------- -------
Date is after a Regular Record Date and before the Interest Payment Date
immediately following such Regular Record Date, interest payments will
2
<PAGE>
commence on the second Interest Payment Date following the Original Issue Date
to the Holder of this Note on the Regular Record Date with respect to such
second Interest Payment Date.
Notwithstanding the foregoing, if an Addendum is attached hereto or
"Other Provisions" apply to this Note as specified above, this Note will be
subject to the terms set forth in such Addendum or such "Other Provisions."
Interest on this Note will accrue from and including the immediately
preceding Interest Payment Date in respect of which such interest has been paid
or duly made available for payment (or from and including the Original Issue
Date if no interest has been paid or duly made available for payment) to, but
excluding, the applicable Interest Payment Date or Maturity, as the case may be
(the "Interest Period"). If an Interest Payment Date (other than at Maturity)
falls on a day that is not a Business Day, such Interest Payment Date will be
postponed to the next succeeding Business Day, and no interest will accrue on
the amount so payable for the period from and after such Interest Payment Date
to the date of such payment on the next succeeding Interest Payment Date;
provided, however, that if the Base Rate is LIBOR and such next succeeding
Business Day falls in the next succeeding calendar month, such Interest Payment
Date will be the immediately preceding day that is a Business Day. If any
Maturity falls on a day that is not a Business Day, the related payment of
principal, premium, if any, and interest need not be made on such day, but may
be made on the next succeeding Business Day as if made on the date such payment
was due, and no interest on such payment shall accrue for the period from and
after such Maturity to the date of such payment on the next succeeding Business
Day. The interest so payable, and punctually paid or duly made available for
payment, on any Interest Payment Date will, as provided in such Indenture, be
paid to the Person in whose name this Note (or one or more Predecessor Notes) is
registered at the close of business on the Regular Record Date for each Interest
Payment Date, which date (whether or not a Business Day) shall be 15 calendar
days next preceding such Interest Payment Date; provided, however, that interest
payable at Maturity will be payable to the Person to whom the principal hereof
will be payable. Any such interest not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date and
may either be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered at the close of business on a Special Record
Date for the payment of such Defaulted Interest to be fixed by the Trustee,
notice whereof shall be given to Holders of Notes not less than 10 calendar days
prior to such Special Record Date, or be paid at any time in any other lawful
manner not inconsistent with the requirements of any securities exchange on
which the Notes of this series may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture. As used
herein, "Business Day" means any day other than a Saturday or Sunday or any
other day on which banks in The City of New York are generally authorized or
obligated by law or executive order to close, and with respect to Notes as to
which LIBOR is an applicable Base Rate, is also a London Business Day. As used
herein, "London Business Day" means any day on which dealings in deposits in
United States dollars are transacted in the London interbank market.
This Note is one of a duly authorized issue of securities of the
Company (herein called the "Securities", and the series thereof to which this
Note belongs being herein called the "Notes"), issued and to be issued in one or
more series under an Indenture dated as of October 15, 1988 as supplemented by a
Second Supplemental
3
<PAGE>
Indenture dated as of March 1, 1999 (as so supplemented, herein called the
"Indenture"), between the Company and Citibank, N.A., as trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties and
immunities thereunder of the Company, the Trustee and the Holders of the Notes
and of the terms upon which the Notes are, and are to be authenticated and
delivered. This Note is one of the series designated above. The Notes of this
series may be issued from time to time at varying maturities (from nine
months to thirty years from the Original Issue Date specified above) and
interest rates and in an aggregate principal amount up to $300,000,000.
Payments of the principal (and premium, if any) and interest due with
respect to this Note, if issued in book-entry form, will be made by the Company
through the Trustee to The Depository Trust Company, or other depositary
selected by the Company, consistent with procedures agreed to by the Company and
such depositary. Payments of the principal (and premium, if any) and interest
due at Maturity with respect to this Note, if issued in certificated form, will
be made in immediately available funds upon presentation and surrender of such
Note (and, in the case of any repayment on an Optional Repayment Date, upon
submission of a duly completed election form in accordance with the provisions
described herein) at the Corporate Trust Office of the Trustee or other Place of
Payment, provided, however, that this Note is presented to the Trustee or other
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Paying Agent in time for the Trustee or other Paying Agent to make such payments
in such funds in accordance with its normal procedures. Payments of interest
other than at Maturity with respect to this Note, if issued in certificated
form, will be made at the Corporate Trust Office; provided, however, that the
-------- -------
payment of such interest may be made at the option of the Company by check
mailed to the address of the Person entitled thereto as such address shall
appear in the Security Register. Notwithstanding the foregoing, a Holder of
$10,000,000 or more in aggregate principal amount of Notes, if issued in
certificated form, having the same Interest Payment Dates will be entitled to
receive interest payments (other than at Maturity) by wire transfer of
immediately available funds if appropriate wire transfer instructions have been
received in writing by the Trustee not less than 15 calendar days prior to the
applicable Interest Payment Date (any such wire transfer instructions received
by the Trustee to remain in effect until revoked in writing by such Holder).
This Note will not be subject to any sinking fund and, unless
otherwise specified in this Note in accordance with the provisions of the
following two paragraphs, will not be redeemable or repayable prior to the
Stated Maturity Date.
If a Redemption Commencement Date and an Initial Redemption
Percentage are specified in this Note, this Note will be subject to redemption
at the option of the Company prior to the Stated Maturity Date on any date on or
after the Redemption Commencement Date specified in this Note, in whole or from
time to time in part in increments of $1,000 or the minimum authorized
denomination (provided that any remaining principal amount hereof will be at
least $1,000 or such minimum authorized denomination), at the Redemption Price
together with unpaid interest accrued thereon to the date fixed for redemption
(each, a "Redemption Date"), on notice given no less than 30 nor more than 60
calendar days prior to the Redemption Date and in accordance with the provisions
of the Indenture. The "Redemption Price" will initially be the Initial
Redemption Percentage specified in this Note (as adjusted by the Annual
4
<PAGE>
Redemption Percentage Reduction, if applicable) multiplied by the unpaid
principal amount of this Note to be redeemed. The Initial Redemption Percentage
will decline at each anniversary of the Redemption Commencement Date by the
Annual Redemption Percentage Reduction, if any, specified in this Note until the
Redemption Price is equal to 100% of the unpaid principal amount to be redeemed.
In the event of redemption of this Note in part only, a new Note of like tenor
for the unredeemed portion hereof and otherwise having the same terms as this
Note will be issued in the name of the Holder hereof upon the presentation and
surrender hereof.
If one or more Optional Repayment Dates are specified herein, this
Note will be subject to repayment by the Company at the option of the Holder
hereof prior to the Stated Maturity Date on the Optional Repayment Date(s)
specified in this Note, in whole or in part in increments of $1,000 or the
minimum authorized denomination (provided that any remaining principal amount
hereof will be at least $1,000 or such minimum authorized denomination), at a
repayment price equal to 100% of the unpaid principal amount to be repaid,
together with unpaid interest accrued thereon to the date fixed for repayment
(each, a "Repayment Date"). For this Note to be repaid, this Note must be
received, together with the form hereon entitled "Option to Elect Repayment"
duly completed, by the Trustee at its corporate trust office not less than 30
nor more than 60 calendar days prior to the Repayment Date. Exercise of such
repayment option by the Holder hereof will be irrevocable. In the event of
repayment of this Note in part only, a new Note of like tenor for the unrepaid
portion hereof and otherwise having the same terms as this Note will be issued
in the name of the Holder hereof upon the presentation and surrender hereof.
If this Note is a Discount Note as specified herein, the amount
payable to the Holder of this Note in the event of redemption, repayment or
acceleration of maturity of this Note will be equal to the sum of (i) the Issue
Price specified in this Note (increased by any accruals of the Discount) and, in
the event of any redemption of this Note (if applicable), multiplied by the
Initial Redemption Percentage (as adjusted by the Annual Redemption Percentage
Reduction, if applicable) and (ii) any unpaid interest on this Note accrued from
the Original Issue Date to the Redemption Date, Optional Repayment Date or date
of acceleration of maturity, as the case may be. The difference between the
Issue Price and 100% of the principal amount of this Note, if a Discount Note,
is referred to herein as the "Discount. "
For purposes of determining the amount of Discount that has accrued as
of any Redemption Date, Optional Repayment Date or date of acceleration of
maturity of this Note, such Discount will be accrued so as to cause the yield on
the Note to be constant. The constant yield will be calculated using a 30-day
month, 360-day year convention, a compounding period that, except for the
Initial Period, corresponds to the shortest period between Interest Payment
Dates (with ratable accruals within a compounding period), a coupon rate equal
to the initial interest rate applicable to this Note and an assumption that the
maturity of this Note will not be accelerated. If the period from the Original
Issue Date to the initial Interest Payment Date (the "Initial Period") is
shorter than the compounding period for this Note, a proportionate amount of the
yield for an entire compounding period will be accrued. If the Initial Period
is longer than the compounding period, then such period will be divided into a
regular compounding period and a short period, with the short period being
treated as provided above.
5
<PAGE>
Unless otherwise indicated herein, this Note will bear interest at a
rate determined by reference to an interest rate basis (the "Base Rate"), which
may be adjusted by a Spread and/or Spread Multiplier. The applicable Base Rate
may be: (a) the Commercial Paper Rate (if applicable, this Note being a
"Commercial Paper Rate Note"), (b) the Prime Rate (if applicable, this Note
being a "Prime Rate Note"), (c) LIBOR (if applicable, this Note being a "LIBOR
Note"), (d) the Treasury Rate (if applicable, this Note being a "Treasury Rate
Note"), (e) the CD Rate (if applicable, this Note being a "CD Rate Note"), (f)
the Federal Funds Rate (if applicable, this Note being a "Federal Funds Rate
Note") or (g) such other Base Rate or interest rate formula as is set forth
herein. If the applicable Base Rate is LIBOR, this Note will also specify the
Designated LIBOR Page, as such term is defined below.
Unless otherwise specified herein, the interest rate with respect to
this Note will be calculated by reference to the specified Base Rate or Rates
(a) plus or minus the Spread, if any, and/or (b) multiplied by the Spread
Multiplier, if any. The "Spread" is the number of basis points (one one-
hundredth of a percentage point), if any, specified herein to be added to or
subtracted from the Base Rate for this Note to calculate the interest rate for
this Note, and the "Spread Multiplier" is the percentage, if any, specified
herein to be multiplied by the Base Rate (or by the Base Rate increased or
decreased by the Spread) to calculate the interest rate for this Note. The
"Index Maturity" for this Note is the period to maturity of the instrument or
obligation from which the Base Rate is calculated.
Unless otherwise specified in this Note, the interest rate with
respect to each Base Rate will be determined in accordance with the applicable
provisions below. Except as set forth in this Note, the interest rate in effect
on each day shall be (i) if such day is an Interest Reset Date, the interest
rate determined as of the Interest Determination Date immediately preceding such
Interest Reset Date or (ii) if such day is not an Interest Reset Date, the
interest rate determined as of the Interest Determination Date immediately
preceding the most recent Interest Reset Date.
The rate of interest on this Note will be reset daily, weekly,
monthly, quarterly, semi-annually or annually (each, an "Interest Reset Date").
The Interest Reset Date will be, in the case of Notes that reset daily, each
Business Day; in the case of Notes (other than Treasury Rate Notes) which reset
weekly, the Wednesday of each week; in the case of Treasury Rate Notes which
reset weekly, the Tuesday of each week; in the case of Notes which reset
monthly, the third Wednesday of each month; in the case of Notes which reset
quarterly, the third Wednesday of March, June, September and December of each
year; in the case of Notes which reset semi-annually, the third Wednesday of two
months of each year as specified above; and in the case of Notes which reset
annually, the third Wednesday of one month of each year as specified above;
provided, however, that (a) the interest rate in effect from the Original Issue
- -------- -------
Date to the first Interest Reset Date with respect to a Note will be the Initial
Interest Rate (as set forth in this Note) and (b) the interest rate in effect
for the ten days immediately prior to Maturity will be that in effect on the
tenth day preceding such Maturity. If any Interest Reset Date for this Note
would otherwise be a day that is not a Business Day, such Interest Reset Date
will be postponed to the next succeeding day that is a Business Day, except that
in the case of a Note as to which LIBOR is an applicable Base Rate, if such
Business Day falls in the next succeeding calendar month, such Interest Reset
Date will be the immediately preceding Business Day.
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<PAGE>
Except as provided below, interest will be payable in the case of
Notes which reset: (i) daily, weekly or monthly, on the third Wednesday of each
month or on the third Wednesday of March, June, September and December of each
year, as specified above; (ii) quarterly, on the third Wednesday of March, June,
September and December of each year; (iii) semiannually, on the third Wednesday
of the two months of each year specified above; and (iv) annually, on the third
Wednesday of the month of each year specified above (each, an "Interest Payment
Date") and, in each case, at Maturity with respect to the principal repayable on
such date.
The Interest Determination Date pertaining to an Interest Reset Date
for a Commercial Paper Rate Note (the "Commercial Paper Rate Interest
Determination Date"), for a Prime Rate Note (the "Prime Rate Interest
Determination Date"), for a CD Rate Note (the "CD Rate Interest Determination
Date") and for a Federal Funds Rate Note (the "Federal Funds Rate Interest
Determination Date") will be the second Business Day preceding such Interest
Reset Date. The Interest Determination Date for a LIBOR Note (the "LIBOR
Interest Determination Date") will be the second London Business Day preceding
such Interest Reset Date. The Interest Determination Date pertaining to an
Interest Reset Date for a Treasury Rate Note (the "Treasury Interest
Determination Date") will be the day of the week in which such Interest Reset
Date falls on which day Treasury bills (as defined below) would normally be
auctioned by the U.S. Department of the Treasury. Treasury bills are generally
sold at auction on Monday of each week, unless that day is a legal holiday, in
which case the auction is usually held on the following Tuesday, except that
such auction may be held on the preceding Friday. If, as a result of a legal
holiday, an auction is so held on the preceding Friday, such Friday will be the
Treasury Interest Determination Date pertaining to the Interest Reset Date
occurring in the next succeeding week. If an auction date with respect to a
Treasury Rate Note shall fall on any Interest Reset Date, then such Interest
Reset Date shall instead be the Business Day next succeeding such auction date.
The Interest Determination Date pertaining to a Note the interest rate of which
is determined by reference to two or more Base Rates will be the most recent
Business Day that is at least two Business Days prior to the applicable Interest
Reset Date for this Note on which each Base Rate is determinable. Each Base
Rate will be determined as of the applicable Interest Determination Date, and
the applicable interest rate will take effect on the applicable Interest Reset
Date.
Notwithstanding the other provisions herein, the daily Floating
Interest Rate hereon shall not be greater than the Maximum Interest Rate, if
any, or less than the Minimum Interest Rate, if any, specified in this Note and,
in addition, the Floating Interest Rate shall in no event be higher than the
maximum rate permitted by New York or Hawaii law, whichever is lower, as the
same may be modified by United States law of general application.
Except as otherwise provided herein, all percentages resulting from
any calculations on this Note will be rounded to the nearest one hundred-
thousandth of a percentage point (with five one-millionths of a percentage point
being rounded up, e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or
.0987655)), and all dollar amounts used in or resulting from such calculation on
this Note will be rounded to the nearest cent (with one half cent being rounded
up).
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<PAGE>
Accrued interest is calculated by multiplying the principal amount of
this Note by an accrued interest factor. The interest factor is computed by
adding the interest factor calculated for each day in the Interest Period. The
interest factor (expressed as a decimal) for each such day is computed by
dividing the interest rate (expressed as a decimal) applicable to such date by
360, in the case of Commercial Paper Rate Notes, Prime Rate Notes, LIBOR Notes,
CD Rate Notes or Federal Funds Rate Notes, or by the actual number of days in
the year, in the case of Treasury Rate Notes. The interest factor for Notes for
which the interest rate is determined by reference to two or more Base Rates
will be calculated in each period in the same manner as if only the lowest,
highest or average of the applicable Base Rate applied, as specified above or in
the Addendum hereto.
The Calculation Agent (which shall be the Trustee unless otherwise
specified above) shall calculate the Floating Interest Rate on this Note on or
before each Calculation Date and, upon request, provide to Holders the Floating
Interest Rate then in effect and, if calculated, to become in effect. The
Calculation Agent's determination of any Floating Interest Rate will be final
and binding in the absence of manifest error. The Calculation Date, if
applicable, pertaining to any Interest Determination Date will be the earlier
and (i) the tenth calendar day after such Interest Determination Date, or, if
such day is not a Business Day, the next succeeding Business Day and (ii) the
Business Day preceding the applicable Interest Payment Date or Maturity, as the
case may be.
Unless otherwise provided in this Note, the Calculation Agent shall
determine each Base Rate in accordance with the following provisions:
Determination of Commercial Paper Rate
The "Commercial Paper Rate" with respect to each Interest Reset Date
will be determined by the Calculation Agent on the Calculation Date and will be
the Money Market Yield (as defined below) as of the Commercial Paper Rate
Interest Determination Date next preceding such Interest Reset Date of the rate
for commercial paper having the Index Maturity specified above, as such rate
shall be published by the Board of Governors of the Federal Reserve System in
"Statistical Release H.15(519), Selected Interest Rates," or any successor
publication (such publication being hereinafter called "H.15(519)"), under the
heading "Commercial Paper-Nonfinancial". In the event that such rate is not
published prior to 3:00 P.M., New York City time, on the related Calculation
Date, then the Commercial Paper Rate with respect to such Interest Reset Date
will be the Money Market Yield on the applicable Commercial Paper Rate Interest
Determination Date of the rate for commercial paper of the Index Maturity
specified in this Note as published by the Federal Reserve Bank of New York in
its daily statistical release "Composite 3:30 P.M. Quotations for U.S.
Government Securities", or any successor publication (such publication being
hereinafter called "Composite Quotations"), under the heading "Commercial Paper"
(with an Index Maturity of one month or three months being deemed to be an
equivalent to an Index Maturity of 30 days or 90 days, respectively). If by
3:00 P.M., New York City time, on such Calculation Date such rate is not yet
published in either H.15(519) or Composite Quotations, then the Commercial Paper
Rate will be calculated by the Calculation Agent and shall be the Money Market
Yield of the arithmetic mean of the offered rates as of 11:00 A.M., New York
City time, on the applicable Commercial Paper Rate
8
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Interest Determination Date of three leading dealers of commercial paper in The
City of New York selected by the Calculation Agent, in its discretion, for
commercial paper of the specified Index Maturity placed for an industrial issuer
whose bond rating is "Aa," or the equivalent, from a nationally recognized
statistical rating organization. If the dealers selected as aforesaid by the
Calculation Agent are not quoting offered rates as described in the preceding
sentence, the Commercial Paper Rate with respect to such Interest Reset Date
will be the Commercial Paper Rate in effect on such Interest Determination Date.
"Money Market Yield" shall be a yield (expressed as a percentage)
calculated in accordance with the following formula:
Money Market Yield = D x 360 x 100
-------------
360-(D x M)
where "D" refers to the applicable per annum rate for commercial paper quoted on
a bank discount basis and expressed as a decimal and "M" refers to the actual
number of days in the applicable Interest Reset Period.
Determination of Prime Rate
The "Prime Rate" with respect to each Interest Reset Date will be
determined by the Calculation Agent on the Calculation Date and will be the rate
as of the Prime Rate Interest Determination Date next preceding such Interest
Reset Date as published in H. 15(519) under the heading "Bank Prime Loan". In
the event that such rate is not published prior to 3:00 P.M., New York City
time, on the related Calculation Date, then the Prime Rate with respect to such
Interest Reset Date will be the arithmetic mean of the rates of interest
publicly announced by each bank that appears on such Prime Rate Interest
Determination Date on the display designated as page "USPRIME1" on the Reuters
Monitor Money Rates Service (or any successor service or such other page as may
replace the USPRIME1 page on that service for the purpose of displaying prime
rates or base lending rates of major United States banks) ("Reuters Screen
USPRIME1 Page") as such bank's prime rate or base lending rate as in effect for
such Prime Rate Interest Determination Date. If fewer than four such rates
appear on the Reuters Screen USPRIME1 Page as of the applicable Prime Rate
Interest Determination Date, the Prime Rate with respect to such Interest Reset
Date will be the arithmetic mean of the prime rates or base lending rates
(quoted on the basis of the actual number of days in the year divided by a 360-
day year) as of the close of business on such Prime Rate Interest Determination
Date as furnished in The City of New York by the major money center banks, if
any, that have provided such quotations and by a reasonable number of substitute
banks or trust companies to obtain four such prime rate quotations, provided
such substitute banks or trust companies are organized and doing business under
the laws of the United States, or any state thereof, each having total equity
capital of at least $500 million and being subject to supervision or examination
by federal or state authority, selected by the Calculation Agent to provide such
rate or rates. If the banks or trust companies selected as aforesaid by the
Calculation Agent are not quoting rates as described in the preceding sentence,
the Prime Rate with respect to such Interest Reset Date will be the Prime Rate
in effect on such Prime Rate Interest Determination Date.
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<PAGE>
Determination of LIBOR
"LIBOR" with respect to each Interest Reset Date will be determined by
the Calculation Agent on the Calculation Date in accordance with the following
provisions:
(i) With respect to a LIBOR Interest Determination Date, LIBOR will be
either: (a) if "LIBOR Reuters" is specified in this Note, the arithmetic mean of
the offered rates (unless the Designated LIBOR Page by its terms provides only
for a single rate, in which case such single rate shall be used) for deposits in
U.S. dollars having the Index Maturity specified in this Note, commencing on the
applicable Interest Reset Date, that appear (or, if only a single rate is
required as aforesaid, appears) on the Designated LIBOR Page as of 11:00 A.M.,
London time, on such LIBOR Interest Determination Date, or (b) if "LIBOR
Telerate" is specified in this Note or if neither "LIBOR Reuters" nor "LIBOR
Telerate" is specified in this Note as the method for calculating LIBOR, the
rate for deposits in U.S. dollars having the Index Maturity specified in this
Note, commencing on such Interest Reset Date, that appears on the Designated
LIBOR Page as of 11:00 A.M., London time, on such LIBOR Interest Determination
Date. If fewer than two such offered rates so appear, or if no such rate so
appears where the Designated LIBOR Page provides only for a single rate, LIBOR
on such LIBOR Interest Determination Date will be determined in accordance with
the provisions described in subparagraph (ii) below.
(ii) With respect to a LIBOR Interest Determination Date on which fewer
offered rates appear than are required in subparagraph (i) above, the
Calculation Agent will request the principal London offices of each of four
major reference banks in the London interbank market as selected by the
Calculation Agent, to provide the Calculation Agent with its offered quotation
for deposits in U.S. dollars for the period of the Index Maturity specified in
this Note, commencing on the applicable Interest Reset Date to prime banks in
the London interbank market at approximately 11:00 A.M., London time, on such
LIBOR Interest Determination Date and in a principal amount that is
representative for a single transaction in U.S. dollars in such market at such
time. If at least two such quotations are so provided, then LIBOR on such LIBOR
Interest Determination Date will be the arithmetic mean of such quotations. If
fewer than two such quotations are so provided, then LIBOR on such LIBOR
Interest Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 A.M., New York City time on such LIBOR Interest
Determination Date by three major banks in The City of New York selected by the
Calculation Agent for loans in U.S. dollars to leading European banks, having
the Index Maturity specified in this Note and in a principal amount that is
representative for a single transaction in U.S. dollars in such market at such
time. If the banks so selected by the Calculation Agent are not quoting rates
as described in the preceding sentence, LIBOR determined as of such LIBOR
Interest Determination Date will be LIBOR in effect under the Note on such LIBOR
Interest Determination Date.
"Designated to LIBOR Page" means (a) if "LIBOR Reuters" is specified
in this Note, the display in the Reuter Monitor Money Rates Service (or any
successor service) on the page specified in this Note (or any other page as may
replace such page on such service) for the purpose of displaying the London
interbank rates of major banks for U.S. dollars, or (b) if "LIBOR Telerate" is
specified in this Note or neither "LIBOR Reuters" nor "LIBOR Telerate" is
specified in this Note as the method for calculating LIBOR, the display on the
Dow Jones
10
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Telerate Service (or any successor service) on the page specified in
this Note (or any other page as may replace such page on such service) for the
purpose of displaying the London interbank rates of major banks for U.S.
dollars.
Determination of Treasury Rate
The "Treasury Rate" with respect to each Interest Reset Date will be
determined by the Calculation Agent on the Calculation Date and will be the rate
for the auction held on the Treasury Rate Interest Determination Date next
preceding such Interest Reset Date of direct obligations of the United States
("Treasury bills") having the Index Maturity specified in this Note as published
in H.15(519) under the heading "Treasury bills-auction average (investment)".
If by 3:00 P.M., New York City time, on such Calculation Date such rate is not
yet published in H.15(519), then the Treasury Rate shall be the auction average
rate (expressed as a bond equivalent on the basis of a year of 365 or 366 days,
as applicable, and applied on a daily basis) as otherwise reported by the U.S.
Department of the Treasury. In the event that the results of the auction of
Treasury bills having the Index Maturity designated in this Note are not
published or reported as provided above by 3:00 P.M., New York City time, on
such Calculation Date or if no such auction is held on the applicable Treasury
Rate Interest Determination Date, then the Treasury Rate will be calculated by
the Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent rounded as aforesaid) of the arithmetic mean of the secondary market
bid rates, as of approximately 3:30 P.M., New York City time, on such Treasury
Rate Interest Determination Date, of three leading primary United States
government securities dealers selected by the Calculation Agent, in its
discretion, for the issue of Treasury bills with a remaining maturity closest to
the Index Maturity designated in this Note. If the dealers selected as
aforesaid by the Calculation Agent are not quoting bid rates as described in the
preceding sentence, the Treasury Rate with respect to such Interest Reset Date
will be the Treasury Rate in effect under the Note on such Treasury Rate
Interest Determination Date.
Determination of CD Rate
The "CD Rate" with respect to each Interest Reset Date will be
determined by the Calculation Agent on the Calculation Date and will be the rate
as of the CD Rate Interest Determination Date next preceding such Interest Reset
Date for negotiable United States dollar certificates of deposit having the
Index Maturity specified in this Note as published in H.15(519) under the
heading "CDs (Secondary Market)". In the event that such rate is not published
prior to 3:00 P.M., New York City time, on the related Calculation Date, then
the CD Rate with respect to such Interest Reset Date shall be the rate on such
CD Rate Interest Determination Date for negotiable United States dollar
certificates of deposit having the Index Maturity specified in this Note as
published in the Composite Quotations under the heading "Certificates of
Deposit". If by 3:00 P.M., New York City time, on such Calculation Date such
rate is not published in either H.15(519) or Composite Quotations, the CD Rate
with respect to such Interest Reset Date shall be calculated by the Calculation
Agent and shall be the arithmetic mean of the secondary market offered rates, as
of 10:00 A.M., New York City time, on such CD Rate Interest Determination Date,
of three leading nonbank dealers in negotiable United States dollar certificates
of deposit in The City of New York selected by the Calculation Agent for
negotiable United States certificates of deposit of major United States money
center banks with a remaining
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<PAGE>
maturity closest to the Index Maturity specified in this Note in United States
dollars. If the dealers selected as aforesaid by the Calculation Agent are not
quoting rates as described in the preceding sentence, the CD Rate with respect
to such Interest Reset Date will be the CD Rate in effect under the Note on such
CD Rate Interest Determination Date.
Determination of Federal Funds Rate
The "Federal Funds Rate" with respect to each Interest Reset Date will
be determined by the Calculation Agent on the Calculation Date and will be the
rate as of the Federal Funds Interest Determination Date next preceding such
Interest Reset Date for United States dollar federal funds as published in H.
15(519) under the heading "Federal Funds (Effective)". In the event that such
rate is not published prior to 3:00 P.M., New York City time, on the relevant
Calculation Date, then the Federal Funds Rate with respect to such Interest
Reset Date will be the rate on such Federal Funds Interest Determination Date as
published in Composite Quotations under the heading "Federal Funds/Effective
Rate". If by 3:00 P.M., New York City time, on such Calculation Date such rate
is not published in either H. 15(519) or Composite Quotations, the Federal Funds
Rate with respect to such Interest Reset Date shall be calculated by the
Calculation Agent and shall be the arithmetic mean of the rates, as of 9:00
A.M., New York City time, on the applicable Federal Funds Interest Determination
Date, for the last transaction in overnight United States federal funds arranged
by three leading brokers of United States federal funds transactions in The City
of New York selected by the Calculation Agent. If the brokers selected as
aforesaid by the Calculation Agent are not quoting rates as described in the
preceding sentence, the Federal Funds Rate with respect to such Interest Reset
Date will be the Federal Funds Rate in effect under the Note on such Federal
Funds Interest Determination Date.
The Indenture contains provisions to defeasance at any time of (a) the
entire indebtedness of this Note and (b) certain restrictive covenants in each
case upon compliance by the Company with certain conditions set forth therein
which provisions apply to this Note.
If an Event of Default with respect to Notes of this series shall
occur and be continuing, the principal of the Notes of this series may be
declared due and payable in the manner and with the effect provided in the
Indenture.
The Indenture permits, with certain exceptions as therein and herein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities of
each series to be affected under the Indenture at any time by the Company and
the Trustee with the consent of the Holders of 66-2/3% in principal amount of
the Securities at the time Outstanding of each series to be affected. The
Indenture also contains provisions permitting the Holders of specified
percentages in principal amount of the Securities of each series at the time
Outstanding on behalf of the Holders of all Securities of such series to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Note shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof, whether
or not notation of such consent or waiver is made
12
<PAGE>
upon this Note.
No reference herein to the Indenture and no provision of this Note or
of the Indenture shall alter or impair the obligation of the Company which is
absolute and unconditional to pay the principal of (and premium, if any) and
interest on this Note at the times, places and rate and in the coin or currency
herein prescribed.
As provided in the Indenture and subject to certain limitations
therein and herein set forth, the transfer of this Note is registrable in the
Security Register upon surrender of this Note for registration of transfer at
the office or agency of the Company in any place where the principal of (and
premium, if any) and interest on this Note are payable duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by the Holder hereof or his
attorney, duly authorized in writing and thereupon one or more new notes of this
series and of like tenor, of authorized denominations and for the same aggregate
principal amount will be issued to the designated transferee or transferees.
Unless otherwise set forth above, the Notes of this series are
issuable only in registered form, without coupons, in minimum denominations of
$1,000 and any amount in excess thereof that is an integral multiple of $1,000.
As provided in the Indenture and subject to certain limitations therein and
herein set forth, Notes of this series are exchangeable for a like aggregate
principal amount of Notes of this series of like tenor of a different authorized
denomination as requested by the Holder surrendering the same.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Note for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name this Note is registered as the owner hereof for all
purposes whether or not this Note is overdue and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
All terms used in this Note which are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
Unless the certificate of authentication hereon has been executed by
the Trustee by manual signature, this Note shall not be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose.
This Note will for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.
13
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
Dated:
HAWAIIAN ELECTRIC INDUSTRIES, INC.
[CORPORATE SEAL]
By:
---------------------------
Name:
Title:
By:
---------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated therein
referred to in the within-mentioned Indenture.
CITIBANK, N.A., as Trustee
By:
----------------------------
Authorized Officer
14
<PAGE>
OPTION TO ELECT REPAYMENT
(For use only if Holder has option to elect repayment)
The undersigned hereby irrevocably request(s) and instruct(s) the
Company to repay this Note (or portion hereof specified below) pursuant to its
terms at a price equal to 100% of the principal amount to be repaid together
with unpaid accrued interest to the Optional Repayment Date, to the undersigned,
at ____________________________________________________________________________
_______________________________________________________________________________
(Please print or typewrite name and address of the undersigned)
For this Note to be repaid, the Trustee must receive at the Corporate
Trust Office, ____________________________, New York, New York __________, or at
such other place or places of which the Company shall from time to time notify
the Holder of this Note, not less than 30 nor more than 60 days prior to an
Optional Repayment Date, if any, specified in this Note, this Note with this
"Option to Elect Repayment" form duly completed.
If less than the entire principal amount of this Note is to be repaid,
specify the portion hereof (which shall be in increments of $1,000) which the
Holder elects to have repaid and specify the denomination or denominations
(which shall be $1,000 or an integral multiple of $1,000 in excess of $1,000) of
the Notes to be issued to the Holder for the portion of this Note not being
repaid (in the absence of any such specification, one such Note will be issued
for the portion not being repaid).
<TABLE>
<S> <C>
Principal Amount ----------------------------------------------------
to be Repaid: $_______________ NOTICE: The signature(s) on this Option to Elect
Repayment must correspond with the name as specified
in this Note in every particular, without alteration
or enlargement or any change whatsoever.
Denomination(s) of Note(s) To Be Issued
for Portion of Note Not Repaid (if
applicable): $_______________
Date: ______________________
</TABLE>
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription specified in
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations.
TEN COM -- as tenants in common
UNIF GIFT MIN ACT --
.....................Custodian..................
(Minor)
Under Uniform Gifts to Minors Act
.............................................
(State)
TEN ENT-- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship
and not as tenants in common
Additional abbreviations may also be used though not in the above list.
<PAGE>
-------------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfers unto
Please Insert Social Security or Other
Identifying Number of Assignee:
-------------------------------
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS
INCLUDING ZIP CODE OF ASSIGNEE:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
the within Note and all rights hereunder, hereby irrevocably constituting and
appointing
______________________________________________________________________ attorney
to transfer said Note on the books of the Company, with full power of
substitution in the premises.
Dated: __________________
NOTICE: The signature to this assignment must correspond with the name as
specified in the within instrument in every particular, without alteration or
enlargement, or any change whatsoever.
<PAGE>
EXHIBIT 5(a)
[LETTERHEAD OF GOODSILL ANDERSON QUINN & STIFEL]
March 2, 1999
Hawaiian Electric Industries, Inc.
900 Richards Street
Honolulu, Hawaii 96813
Ladies and Gentlemen:
Hawaiian Electric Industries, Inc., a Hawaii corporation (the "Company"),
has filed a registration statement on Form S-3 (the "Registration Statement")
with the Securities and Exchange Commission under the Securities Act of 1933,
as amended (the "Act"), covering the registration of $300,000,000 aggregate
principal amount of Medium-Term Notes, Series C (the "Notes"). Under the terms
of the indenture dated as of October 15, 1988, between the Company and
Citibank, N.A., as previously supplemented, and to be further supplemented by
a Second Supplemental Indenture in substantially the form attached as an
Exhibit to the Registration Statement (as supplemented, the "Indenture"), the
Notes may be issued from time to time with the specific terms to be determined
at the time of sale.
In connection with the filing of the Registration Statement, we have
examined the Registration Statement, the Indenture and such corporate and
other records, certificates and documents and such matters of fact and law as
we have deemed necessary or appropriate as a basis for the opinions
hereinafter expressed. We are members of the bar of the State of Hawaii and,
for purposes of this opinion, do not hold ourselves out as experts on the laws
of any jurisdiction other than the laws of the State of Hawaii. In expressing
the following opinions, we have relied, with your and its approval, as to all
matters of New York law related to this opinion upon the opinion of even date
herewith addressed to us of Winthrop, Stimson, Putnam & Roberts.
Based on the foregoing, we advise you that in our opinion:
1. The Company is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Hawaii.
2. When the Registration Statement has become effective under the Act and
any necessary Pricing Supplement and amendments thereto have been filed,
the Second Supplemental Indenture and any applicable amendments and
supplements thereto and to the Indenture have been duly authorized,
executed and delivered by the Company and the Trustee, the terms of the
Notes and their issue and sale have been duly established in conformity
with the Indenture, the Distribution Agreement relating to the Notes
between the Company and the Agents named therein and the resolutions of the
Board of Directors of the Company relating to the Notes so as not to
violate any applicable law, agreement or instrument then binding on the
Company, and the Notes have been duly authenticated and delivered by the
Trustee and duly executed, issued and delivered by the Company in
compliance with the Indenture and the laws, agreements and instruments then
binding on the Company and have been issued and sold in the manner and as
otherwise contemplated in the Registration Statement (and in any Pricing
Supplements and amendments thereto), the Notes will be duly authorized and
will constitute valid and legally binding obligations of the Company,
except as may be limited by bankruptcy, insolvency, moratorium, fraudulent
conveyance, reorganization and other similar laws relating to or affecting
the enforcement of creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law) and
subject to the requirements of reasonableness, good faith and fair dealing.
<PAGE>
We hereby consent to the filing of this opinion as Exhibit 5(a) to the
Registration Statement, to the references to our firm under the caption
"Validity of Notes" in the Registration Statement and to the reliance by
Winthrop, Stimson, Putnam & Roberts on this opinion in connection with its
opinion of even date herewith addressed to us insofar as such opinion relates
to matters of Hawaii law. In giving such consent, we do not thereby admit that
we are in the category of persons whose consent is required under Section 7 of
the Act.
Very truly yours,
/s/ Goodsill Anderson Quinn & Stifel
<PAGE>
Exhibit 5(b)
[LETTERHEAD OF WINTHROP, STIMSON, PUTNAM & ROBERTS]
March 2, 1999
Goodsill Anderson Quinn & Stifel
1099 Alakea Street
Honolulu, Hawaii 96813
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933, as
amended (the "Act"), of $300,000,000 aggregate principal amount of Medium-Term
Notes, Series C (the "Notes") of Hawaiian Electric Industries, Inc., a Hawaii
corporation (the "Company"), we have reviewed such corporate records,
certificates and other documents and such questions of law as we have
considered necessary or appropriate for the purposes of this opinion.
Upon the basis of such review, we advise you that, in our opinion, when
(1) the Registration Statement on Form S-3 relating to the Notes (the
"Registration Statement") has become effective under the Act, (2) the Second
Supplemental Indenture to the Indenture, dated as of October 15, 1988, between
the Company and Citibank, N.A., as trustee, relating to the Notes has been duly
authorized, executed and delivered, (3) the terms of the Notes and of their
issue and sale have been duly authorized and established in conformity with
such Indenture, the Distribution Agreement relating to the Notes between the
Company and the Agents named therein and the resolutions of the Board of
Directors of the Company relating to the Notes and (4) the Notes have been duly
executed and authenticated in accordance with such Indenture and issued and
sold as contemplated by the Registration Statement, the Notes will constitute
valid and binding obligations of the Company, except as limited by bankruptcy,
insolvency, moratorium, fraudulent conveyance, reorganization and other similar
laws relating to or affecting creditors' rights generally and general equitable
principles (whether considered in a proceeding in equity or at law) and subject
to requirements of reasonableness, good faith and fair dealing.
We are members of the bar of the State of New York and, for purposes of
this opinion, do not hold ourselves out as experts on the laws of any
jurisdiction other than the laws of the State of New York. We have relied upon
your opinion of even date herewith addressed to the Company as to all matters
of Hawaii law related to this opinion.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement, to the reference to us under the caption "Validity of
the Notes" in the Registration Statement and to the reference to this opinion
in your opinion filed as an exhibit to the Registration Statement. In giving
such consent, we do not thereby admit that we are in the category of persons
whose consent is required under Section 7 of the Act.
Very truly yours,
/s/ Winthrop, Stimson, Putnam &
Roberts
<PAGE>
EXHIBIT 12(a)
HAWAIIAN ELECTRIC INDUSTRIES, INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
EXCLUDING INTEREST ON ASB DEPOSITS
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Fixed charges
Total interest charges(1)... $145,449 $137,855 $127,006 $114,626 $ 79,999
Interest component of
rentals.................... 3,599 2,973 3,583 3,857 3,736
Pretax preferred stock
dividend requirements of
subsidiaries............... 9,404 9,999 10,730 11,424 11,893
Preferred securities
distributions of trust
subsidiaries............... 12,557 10,600 -- -- --
-------- -------- -------- -------- --------
Total fixed charges......... $171,009 $161,427 $141,319 $129,907 $ 95,628
======== ======== ======== ======== ========
Earnings
Pretax income from
continuing operations...... $151,581 $150,616 $136,585 $137,469 $128,987
Fixed charges, as shown..... 171,009 161,427 141,319 129,907 95,628
Interest capitalized........ (5,915) (6,190) (5,862) (5,112) (4,043)
-------- -------- -------- -------- --------
Earnings available for fixed
charges.................... $316,675 $305,853 $272,042 $262,264 $220,572
======== ======== ======== ======== ========
Ratio of earnings to fixed
charges.................... 1.85 1.89 1.93 2.02 2.31
======== ======== ======== ======== ========
</TABLE>
- --------
(1) Interest on nonrecourse debt from leveraged leases is not included in
total interest charges nor in interest expense in HEI's consolidated
statements of income.
<PAGE>
EXHIBIT 12(b)
HAWAIIAN ELECTRIC INDUSTRIES, INC.
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
INCLUDING INTEREST ON ASB DEPOSITS
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Fixed charges
Total interest charges(1)... $287,518 $226,954 $218,170 $203,922 $156,508
Interest component of
rentals.................... 3,599 2,973 3,583 3,857 3,736
Pretax preferred stock
dividend requirements of
subsidiaries............... 9,404 9,999 10,730 11,424 11,893
Preferred securities
distributions of trust
subsidiaries............... 12,557 10,600 -- -- --
-------- -------- -------- -------- --------
Total fixed charges......... $313,078 $250,526 $232,483 $219,203 $172,137
======== ======== ======== ======== ========
Earnings
Pretax income from
continuing operations...... $151,581 $150,616 $136,585 $137,469 $128,987
Fixed charges, as shown..... 313,078 250,526 232,483 219,203 172,137
Interest capitalized........ (5,915) (6,190) (5,862) (5,112) (4,043)
-------- -------- -------- -------- --------
Earnings available for fixed
charges.................... $458,744 $394,952 $363,206 $351,560 $297,081
======== ======== ======== ======== ========
Ratio of earnings to fixed
charges.................... 1.47 1.58 1.56 1.60 1.73
======== ======== ======== ======== ========
</TABLE>
- --------
(1) Interest on nonrecourse debt from leveraged leases is not included in
total interest charges nor in interest expense in HEI's consolidated
statements of income.
<PAGE>
EXHIBIT 23(a)
[LETTERHEAD OF KPMG LLP]
ACCOUNTANTS' CONSENT
The Board of Directors
Hawaiian Electric Industries, Inc.:
We consent to the incorporation by reference in the Registration Statement
on Form S-3 of Hawaiian Electric Industries, Inc., of our report dated January
18, 1999, relating to the consolidated financial statements of Hawaiian
Electric Industries, Inc. and subsidiaries as of December 31, 1998 and 1997,
and for each of the years in the three-year period ended December 31, 1998,
and our reports dated January 19, 1998, relating to the consolidated financial
statements of Hawaiian Electric Industries, Inc. and subsidiaries as of
December 31, 1997 and 1996, and for each of the years in the three-year period
ended December 31, 1997, and relating to the consolidated financial statement
schedule of Hawaiian Electric Industries, Inc. and subsidiaries for each of
the years in the three-year period ended December 31, 1997, and to the
reference to our firm under the heading "EXPERTS" in the prospectus.
/s/ KPMG LLP
Honolulu, Hawaii
March 2, 1999
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS that the undersigned, HAWAIIAN ELECTRIC
INDUSTRIES, INC., a Hawaii corporation, and the officers and directors of said
corporation whose names are signed hereto, hereby constitute and appoint
ROBERT F. CLARKE, ROBERT F. MOUGEOT, CONSTANCE H. LAU, DAVID J. REBER and
GREGORY R. KIM, all of Honolulu, Hawaii, and each of them, with full power of
substitution in the premises (with full power to each of them to act alone),
their true and lawful attorneys and agents, and in its and their name, place
and stead, to do any and all acts and things and to execute any and all
instruments and documents which said attorneys and agents or any of them may
deem necessary or advisable to enable Hawaiian Electric Industries, Inc. to
comply with the Securities Act of 1933, as amended (the "Securities Act"), and
any rules, regulations or requirements of the Securities and Exchange
Commission in respect thereof, in connection with the following:
(i) The registration under said Act of up to $300,000,000 aggregate
principal amount of Medium-Term Notes, Series C, which amount shall include
(a) $6,000,000 aggregate principal amount of Medium-Term Notes registered
but not yet sold pursuant to Registration Statement No. 33-58820, and (b)
$200,000,000 aggregate principal amount/offering price of securities
registered but not yet sold pursuant to Registration Statement Nos. 333-
18809-01, 333-18809-02, 333-18809-03 and 333-18809-04, in each case carried
forward to said registration pursuant to Rule 429 under the Securities Act,
including specifically but without limiting the generality of the
foregoing, power and authority to sign the name of Hawaiian Electric
Industries, Inc. and the names of the undersigned officers and directors
thereof, in the capacities indicated below, to any and all amendments
(including pre- and post-effective amendments) and supplements to such
registration statement on Form S-3 and to any instruments or documents
filed as a part of or in connection with said registration statement or
amendments or supplements thereto, and each of the undersigned hereby
ratifies and confirms all of the aforesaid that said attorneys and agents
or any of them shall do or cause to be done by virtue hereof; and
(ii) Registration Statement No. 33-58820, and Registration Statement Nos.
333-18809, 333-18809-01, 333-18809-02, 333-18809-03 and 333-18809-04, as
referred to in clause (i) above, including specifically but without
limiting the generality of the foregoing, power and authority to sign the
name of Hawaiian Electric Industries, Inc. and the names of the undersigned
officers and directors thereof, in the capacities indicated below, to any
and all post-effective amendments and supplements to said registration
statements (including specifically and without limiting the generality of
the foregoing, any amendment or amendments changing the amount of medium-
term notes for which registration is being sought) and to any instruments
or documents filed as part of or in connection with said registration
statements or amendments or supplements thereto and/or which operate
pursuant to Rule 429 under the Securities Act to amend said registration
statements or amendments or supplements thereto, and each of the
undersigned hereby ratifies and confirms all of the aforesaid that said
attorneys and agents or any of them shall do or cause to be done by virtue
hereof.
<PAGE>
IN WITNESS WHEREOF, Hawaiian Electric Industries, Inc. has caused this Power
of Attorney to be executed in its name by its President and its Financial Vice
President and attested by its Assistant Secretary, and the undersigned
officers and directors of Hawaiian Electric Industries, Inc. have hereunto set
their hands, as of the 19th day of January, 1999. This Power of Attorney may
be executed in any number of counterparts by the corporation and by any one or
more of the officers and directors named below.
ATTEST: HAWAIIAN ELECTRIC INDUSTRIES, INC.
/s/ Molly M. Egged /s/ Robert F. Clarke
- ------------------------------------- By: _________________________________
Molly M. Egged Robert F. Clarke
Assistant Secretary Chairman of the Board and
President
(Chief Executive Officer)
/s/ Robert F. Mougeot
By: _________________________________
Robert F. Mougeot
Financial Vice President
and Chief Financial Officer
(Principal Financial Officer)
<TABLE>
<S> <C>
/s/ Robert F. Clarke Chairman of the Board, President and
___________________________________________ Director (Chief Executive Officer)
Robert F. Clarke
/s/ Robert F. Mougeot Financial Vice President and Chief
___________________________________________ Financial Officer (Principal Financial
Robert F. Mougeot Officer)
/s/ Curtis Y. Harada Controller (Principal Accounting Officer)
___________________________________________
Curtis Y. Harada
/s/ Don E. Carroll Director
___________________________________________
Don E. Carroll
/s/ Richard Henderson Director
___________________________________________
Richard Henderson
Director
___________________________________________
Victor Hao Li
/s/ T. Michael May Director
___________________________________________
T. Michael May
/s/ Bill D. Mills Director
___________________________________________
Bill D. Mills
</TABLE>
2
<PAGE>
<TABLE>
<S> <C>
/s/ A. Maurice Myers Director
___________________________________________
A. Maurice Myers
/s/ Diane J. Plotts Director
___________________________________________
Diane J. Plotts
/s/ James K. Scott Director
___________________________________________
James K. Scott
/s/ Oswald K. Stender Director
___________________________________________
Oswald K. Stender
/s/ Kelvin H. Taketa Director
___________________________________________
Kelvin H. Taketa
/s/ Jeffrey N. Watanabe Director
___________________________________________
Jeffrey N. Watanabe
</TABLE>
3
<PAGE>
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
Check if an application to determine eligibility of a Trustee pursuant to
Section 305(b)(2)
________________________
CITIBANK, N.A.
(Exact name of trustee as specified in its charter)
399 Park Avenue, New York, New York 13-5266470
(Address of principal executive offices) (I.R.S. employer identification no.)
10043
(Zip Code)
_______________________
Hawaiian Electric Industries, Inc.
(Exact name of obligor as specified in its charter)
Hawaii 99-0208097
(State or other jurisdiction of (I.R.S. employer identification no.)
incorporation or organization)
900 Richards Street
Honolulu, Hawaii 96813
(Address of principal executive offices) (Zip Code)
"Securities"
(Title of the Indenture Securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
Name Address
---- -------
Comptroller of the Currency Washington, D.C.
Federal Reserve Bank of New York New York, N.Y.
Federal Deposit Insurance Corporation Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affiliation.
None.
Item 16. List of Exhibits
----------------
List below all exhibits filed as a part of this Statement of Eligibility.
Exhibit 1 - Copy of Articles of Association of the Trustee, as now in
effect. (Exhibit 1 to T-1 to Registration Statement No. 2-79983).
Exhibit 2 - Copy of certificate of authority of the Trustee to commence
business. (Exhibit 2 to T-1 to Registration Statement No. 2-29577).
Exhibit 3 - Copy of authorization of the Trustee to exercise corporate
trust powers. (Exhibit 3 to T-1 to Registration Statement No. 2-55519).
Exhibit 4 - Copy of existing By-Laws of the Trustee. (Exhibit 4 to T-1 to
Registration Statement No. 33-34988).
Exhibit 5 - Not applicable.
Exhibit 6 - The consent of the Trustee required by Section 321(B) of the
Trust Indenture Act of 1939. (Exhibit 6 to T-1 to Registration Statement
No. 33-19227).
Exhibit 7 - Copy of the latest Report of Condition of Citibank, N.A. (as
of December 31, 1998 - attached).
Exhibit 8 - Not applicable.
Exhibit 9 - Not applicable.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, the Trustee,
Citibank, N.A., a national banking association organized and existing under the
laws of the United States of America, has duly caused this statement of
eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York and State of New York, on the 2nd day of
March, 1999.
CITIBANK, N.A.
BY /s/Florence Mills
-----------------
Florence Mills
Senior Trust Officer
<PAGE>
Charter No. 1461
Comptroller of the Currency
Northeastern District
REPORT OF CONDITION
CONSOLIDATING
DOMESTIC AND FOREIGN
SUBSIDIARIES OF
Citibank, N.A.
of New York in the State of New York, at the close of business on
December 31, 1998, published in response to call made by Comptroller of
the Currency, under Title 12, United States Code, Section 161. Charter
Number 1461 Comptroller of the Currency Northeastern District.
<TABLE>
<CAPTION>
ASSETS
Thousands
of dollars
<S> <C>
Cash and balances due from de-
pository institutions:
Noninterest-bearing balances
and currency and coin.............. $ 8,052,000
Interest-bearing balances.......... 15,782,000
Held-to-maturity securities.......... 0
Available-for-sale securities........ 37,330,000
Federal funds sold and
securities purchased under
agreements to resell............... 8,039,000
Loans and lease financing
receivables:
Loans and Leases, net of un-
earned income...................... $182,508,000
LESS: Allowance for loan
and lease losses...... 4,709,000
-----------
Loans and leases, net of un-
earned income, allowance,
and reserve........................ $177,799,000
Trading assets....................... 31,683,000
Premises and fixed assets (includ-
ing capitalized leases)............ 4,022,000
Other real estate owned.............. 458,000
Investments in unconsolidated
subsidiaries and associated com-
panies............................. 1,154,000
Customers' liability to this bank
on acceptances outstanding......... 1,281,000
Intangible assets.................... 3,504,000
Other assets......................... 11,791,000
------------
TOTAL ASSETS......................... $300,895,000
============
</TABLE>
<PAGE>
LIABILITIES
<TABLE>
<CAPTION>
<S> <C>
Deposits:
In domestic offices................. $ 39,355,000
Noninterest-
Bearing...........$ 13,199,000
------------
Interest-
bearing........... 26,156,000
------------
In foreign offices, Edge and
Agreement subsidiaries, and
IBFs................................ 163,573,000
Noninterest-
bearing........... 10,803,000
Interest-
bearing........... 152,770,000
------------
Federal funds purchased and
securities sold under agree-
ments to repurchase................. 9,752,000
Trading liabilities................... 30,753,000
Other borrowed money (includes
mortgage indebtedness and
obligations under capitalized
leases):
With a remaining maturity of one
year or less........................ 13,308,000
With a remaining maturity of more
than one year through three years... 1,528,000
With a remaining maturity of more
than three years.................... 2,110,000
Bank's liability on acceptances ex-
ecuted and outstanding.............. 1,382,000
Subordinated notes and
debentures.......................... 6,600,000
Other liabilities..................... 12,802,000
============
TOTAL LIABILITIES..................... $281,163,000
</TABLE>
EQUITY CAPITAL
<TABLE>
<CAPTION>
<S> <C>
Perpetual preferred stock
and related surplus................. 0
Common stock.......................... $ 751,000
Surplus............................... 9,397,000
Undivided profits and capital re-
serves.............................. 10,356,000
Net unrealized holding gains (losses)
on available-for-sale securities.... (113,000)
Cumulative foreign currency
translation adjustments............. (659,000)
------------
TOTAL EQUITY CAPITAL.................. $ 19,732,000
------------
TOTAL LIABILITIES, LIMITED-
LIFE PREFERRED STOCK, AND
EQUITY CAPITAL...................... $300,895,000
============
</TABLE>
<PAGE>
I, Roger W. Trupin, Controller of the above-named bank do hereby declare
that this Report of Condition is true and correct to the best of my
knowledge and belief.
ROGER W. TRUPIN
CONTROLLER
We, the undersigned directors, attest to the correctness of this Report
of Condition. We declare that it has been examined by us, and to the
best of our knowledge and belief has been prepared in conformance with
the instructions and is true and correct.
PAUL J. COLLINS
JOHN S. REED
WILLIAM R. RHODES
DIRECTORS
