<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MARCH 13, 1997
REGISTRATION NO. 333-20757
333-20757-01
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
HAWAIIAN ELECTRIC COMPANY, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER OF INCORPORATION OR
ORGANIZATION)
HAWAII 99-0040500
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
900 RICHARDS STREET, HONOLULU, HAWAII 96813 (808) 543-5771
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
PRINCIPAL EXECUTIVE OFFICES)
HECO CAPITAL TRUST I
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER OR CERTIFICATE OF TRUST)
DELAWARE 52-6834193
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
C/O THE BANK OF NEW YORK, 101 BARCLAY STREET, 21ST FLOOR, NEW YORK, NEW YORK
10286
ATTENTION: CORPORATE TRUST TRUSTEE ADMINISTRATION, (212) 815-5084
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
PRINCIPAL EXECUTIVE OFFICES)
---------------
PAUL A. OYER
FINANCIAL VICE PRESIDENT AND TREASURER
HAWAIIAN ELECTRIC COMPANY, INC.
900 RICHARDS STREET, HONOLULU, HAWAII 96813 (808) 543-7360
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
---------------
COPIES TO:
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
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the effective date of this Registration
Statement.
If the only securities being registered on this Form are to be 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, please check the following box. [_]
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 earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
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 REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
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 THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
CALCULATION OF REGISTRATION FEE
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<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
AMOUNT MAXIMUM AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE OFFERING REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(1)(2) PRICE(1)(2) FEE
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<S> <C> <C> <C> <C>
Preferred Securities of
HECO Capital Trust I
("QUIPS")................. (3) (3) (3) N/A
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HECO Junior Subordinated
Deferrable Interest
Debentures ("QUIDS")...... (3)(4) (3)(4) (3)(4) N/A
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HECO Guarantee with respect
to Preferred Securities of
HECO Capital Trust I...... (5) (5) (5) N/A
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HECO Guarantees of
debentures of its wholly-
owned subsidiaries........ (5) (5) (5) N/A
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Total.................. $50,000,000(3) 100% $50,000,000(3) $15,152
</TABLE>
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Exclusive of accrued distributions, dividends and interest (if any).
(3) In no event will the aggregate initial public offering price of the
securities issued under this Registration Statement exceed $50,000,000,
exclusive of accrued distributions, dividends and interest (if any).
Junior Subordinated Deferrable Interest Debentures (the "QUIDS") will be
issued and sold by HECO and its subsidiaries to HECO Capital Trust I (the
"Trust") in an aggregate principal amount corresponding to the aggregate
stated liquidation preference of the Preferred Securities (the "QUIPS")
and Common Securities of the Trust. HECO QUIDS (including HECO QUIDS
issued to the Trust in exchange for subsidiary QUIDS) may later be
distributed for no additional consideration to the holders of the QUIPS
upon a dissolution of the Trust and the distribution of the assets
thereof.
(4) The HECO QUIDS and the subsidiary QUIDS will be purchased by the Trust
with the proceeds of the sale of the QUIPS, together with the proceeds
received from HECO in respect of the Common Securities to be issued by the
Trust to HECO. No separate consideration will be received for such QUIDS.
(5) No separate consideration will be received for the HECO Guarantees.
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE +
+WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES +
+LAWS OF ANY SUCH JURISDICTION. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED MARCH 13, 1997
2,000,000 PREFERRED SECURITIES
HECO CAPITAL TRUST I
% CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES, SERIES 1997 (QUIPS SM)*
(LIQUIDATION PREFERENCE $25 PER PREFERRED SECURITY)
GUARANTEED TO THE EXTENT HECO CAPITAL TRUST I HAS FUNDS AS SET FORTH HEREIN BY
HAWAIIAN ELECTRIC COMPANY, INC.
The % Cumulative Quarterly Income Preferred Securities, Series 1997 (the
"QUIPS") offered hereby represent preferred undivided beneficial interests in
the assets of HECO Capital Trust I, a trust created under the laws of the State
of Delaware (the "Trust"). Hawaiian Electric Company, Inc., a Hawaii
corporation ("HECO"), will be the owner of all of the beneficial interests
represented by common securities of the Trust (the "Common Securities"). The
preferred interests represented by the QUIPS will have a preference under
certain circumstances with respect to cash distributions and amounts payable on
liquidation, redemption or otherwise over the trust interests represented by
the Common Securities. See "Description of QUIPS--Subordination of Common
Securities." The Bank of
(Continued on next page)
SEE "RISK FACTORS" BEGINNING ON PAGE 7 HEREOF FOR CERTAIN INFORMATION
RELEVANT TO AN INVESTMENT IN THE QUIPS.
The QUIPS have been approved for listing on the New York Stock Exchange, Inc.
(the "New York Stock Exchange"), subject to official notice of issuance.
Trading on the New York Stock Exchange is expected to commence within the 30-
day period after the initial delivery of the QUIPS. See "Underwriting."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO THE
OFFERING PRICE COMMISSION(1) TRUST(2)(3)
-------------- ------------- ---------------
<S> <C> <C> <C>
Per QUIPS.......................... $25.00 (2) $25.00
Total.............................. $50,000,000 (2) $50,000,000
</TABLE>
- -----
(1) The Trust and HECO have agreed to indemnify the several Underwriters
against certain liabilities, including liabilities under the Securities Act
of 1933. See "Underwriting."
(2) In view of the fact that the proceeds of the sale of the QUIPS will be used
to purchase the QUIDS of HECO and its subsidiaries, the Underwriting
Agreement provides that HECO will pay to the Underwriters, as compensation
("Underwriters' Compensation") for their arranging the investment therein
of such proceeds, $ per QUIPS (or $ in the aggregate). See
"Underwriting."
(3) Expenses of the offering, which are payable by HECO, are estimated to be
$330,000.
-----------
The QUIPS offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to
their right to reject any order in whole or in part. It is expected that the
QUIPS will be ready for delivery in book-entry form only through the facilities
of The Depository Trust Company ("DTC") in New York, New York, on or about
March , 1997, against payment therefor in immediately available funds.
- -----
* QUIPS and QUIDS are servicemarks of Goldman, Sachs & Co.
GOLDMAN, SACHS & CO. DEAN WITTER REYNOLDS INC.
The date of this Prospectus is March , 1997.
<PAGE>
CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE QUIPS, INCLUDING
OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN THE QUIPS, AND
THE IMPOSITION OF A PENALTY BID, DURING AND AFTER THIS OFFERING. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
----------------
(Continued from previous page)
New York is the property trustee of the Trust (the "Property Trustee"). The
Trust exists for the sole purpose of issuing the QUIPS and the Common
Securities and concurrently investing the proceeds thereof in % Junior
Subordinated Deferrable Interest Debentures, Series 1997 (collectively, the
"QUIDS"SM), to be issued by HECO and its subsidiaries, Maui Electric Company,
Limited ("MECO") and Hawaii Electric Light Company, Inc. ("HELCO" and,
together with HECO and MECO, the "Companies" and each, a "Company"), in the
principal amounts of $31,546,400 for HECO (the "HECO QUIDS"), $10,000,000 for
MECO (the "MECO QUIDS") and $10,000,000 for HELCO (the "HELCO QUIDS"). HECO
will fully and unconditionally guarantee, on a subordinated basis, the
obligations of MECO and HELCO under the MECO QUIDS and the HELCO QUIDS,
respectively (the "Subsidiary Guarantees"). See "Description of Subsidiary
Guarantees." The obligations of HECO under the Subsidiary Guarantees will be
subordinate and junior in right of payment to all Senior Debt (as defined
herein) of HECO. The Companies have agreed in an Agreement as to Expenses and
Liabilities (the "Expense Agreement") to provide funds to the Trust as needed
to pay obligations of the Trust to parties other than the Holders of the
QUIPS. Each of the Companies will be obligated under the Expense Agreement to
pay its share of such expenses pro rata based on the proportionate amount of
its QUIDS held by the Trust, and the respective obligations of MECO and HELCO
under the Expense Agreement will be fully, irrevocably and unconditionally
guaranteed by HECO. The QUIDS of each of the Companies will have terms
corresponding in all material respects to the terms of the QUIPS and will be
unsecured and subordinate and junior in right of payment to all Senior Debt of
each of the respective Companies. See "Description of QUIDS--Subordination."
The QUIDS will mature on March , 2027, which maturity may at any time
(including upon a distribution of Distributable HECO QUIDS (as defined herein)
as described below) be shortened to a date not earlier than March , 2002, or
extended to a date not later than March , 2046, if, in each case, certain
conditions are met. The QUIDS will be the sole assets of the Trust, and
payments under the QUIDS and the Expense Agreement will be the sole revenues
of the Trust.
Holders of the QUIPS will be entitled to receive preferential cumulative
cash distributions accumulating from the date of original issuance and payable
quarterly in arrears on the last day of March, June, September and December of
each year, commencing March 31, 1997, at the annual rate of % of the
Liquidation Preference of $25 per QUIPS (the "Distributions"). Payment of
Distributions and payments of the amounts payable on the liquidation or
redemption of the QUIPS, in each case to the extent of funds held by the
Trust, are each irrevocably guaranteed by HECO (the "Trust Guarantee"), as
described herein. See "Description of Trust Guarantee." The obligations of
HECO under the Trust Guarantee will be subordinate and junior in right of
payment to all Senior Debt of HECO.
Each of the Companies has the right to defer payment of interest on its
respective QUIDS at any time or from time to time for a period (including any
extensions thereof) not exceeding 20 consecutive quarters with respect to each
deferral period (each, an "Extension Period"), provided that no Extension
Period may extend beyond the Stated Maturity (as defined herein) of the QUIDS.
Upon the termination of any such Extension Period and the payment of all
amounts then due on any Interest Payment Date (as defined herein), the
deferring Company may elect to begin a new Extension Period subject to the
requirements set forth herein. If interest payments on the QUIDS are so
deferred by any of the Companies, distributions on the QUIPS will also be
deferred to the same extent as interest payments are being deferred and each
of the deferring Companies (and, if such deferring Company is MECO or HELCO,
HECO) will not be permitted, subject to certain exceptions set forth herein,
to declare or pay
2
<PAGE>
any cash distributions with respect to its capital stock or debt securities
that rank pari passu with or junior to the QUIDS so deferred. During an
Extension Period, interest on the QUIDS will continue to accrue (and the
amount of Distributions to which Holders of the QUIPS are entitled but do not
receive will accumulate additional Distributions) at the rate of % per annum,
compounded quarterly, and Holders of QUIPS will be required to accrue interest
income for United States federal income tax purposes. See "Description of
QUIPS--Distributions," "Description of QUIDS--Option to Extend Interest
Payment Period" and "Certain Federal Income Tax Consequences--Stated Interest
and Original Issue Discount."
HECO has, through the HECO QUIDS, the Subsidiary Guarantees, the Trust
Guarantee, the Trust Agreement (as defined herein), the HECO Indenture (as
defined herein) and the Expense Agreement, taken together, fully, irrevocably
and unconditionally guaranteed, on a subordinated basis, all of the Trust's
obligations under the QUIPS. The Trust Guarantee guarantees the payment of
Distributions and payments on liquidation or redemption of the QUIPS, but only
in each case to the extent of funds held by the Trust. If HECO does not make
payments on the QUIDS (whether as a result of its failure to make interest
payments on the HECO QUIDS or its failure to make payments under the
applicable Subsidiary Guarantee in the event that MECO or HELCO fails to make
interest payments on its QUIDS), the Trust will have insufficient funds to pay
Distributions on the QUIPS. The Trust Guarantee does not cover payment of
Distributions when the Trust does not have sufficient funds to pay such
Distributions. See "Description of Trust Guarantee." In such event, a Holder
of QUIPS may institute a legal proceeding directly against the defaulting
Company (and against HECO as guarantor if the defaulting Company is MECO or
HELCO) to enforce payment of such Distributions to such Holder. The
obligations of HECO under the Trust Guarantee, the HECO QUIDS, the HECO
Indenture, the Subsidiary Guarantees and the Expense Agreement are subordinate
and junior in right of payment to all of HECO's Senior Debt.
The QUIPS are subject to mandatory redemption, in whole or in part, upon
repayment of the QUIDS at maturity or their earlier redemption in an amount
equal to the amount of related QUIDS maturing or being redeemed at a
redemption price equal to the aggregate Liquidation Preference of such QUIPS
plus accumulated and unpaid Distributions thereon to the date of redemption
(the "Redemption Price"). The QUIDS of each Company are redeemable prior to
maturity (i) at the option of each of the respective Companies on or after
March , 2002, in whole at any time or in part from time to time, at a
redemption price equal to the accrued and unpaid interest on the QUIDS so
redeemed to the date fixed for redemption, plus 100% of the principal amount
thereof (the "QUIDS Redemption Price") or (ii) at the option of HECO at any
time, in whole (but not in part), upon the occurrence and continuation of a
Special Event (as defined herein), at the QUIDS Redemption Price, subject, in
each case, to the further conditions described under "Description of QUIDS--
Redemption."
Upon the occurrence and continuation of a Special Event and subject to
obtaining prior approval from the Public Utilities Commission of the State of
Hawaii (the "PUC"), HECO may, instead of redeeming the QUIPS, direct the
Property Trustee to dissolve the Trust and, after satisfaction of creditors of
the Trust as provided by applicable law, cause QUIDS to be distributed to the
Holders of the QUIPS in liquidation of the Trust and in lieu of any cash
distribution. In order to effect such a distribution, HECO will issue to the
Trust additional % Junior Subordinated Deferrable Interest Debentures,
Series 1997 in the aggregate principal amount of the MECO QUIDS and HELCO
QUIDS then held by the Trust (the "Substituted HECO QUIDS") and having the
same terms as the HECO QUIDS in exchange for the MECO QUIDS and HELCO QUIDS
(the "Exchange"), which MECO QUIDS and HELCO QUIDS shall thereafter represent
obligations of MECO and HELCO to HECO. The Trust will then distribute the HECO
QUIDS and the Substituted HECO QUIDS (collectively, the "Distributable HECO
QUIDS") to the Holders of the QUIPS. Under current United States federal
income tax law, the Exchange would likely be treated as a taxable exchange
with respect to each such Holder's pro rata share of the MECO QUIDS and the
HELCO QUIDS for United States federal income tax purposes and
3
<PAGE>
such Holder would recognize gain or loss as described under "Certain Federal
Income Tax Consequences--Distribution of QUIDS to Holders of QUIPS." See
"Description of QUIPS--Redemption or Exchange--Special Event Redemption or
Distribution of QUIDS" and "Description of QUIDS--Distribution of QUIDS;
Exchange of Substituted HECO QUIDS for MECO and HELCO QUIDS." The
Distributable HECO QUIDS may also be distributed to Holders of the QUIPS under
certain other circumstances as described below. See "Description of QUIPS--
Liquidation Value; Liquidation Distribution Upon Dissolution."
The HECO QUIDS, the HECO Indenture, the Trust Guarantee, the Expense
Agreement and the Subsidiary Guarantees are subordinate and junior in right of
payment to all Senior Debt of HECO. The MECO QUIDS and HELCO QUIDS, and the
obligations of MECO and HELCO under the Expense Agreement, are subordinate and
junior in right of payment to all of their respective Senior Debt. As of
December 31, 1996, the principal portion of the Senior Debt of HECO, MECO and
HELCO was approximately $494.4 million (exclusive of contingent amounts under
HECO's guarantees of the obligations of its subsidiaries), $138.2 million and
$95.6 million, respectively (or $728.2 million in the aggregate). In addition,
since HECO receives interest and dividends from MECO and HELCO, and certain of
the operating assets of the Companies are owned by MECO and HELCO, the HECO
QUIDS will be effectively subordinated to all existing and future liabilities
of HECO's subsidiaries (which, to the extent such existing liabilities
constitute the principal portion of Senior Debt of such subsidiaries, was
equal to approximately $233.8 million in the aggregate at December 31, 1996).
Accordingly, Holders of HECO QUIDS (and the Substituted HECO QUIDS, if issued)
should look only to the assets of HECO for payments thereon. See "Description
of QUIDS--Subordination." The terms of the QUIDS place no limitation on the
amount of Senior Debt that may be incurred by any of the Companies.
In the event of the dissolution of the Trust, after satisfaction of the
creditors of the Trust as provided by applicable law, the Holders of the QUIPS
will be entitled to receive a liquidation preference of $25 per QUIPS plus
accumulated and unpaid Distributions thereon to the date of payment, which may
be in the form of a distribution of a Like Amount (as defined herein) in
Distributable HECO QUIDS in certain circumstances. See "Description of QUIPS--
Liquidation Value; Liquidation Distribution Upon Dissolution."
The QUIPS have been approved for listing on the New York Stock Exchange,
subject to official notice of issuance. If Distributable HECO QUIDS are
distributed to the Holders of QUIPS upon the liquidation of the Trust, HECO
will use its best efforts to list the Distributable HECO QUIDS on the New York
Stock Exchange or such other stock exchanges, if any, on which the QUIPS are
then listed.
The QUIPS will be represented by a global certificate registered in the name
of DTC or its nominee. Beneficial interests in the QUIPS will be shown on, and
transfers thereof will be effected only through, records maintained by
Participants (as defined herein) in DTC. Except as described herein, QUIPS in
certificated form will not be issued in exchange for the global certificate.
See "Description of QUIPS--Book-Entry Issuance."
4
<PAGE>
AVAILABLE INFORMATION
HECO and its parent corporation, Hawaiian Electric Industries, Inc. ("HEI"),
are subject to the informational requirements of the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), and in accordance therewith file
reports, proxy statements and other information with the Securities and
Exchange Commission (the "Commission"), which may be inspected and copied at
prescribed rates at the public reference facilities maintained by the
Commission at the Judiciary Plaza, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and at the following Regional Offices of the
Commission: Chicago Regional Office, Suite 1400, Citicorp Center, 14th Floor,
500 West Madison Street, Chicago, Illinois 60661; and New York Regional
Office, 7 World Trade Center, 13th Floor, New York, New York 10048. Copies of
such material can be obtained by mail at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549. If available, such reports and other
information may also be accessed through the Commission's electronic data
gathering, analysis and retrieval system ("EDGAR") via electronic means,
including the Commission's Web Site on the Internet (http://www.sec.gov). Such
reports, proxy statements and other information may also be inspected at the
offices of the New York Stock Exchange, 20 Broad Street, New York, New York
10005, and the Pacific Stock Exchange, 301 Pine Street, San Francisco,
California 94104, on which exchanges HEI's common stock is listed.
HECO and the Trust have filed with the Commission a Registration Statement
on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the securities offered hereby. This
Prospectus constitutes a part of the Registration Statement and omits, in
accordance with the rules and regulations of the Commission, certain of the
information contained in the Registration Statement. Reference is hereby made
to the Registration Statement and the exhibits and the financial statements,
notes and schedules filed as a part thereof or incorporated by reference
therein for further information with respect to the Companies, the Trust and
the securities offered hereby. Statements contained herein concerning the
provisions of any document are not necessarily complete and, in each instance,
where a copy of such document has been filed as an exhibit to the Registration
Statement or otherwise has been filed with the Commission, reference is made
to the copy so filed. Each such statement is qualified in its entirety by such
reference.
No separate financial statements of the Trust have been included herein. The
Companies and the Trust do not consider that such financial statements for the
Trust would be material to Holders of the QUIPS because the Trust is a newly
formed special purpose entity, has no operating history or independent
operations and is not engaged in and does not propose to engage in any
activity other than holding as trust assets the QUIDS and issuing the QUIPS
and Common Securities. See "HECO Capital Trust I," "Description of QUIPS,"
"Description of QUIDS," "Description of Trust Guarantee" and "Description of
Subsidiary Guarantees." In addition, HECO intends to seek Staff Accounting
Bulletin 53 treatment for the Trust and will include an appropriate footnote
pertaining to the QUIPS and the Trust in its audited consolidated financial
statements. See "Accounting Treatment."
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents filed with the Commission (File No. 1-4955) by HECO
pursuant to Section 13 of the Exchange Act are hereby incorporated by
reference in this Prospectus insofar as such documents relate to the
Companies: (a) Annual Report on Form 10-K for the fiscal year ended December
31, 1995, as amended by Form 10-K/A dated April 30, 1996; (b) Quarterly
Reports on Form 10-Q for the quarters ended March 31, 1996, June 30, 1996 and
September 30, 1996; and (c) Current Reports on Form 8-K filed January 21,
1997, January 27, 1997, February 3, 1997, March 6, 1997 and March 13, 1997.
5
<PAGE>
Each document filed by HECO with the Commission pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of securities made by
this Prospectus shall be deemed to be incorporated herein by reference and to
be a part hereof from the date of filing such document insofar as such
document relates to the Companies. Any statement contained in this Prospectus,
or in a document all or a portion of which is incorporated or deemed to be
incorporated by reference herein (each, an "Incorporated Document"), shall be
deemed to be modified or superseded for purposes of the Registration Statement
and this Prospectus to the extent that a statement contained herein or therein
(or in any other subsequently filed Incorporated Document) modifies or
supersedes such statement. Such incorporation by reference shall not be deemed
to specifically incorporate by reference the information referred to in Item
402(a)(8) of Regulation S-K. Any such statement so modified or superseded
shall not be deemed, except as so modified or superseded, to constitute a part
of the Registration Statement or this Prospectus.
Certain information contained in this Prospectus summarizes, is based upon
or refers to information and financial statements contained in one or more of
the Incorporated Documents. Accordingly, such information contained herein is
qualified in its entirety by reference to such Incorporated Documents and
should be read in conjunction therewith.
HECO WILL PROVIDE WITHOUT CHARGE TO ANY PERSON TO WHOM A COPY OF THIS
PROSPECTUS IS DELIVERED, UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY
OF ANY AND ALL OF THE INCORPORATED DOCUMENTS (OTHER THAN EXHIBITS TO SUCH
DOCUMENTS WHICH ARE NOT SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH
DOCUMENTS). SUCH REQUESTS SHOULD BE DIRECTED TO: TREASURER, HAWAIIAN ELECTRIC
COMPANY, INC., P. O. BOX 2750, HONOLULU, HAWAII 96840-0001, TELEPHONE NUMBER
(808) 543-7360.
6
<PAGE>
RISK FACTORS
Prospective purchasers of the QUIPS should consider carefully the risk
factors set forth below, as well as all other information contained or
incorporated by reference in this Prospectus, in evaluating an investment in
the QUIPS. To the extent any of the information contained or incorporated by
reference in this Prospectus constitutes a "forward-looking statement" as
defined in Section 27A(i)(1) of the Securities Act, the risk factors set forth
below are meaningful cautionary statements identifying important factors that
could cause actual results to differ materially from those in the forward-
looking statement.
RANKING OF SUBORDINATED OBLIGATIONS UNDER THE TRUST GUARANTEE, THE QUIDS AND
THE SUBSIDIARY GUARANTEES
The obligations of HECO under the Trust Guarantee and the Subsidiary
Guarantees (collectively, the "Guarantees") issued by HECO for the benefit of
the Holders of QUIPS are unsecured and rank subordinate and junior in right of
payment to all Senior Debt of HECO. The obligations of each of the Companies
under its respective QUIDS are subordinate and junior in right of payment to
all Senior Debt of such Company. At December 31, 1996, the principal portion of
the Senior Debt of HECO (exclusive of contingent amounts under HECO's
guarantees of the obligations of its subsidiaries), MECO and HELCO was
approximately $494.4 million, $138.2 million and $95.6 million, respectively
(or $728.2 million in the aggregate). HECO receives interest and dividends from
MECO and HELCO. Accordingly, the HECO QUIDS (and the Substituted HECO QUIDS, if
issued) and the Guarantees will be effectively subordinated to all existing and
future liabilities of HECO's subsidiaries (which, to the extent such existing
liabilities constitute the principal portion of Senior Debt of such
subsidiaries, was equal to approximately $233.8 million in the aggregate at
December 31, 1996) and Holders of QUIDS should look only to the assets of HECO
for payments on the HECO QUIDS (and the Substituted HECO QUIDS, if issued) and
the Guarantees. Neither the Indentures pursuant to which the QUIDS will be
issued, nor the Trust Agreement, the Trust Guarantee or the Subsidiary
Guarantees, places any limitation on the amount of secured or unsecured debt,
including Senior Debt, that may be incurred by any of the Companies. Also, the
provisions of the Trust Agreement, the Indentures or the Guarantees do not
afford Holders of the QUIPS or the QUIDS protection in the event of a highly
leveraged or other transaction involving the Companies, or in the event of a
change in control thereof, that may adversely affect Holders of the QUIPS or
the QUIDS. See "Description of QUIDS--Subordination," "Description of Trust
Guarantee--Status of the Trust Guarantee" and "Description of Subsidiary
Guarantees."
The ability of the Trust to pay amounts due on the QUIPS is solely dependent
upon the Companies making payments on the QUIDS as and when required.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX CONSEQUENCES
Each of the Companies has the right under the respective indenture pursuant
to which its QUIDS will be issued to defer the payment of interest on its
respective QUIDS at any time or from time to time for a period (including any
extensions thereof) not exceeding 20 consecutive quarters with respect to each
Extension Period, provided that no Extension Period may extend beyond the
Stated Maturity of the QUIDS. As a consequence of any such deferral, quarterly
Distributions on the QUIPS and the Common Securities by the Trust will be
deferred in a corresponding amount (and the amount of Distributions to which
Holders of the QUIPS and the Common Securities are entitled but do not receive
will accumulate additional Distributions thereon at the rate of % per annum,
compounded quarterly from the relevant payment date for such Distributions)
during any such Extension Period. Unless all three of the Companies defer the
payment of interest on their QUIDS for the same Extension Period, Holders will
receive partial Distributions in the corresponding amounts not deferred.
During any such Extension Period, each of the deferring Companies (and, if
such deferring Company is MECO or HELCO, HECO) may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of its capital stock, (ii) make any
payment of principal, interest or premium, if any, on or repay, repurchase or
redeem any
7
<PAGE>
of its debt securities (including other junior subordinated deferrable
interest debentures of such Company) that rank pari passu with or junior in
interest to the QUIDS on which payment is being deferred or (iii) make any
guarantee payments with respect to any guarantee issued by such Company if
such guarantee ranks pari passu with or junior in interest to the QUIDS on
which payment is being deferred, in each case other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, its common stock and exchanges or conversions of common
stock of one class for common stock of another class, (b) payments by HECO
under the Guarantees (or any other guarantee by HECO with respect to any
securities of any of its subsidiaries, provided that the proceeds from the
issuance of such securities were used to purchase junior subordinated
deferrable interest debentures Issued by any of the Companies), and (c)
purchases by a Company of its common stock required to prevent the loss or
secure the renewal or reinstatement of any government license or franchise
held by HECO or any of its subsidiaries. Prior to the termination of any such
Extension Period, the deferring Company may further extend the interest
payment period, provided that no Extension Period may exceed 20 consecutive
quarters or extend beyond the Stated Maturity of the QUIDS. Upon the
termination of any Extension Period and the payment of all amounts then due on
any Interest Payment Date, the deferring Company may elect to begin a new
Extension Period subject to the above requirements. See "Description of
QUIPS--Distributions" and "Description of QUIDS--Option to Extend Interest
Payment Period."
Should an Extension Period occur, each Holder of QUIPS (even if it uses the
cash method of accounting for United States federal income tax purposes) will
be required to accrue income (in the form of original issue discount for
United States federal income tax purposes) in respect of its allocable share
of the deferred interest on the QUIDS of the deferring Company. As a result, a
Holder of QUIPS will include such income in gross income for United States
federal income tax purposes in advance of the receipt of cash, and will not
receive the cash related to such income from the Trust if such Holder disposes
of the QUIPS prior to the record date for any Distribution Date (as defined
herein). See "Certain Federal Income Tax Consequences--Stated Interest and
Original Issue Discount" and "--Sales or Redemption of QUIPS."
None of the Companies has a current intention of exercising its right to
defer payments of interest by extending the interest payment period on its
respective QUIDS. Moreover, because of the consequences of exercising such
right, including a prohibition on the payment of dividends with respect to a
deferring Company's capital stock (and with respect to HECO's capital stock if
the deferring Company is MECO or HELCO), each of the Companies believes that
the likelihood of such exercise is remote. However, should any of the
Companies elect to exercise such right in the future, the market price of the
QUIPS is likely to be affected. A Holder that disposes of its QUIPS during an
Extension Period, therefore, might not receive the same return on its
investment as a Holder that continues to hold its QUIPS. In addition, as a
result of the existence of a right to defer interest payments, the market
price of the QUIPS (which represent preferred undivided beneficial interests
in the QUIDS) may be more volatile than the market prices of other securities
which do not contain such right.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION; TAXABLE EXCHANGES; POSSIBLE TAX LAW
CHANGES
Upon the occurrence and continuation of either a Tax Event or an Investment
Company Event (each, as defined herein, a "Special Event"), the Companies, at
the direction of HECO, have the right to redeem the QUIDS in whole (but not in
part) at the QUIDS Redemption Price within 90 days following the occurrence of
such Special Event and thereby cause a mandatory redemption of the QUIPS and
Common Securities. Under current United States federal income tax law, such a
redemption of the QUIPS would constitute a taxable event to the Holders
thereof. See "Certain Federal Income Tax Consequences--Sales or Redemption of
QUIPS."
Instead of redeeming the QUIPS, HECO has the right, upon the occurrence and
continuation of a Special Event and subject to obtaining prior approval from
the PUC, to direct the Property Trustee to dissolve the Trust and, in
connection therewith, after satisfaction of creditors of the Trust, if any, to
8
<PAGE>
issue Substituted HECO QUIDS in exchange for the MECO QUIDS and the HELCO
QUIDS and then cause the Distributable HECO QUIDS to be distributed to the
Holders of QUIPS on a pro rata basis in liquidation of such Holders' interests
in the Trust. Under current United States federal income tax law, although the
distribution of the Distributable HECO QUIDS upon the dissolution of the Trust
would not be a taxable exchange to Holders of the QUIPS for United States
federal income tax purposes, the Exchange of the MECO QUIDS and the HELCO
QUIDS for the Substituted HECO QUIDS would be treated as such a taxable
exchange to Holders of the QUIPS if such Exchange were deemed to constitute a
change of obligor, within the meaning of United States federal income tax law,
with respect to the QUIDS so exchanged. As a result of such taxable exchange,
each Holder would recognize gain or loss as described under "Certain Federal
Income Tax Consequences--Distribution of QUIDS to Holders of QUIPS." In
addition, if the Trust were characterized for United States federal income tax
purposes as an association taxable as a corporation at the time of
dissolution, or if there were a change in law or legal interpretation, or upon
the occurrence of certain other circumstances, the distribution of the
Distributable HECO QUIDS could be a taxable exchange to Holders of QUIPS. See
"Certain Federal Income Tax Consequences--Distribution of QUIDS to Holders of
QUIPS."
Because Holders of QUIPS may receive Distributable HECO QUIDS on dissolution
of the Trust, prospective purchasers of QUIPS are also making an investment
decision with regard to the Distributable HECO QUIDS and should carefully
review all the information regarding the QUIDS contained herein. See
"Description of QUIPS--Redemption or Exchange--Special Event Redemption or
Distribution of QUIDS" and "Description of QUIDS."
A "Tax Event" means the receipt by HECO or the Trust of an opinion of
counsel, rendered by a law firm having a recognized federal and state tax and
securities practice, to the effect that, as a result of a Tax Action (as
defined herein), there is more than an insubstantial risk that (i) the Trust
is, or will be within 90 days of the date thereof, subject to United States
federal income tax with respect to income received or accrued on the QUIDS,
(ii) interest payable by any of the Companies on its respective QUIDS is not,
or within 90 days of the date thereof will not be, deductible by such Company,
in whole or in part, for United States federal income tax purposes, or (iii)
the Trust is, or will be within 90 days of the date thereof, subject to more
than a de minimis amount of other taxes, duties or other governmental charges.
A "Tax Action" includes (a) any amendment to or change (including any
announced prospective change) in the laws (or any regulations thereunder) of
the United States, or of any State or the District of Columbia, or of any
political subdivision or taxing authority thereof or therein, (b) any judicial
decision interpreting, applying or clarifying such laws or regulations or (c)
any administrative pronouncement or action that represents an official
position (including a clarification of an official position) of the
governmental authority or regulatory body making such administrative
pronouncement or taking such action, in each such case that occurs or becomes
effective on or after the date of original issuance of the QUIPS.
An "Investment Company Event" means the receipt by HECO or the Trust of an
opinion of counsel, rendered by a law firm having a recognized federal
securities practice, to the effect that, as a result of the occurrence of a
change in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), there is more than an
insubstantial risk that the Trust is or will be considered an "investment
company" that is required to be registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), which Change in 1940 Act Law
becomes effective on or after the date of original issuance of the QUIPS.
On February 6, 1997, President Clinton released the administration's fiscal
year 1998 budget proposal, including a proposal for tax legislation that
would, among other things, generally deny a deduction for interest (and
original issue discount ("OID")) on a corporate debt instrument with (i) a
maximum weighted average maturity of more than 40 years or (ii) a maximum term
of more than 15 years that is not shown as indebtedness on the separate
balance sheet of the issuer or, where the
9
<PAGE>
instrument is issued to a related party (other than a corporation), where the
holder or some other related party issues a related instrument that is not
shown as indebtedness on the issuer's consolidated balance sheet. For purposes
of determining the weighted average maturity or the term of an instrument, any
right to extend would be treated as exercised. The above described provisions
were proposed to be effective for instruments issued on or after the date of
"first committee action," the meaning of which is unclear. The House Ways and
Means Committee began a full committee hearing on the President's fiscal year
1998 budget proposal on February 11, 1997. There can be no assurance as to
whether the effective date guidance contained in the President's legislative
proposal will be followed if the proposed legislation is enacted, or whether
future legislative or administrative proposals or final legislation enacted
after the date hereof will not adversely affect the ability of the Companies
to deduct the interest on the QUIDS. A change in law consistent with the
President's legislative proposal, if it were to apply retroactively to the
issuance of the QUIPs, would give rise to a Tax Event, which would in turn
permit HECO to cause a redemption of the QUIPS or a distribution of
Distributable HECO QUIDS upon dissolution of the Trust upon receipt of an
opinion of counsel, as described more fully under "Description of QUIPS--
Redemption or Exchange--Special Event Redemption or Distribution of QUIDS."
Such a change in law would not alter the United States federal income tax
consequences of the purchase, ownership and disposition of QUIPS. See "Certain
Federal Income Tax Consequences." Despite the existing uncertainty with
respect to proposed tax legislation as discussed above, HECO has elected to
offer QUIPS because the issuance thereof, under current law, is expected to
improve its capital structure while lowering its cost of capital.
MARKET PRICE
There can be no assurance as to the market prices for QUIPS or for the
Distributable HECO QUIDS that may be distributed in exchange for QUIPS if a
dissolution of the Trust occurs. Accordingly, the QUIPS that an investor may
purchase, whether pursuant to the offer made hereby or in the secondary
market, or the Distributable HECO QUIDS that a Holder of QUIPS may receive on
dissolution of the Trust, may trade at a discount to the price that the
investor paid to purchase the QUIPS offered hereby. In addition, in connection
with the Exchange of the Substituted HECO QUIDS for the MECO QUIDS and the
HELCO QUIDS, the Substituted HECO QUIDS may be treated as having been issued
either with OID or at a premium, depending on their fair market value at the
time of the Exchange and a Holder's tax basis in the QUIPS at the time of the
Exchange. Accordingly, if the Substituted HECO QUIDS are treated as having
been issued with OID, a Holder of QUIPS (even if it uses the cash method of
accounting for United States federal income tax purposes) would be required to
include OID in income on an economic accrual basis with respect to such
Substituted HECO QUIDS.
RIGHTS UNDER THE TRUST GUARANTEE; LIMITATION OF FUNDS AVAILABLE TO THE TRUST
The Trust Guarantee will be qualified as an indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The Bank of New
York will act as the indenture trustee under the Trust Guarantee (the "Trust
Guarantee Trustee") for the purposes of compliance with the Trust Indenture
Act and will hold the Trust Guarantee for the benefit of the Holders of the
QUIPS. The Bank of New York will also act as Debenture Trustee for the QUIDS
and as Property Trustee under the Trust Agreement, and the Delaware affiliate
of the Property Trustee will act as the Delaware Trustee under the Trust
Agreement. The Trust Guarantee guarantees to the Holders of the QUIPS the
following payments, to the extent not paid by the Trust: (i) any accumulated
and unpaid Distributions required to be paid on the QUIPS, to the extent that
the Trust has funds on hand available therefor at such time, (ii) the
Redemption Price with respect to any QUIPS called for redemption, to the
extent that the Trust has funds on hand available therefor at such time, and
(iii) upon a voluntary or involuntary dissolution, winding-up or liquidation
of the Trust (unless the Distributable HECO QUIDS are distributed to Holders
of the QUIPS), the lesser of (a) the aggregate of the liquidation preference
and all accumulated and unpaid Distributions to the date of payment to the
extent that the Trust has funds on hand available therefor at such time and
(b) the amount of assets of the Trust remaining available for distribution to
Holders of the QUIPS in liquidation of the Trust. The Holders of not less than
a majority in aggregate
10
<PAGE>
Liquidation Preference of the QUIPS have the right to waive any default by
HECO on any of its payment obligations under the Trust Guarantee, and to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trust Guarantee Trustee in respect of the Trust Guarantee or
to direct the exercise of any trust power conferred upon the Trust Guarantee
Trustee under the Trust Guarantee. Any Holder of the QUIPS may institute a
proceeding directly against HECO to enforce its rights under the Trust
Guarantee without first instituting a proceeding against the Trust, the Trust
Guarantee Trustee or any other person or entity.
If HECO were to default on its obligation to pay amounts payable under the
HECO QUIDS, or if MECO or HELCO were to default on their obligations to pay
amounts payable under their respective QUIDS and HECO were to default on its
related obligation to make such payments under the Subsidiary Guarantees, the
Trust would lack funds for the payment of Distributions or amounts payable
upon redemption of the QUIPS or otherwise, and, in such event, Holders of the
QUIPS would not be able to rely upon the Trust Guarantee for payment of such
amounts. Instead, in the event a Debenture Event of Default (as defined
herein) shall have occurred and be continuing and such event is attributable
to the failure of one or more of the Companies to pay interest on or principal
of the QUIDS on the payment date on which such payment is due and payable
(and, in the case of such default by either or both of MECO and HELCO, the
failure of HECO to make such payment under the Subsidiary Guarantees), then a
Holder of QUIPS may directly institute a proceeding against each defaulting
Company (including HECO as guarantor if the defaulting Company is MECO or
HELCO) for enforcement of payment to such Holder of the interest on or
principal of such QUIDS having a principal amount equal to the aggregate
Liquidation Preference of the QUIPS of such Holder (a "Direct Action"). In
connection with such Direct Action, the defaulting Company (or HECO, as
guarantor) will be subrogated to the rights of such Holder of QUIPS to the
extent of any payment made by such Company (or by HECO, as guarantor) to such
Holder of QUIPS in such Direct Action. Unless Distributable HECO QUIDS are
distributed to the Holders of the QUIPS, such Holders will not be able to
exercise directly any other remedy available to holders of QUIDS or assert
directly any other rights in respect of the QUIDS. See "Description of QUIPS--
Enforcement of Certain Rights by Holders of QUIPS," "Description of QUIDS--
Debenture Events of Default," "Description of Trust Guarantee" and
"Description of Subsidiary Guarantees." The Trust Agreement provides that each
Holder of QUIPS by acceptance thereof agrees to the provisions of the Trust
Guarantee and the Indentures.
LIMITED VOTING RIGHTS
Holders of QUIPS will generally have limited voting rights relating only to
the modification of the QUIPS and the dissolution, winding-up or liquidation
of the Trust. Holders of QUIPS will not be entitled to vote to appoint, remove
or replace the Property Trustee or the Delaware Trustee, which voting rights
are vested exclusively in HECO as the Holder of the Common Securities except
upon the occurrence of certain events described herein. The Administrative
Trustees (as defined herein) and HECO may amend the Trust Agreement without
the consent of Holders of QUIPS to ensure that the Trust will be classified
for United States federal income tax purposes as a grantor trust and that the
Trust will not be required to register as an "investment company" under the
Investment Company Act, even if such action adversely affects the interests of
such Holders. See "Description of QUIPS--Removal of Trustees" and "--Voting
Rights; Amendment of the Trust Agreement."
TRADING CHARACTERISTICS OF THE QUIPS
The QUIPS constitute a new issue of securities with no established trading
market. While the QUIPS have been approved for listing on the New York Stock
Exchange upon official notice of issuance, no assurance can be given as to the
liquidity of or the development and maintenance of trading markets for the
QUIPS. In addition, the QUIPS may trade at prices that do not fully reflect
the value of accrued but unpaid interest with respect to the underlying QUIDS.
A Holder of QUIPS that disposes of its QUIPS between record dates for any
Distribution Dates will nevertheless be required to include in income as
ordinary income an amount equal to the accrued but unpaid interest on the
11
<PAGE>
QUIDS through the date of disposition. Such Holder will recognize a capital
loss to the extent the selling price (which may not fully reflect the value of
accrued but unpaid interest) is less than its adjusted tax basis. Subject to
certain limited exceptions, capital losses cannot be applied to offset
ordinary income for United States federal income tax purposes. See "Certain
Federal Income Tax Consequences--Sales or Redemption of QUIPS."
CAPITAL AND OTHER EXPENDITURES
The Companies anticipate that they will continue to make substantial capital
expenditures in the future. They also may make acquisitions, some of which may
be significant, and the funding for which may be generated, in whole or in
part, from the incurrence of indebtedness. The incurrence of indebtedness to
fund capital expenditures or acquisitions (or the assumption of indebtedness
in connection with such acquisitions), which in each case could be senior to
the QUIPS and the QUIDS, could result in a downgrading of HECO's credit
rating, and, as a result, have an adverse effect upon the market value of the
QUIPS and the QUIDS.
HECO CAPITAL TRUST I
HECO Capital Trust I is a statutory business trust created under the
Delaware Business Trust Act, as amended (the "Trust Act"), pursuant to (i) the
trust agreement executed by HECO, as Depositor, The Bank of New York, as
Property Trustee, and The Bank of New York (Delaware), as the Delaware
Trustee, and the three Administrative Trustees named therein (collectively,
the "Trustees"), and (ii) the filing of a certificate of trust with the
Delaware Secretary of State on December 31, 1996. The Administrative Trustees
are individuals who are officers of HECO. The trust agreement will be amended
and restated in its entirety (as so amended and restated, the "Trust
Agreement") substantially in the form filed as an exhibit to the Registration
Statement of which this Prospectus forms a part. The Trust's business and
affairs are conducted by the Trustees. The Bank of New York, as Property
Trustee, will act as sole indenture trustee under the Trust Agreement for
purposes of compliance with the Trust Indenture Act. The Bank of New York will
also act as trustee under the Guarantees and the Indentures. See "Description
of QUIDS," "Description of Trust Guarantee" and "Description of Subsidiary
Guarantees." HECO, as the holder of the Common Securities, or the Holders of a
majority in Liquidation Preference of the QUIPS if any Debenture Event of
Default has occurred and is continuing, will be entitled to appoint, remove or
replace the Property Trustee and/or the Delaware Trustee. In no event will the
Holders of the QUIPS have the right to vote to appoint, remove or replace the
Administrative Trustees; such voting rights are vested exclusively in HECO, as
the holder of the Common Securities. The duties and obligations of each
Trustee are governed by the Trust Agreement. HECO will pay all fees and
expenses related to the Trust and the offering of the QUIPS and will pay,
directly or indirectly, all ongoing costs, expenses and liabilities of the
Trust. The principal office of the Trust is c/o The Bank of New York, 101
Barclay Street 21W, New York, New York 10286, Attention: Corporate Trust
Trustee Administration. Inquiries concerning the Trust may also be directed to
HECO at 900 Richards Street, Honolulu, Hawaii 96813, telephone number
(808) 543-7360.
The Trust exists for the exclusive purposes and functions of (i) issuing and
selling the QUIPS and the Common Securities, (ii) using the proceeds from the
sale of QUIPS and the Common Securities to acquire QUIDS issued by the
Companies, (iii) maintaining the status of the Trust as a grantor trust for
United States federal income tax purposes and (iv) engaging in only those
other activities necessary, convenient or incidental thereto. Accordingly, the
QUIDS will be the sole assets of the Trust, and payments under the QUIDS and
the Expense Agreement will be the sole revenues of the Trust. All of the
Common Securities will be owned by HECO. The Common Securities will rank pari
passu, and payments will be made thereon pro rata with the QUIPS, except that
upon the occurrence and continuance of an Event of Default (as defined herein)
under the Trust Agreement resulting from a Debenture Event of Default, the
rights of HECO as Holder of the Common Securities to payment in respect of
Distributions and payments upon liquidation, redemption or otherwise will be
subordinated to the rights of the Holders of the QUIPS. See "Description of
QUIPS--Subordination of Common Securities." HECO will acquire the Common
Securities in an aggregate liquidation amount equal to 3% of the total capital
of the Trust. The Trust has a term of 53 years, but may terminate earlier as
provided in the Trust Agreement.
12
<PAGE>
HAWAIIAN ELECTRIC COMPANY, INC. AND SUBSIDIARIES
HECO, a Hawaii corporation, was incorporated under the laws of the Kingdom
of Hawaii on October 13, 1891, and became a wholly-owned subsidiary of HEI, a
Hawaii corporation, as a result of a corporate reorganization completed on
July 1, 1983. HECO's principal business and executive offices are located at
900 Richards Street, Honolulu, Hawaii 96813-2956, and its telephone number is
(808) 543-7771.
HECO owns all of the common stock of MECO, acquired in 1968, and HELCO,
acquired in 1970. MECO was incorporated under the laws of the Territory of
Hawaii on April 28, 1921, and its principal business and executive offices are
located at 210 West Kamehameha Avenue, Kahului, Hawaii 96732-2253, and its
telephone number is (808) 871-2300. HELCO was incorporated under the laws of
the Republic of Hawaii on December 5, 1894, and its principal business and
executive offices are located at 1200 Kilauea Avenue, Hilo, Hawaii 96720-4295,
and its telephone number is (808) 969-0121.
HECO, MECO and HELCO are regulated operating electric public utilities
engaged in the production, purchase, transmission, distribution and sale of
electricity on the islands of Oahu; Maui, Lanai and Molokai; and Hawaii,
respectively. These five islands had a combined population estimated at
1,135,000, or approximately 95 percent of the State's total population, and a
service area of approximately 5,766 square miles. The Companies do not provide
electric public utility service on the island of Kauai. The principal
communities served include Honolulu (on Oahu), Wailuku and Kahului (on Maui)
and Hilo and Kona (on Hawaii). The service areas also include numerous
suburban communities, resorts, U.S. Armed Forces installations and
agricultural operations.
The Companies provide the only electric public utility service on the
islands they serve. The following table sets forth the number of electric
customer accounts as of December 31, 1994, 1995 and 1996 and the related
electric sales revenues by Company for each of the years then ended:
<TABLE>
<CAPTION>
1994 1995 1996
----------------------- ----------------------- -----------------------
CUSTOMER ELECTRIC SALES CUSTOMER ELECTRIC SALES CUSTOMER ELECTRIC SALES
ACCOUNTS REVENUES ACCOUNTS REVENUES ACCOUNTS REVENUES
-------- -------------- -------- -------------- -------- --------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
HECO.................... 264,992 $652,442 269,307 $712,380 271,602 $ 767,264
MECO.................... 52,483 119,805 53,339 127,284 53,763 144,434
HELCO................... 58,017 128,259 58,515 135,110 59,349 152,312
------- -------- ------- -------- ------- ----------
375,492 $900,506 381,161 $974,774 384,714 $1,064,010
======= ======== ======= ======== ======= ==========
</TABLE>
Revenues from the sale of electricity in 1996 were from the following types
of customers in the proportions shown:
<TABLE>
<CAPTION>
HECO MECO HELCO TOTAL
---- ---- ----- -----
<S> <C> <C> <C> <C>
Residential............................................ 31% 36% 41% 33%
Commercial............................................. 31 34 38 32
Large light and power.................................. 37 30 20 34
Other.................................................. 1 -- 1 1
--- --- --- ---
100% 100% 100% 100%
=== === === ===
</TABLE>
13
<PAGE>
SELECTED CONSOLIDATED FINANCIAL INFORMATION
The following selected consolidated financial information should be read in
conjunction with HECO's consolidated financial statements and the notes
thereto, and "Management's Discussion and Analysis of Financial Condition and
Results of Operations," included in the Incorporated Documents. The
consolidated Income Statement and Operating Data for each of the years in the
three-year period ended December 31, 1996, and the Capitalization Data as of
December 31, 1996, are derived from, and are qualified by reference to, the
audited consolidated financial statements included in the Incorporated
Documents. The historical results are not necessarily indicative of the
results of operations to be expected in the future.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------
1992 1993 1994 1995 1996
-------- -------- -------- -------- ----------
(DOLLARS IN THOUSANDS, EXCEPT PER BARREL
AMOUNTS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT AND OPERATING
DATA:
Operating Revenues.............. $776,929 $874,010 $907,308 $981,990 $1,071,426
-------- -------- -------- -------- ----------
Operating Expenses:
Fuel Oil....................... 225,611 213,285 186,717 207,001 250,544
Purchased Power................ 172,761 258,723 271,636 276,364 286,077
Other Operating Expenses....... 301,518 323,917 361,643 395,903 426,014
-------- -------- -------- -------- ----------
Total Operating Expenses....... 699,890 795,925 819,996 879,268 962,635
-------- -------- -------- -------- ----------
Operating Income................ $ 77,039 $ 78,085 $ 87,312 $102,722 $ 108,791
======== ======== ======== ======== ==========
Allowance for Equity Funds Used
During Construction............ $ 6,781 $ 6,973 $ 9,064 $ 10,202 $ 11,741
Income Before Interest and Other
Charges(1)..................... $ 86,799 $ 89,641 $102,105 $119,047 $ 129,466
Allowance for Borrowed Funds
Used During Construction....... $ 2,095 $ 3,869 $ 4,043 $ 5,112 $ 5,862
Income Before Preferred Stock
Dividends of HECO(2)........... $ 53,678 $ 56,126 $ 65,961 $ 77,023 $ 85,213
Net Income for Common Stock..... $ 49,153 $ 51,705 $ 61,645 $ 72,897 $ 81,348
Ratio of Earnings to Fixed
Charges(3)..................... 3.03 3.25 3.47 3.46 3.58
Ratio of Earnings to Combined
Fixed Charges and Preferred
Stock Dividends(3)............. 2.62 2.81 3.03 3.10 3.23
Average Fuel Oil Cost Per
Barrel......................... $ 19.69 $ 21.09 $ 18.92 $ 20.47 $ 24.08
Kilowatthour Sales (Millions)... 8,332 8,325 8,593 8,806 8,991
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1996 AS ADJUSTED(5)
--------------------------- ---------------------------
(DOLLARS IN (% OF TOTAL (DOLLARS IN (% OF TOTAL
THOUSANDS) CAPITALIZATION) THOUSANDS) CAPITALIZATION)
----------- --------------- ----------- ---------------
<S> <C> <C> <C> <C>
CAPITALIZATION DATA:
Short-Term Debt......... $ 125,920 8.0% $ 75,920 4.8%
Long-Term Debt
(including $13 million
due within one
year)(4)............... 602,226 38.4 602,226 38.4
HECO-Obligated Preferred
Securities of
Subsidiary holding
solely subordinated
debentures of HECO,
MECO and HELCO......... -- -- 50,000 3.2
Preferred Stock with
Mandatory Redemption
Requirements (including
sinking fund
requirements due within
one year).............. 38,955 2.5 38,955 2.5
Preferred Stock without
Mandatory Redemption
Requirements........... 48,293 3.1 48,293 3.1
Common Stock Equity..... 751,311 48.0 751,311 48.0
---------- ----- ---------- -----
Total Capitalization... $1,566,705 100.0% $1,566,705 100.0%
========== ===== ========== =====
</TABLE>
- -------
(1) Income Before Interest and Other Charges includes Operating Income plus
the Allowance for Equity Funds Used During Construction and nonoperating
income.
(2) Income Before Preferred Stock Dividends of HECO includes Income Before
Interest and Other Charges, less interest (reduced by Allowance for
Borrowed Funds Used During Construction), amortization of net bond premium
and expense and preferred stock dividends of the HECO subsidiaries.
(3) See "Ratios of Earnings to Fixed Charges and to Combined Fixed Charges and
Preferred Stock Dividends."
(4) The Department of Budget and Finance of the State of Hawaii (the
"Department") was authorized by the Hawaii Legislature in 1994 to issue up
to $170 million of Special Purpose Revenue Bonds and to loan the proceeds
to HECO and its subsidiaries by December 31, 1997. Special Purpose Revenue
Bonds in the aggregate principal amount of $125 million have been sold
pursuant to this authorization. The Department was authorized by the
Hawaii Legislature in 1996 to issue up to $150 million of Special Purpose
Revenue Bonds and to loan the proceeds to HECO and MECO by December 31,
1999. No Special Purpose Revenue Bonds have been sold pursuant to this
authorization. Long-Term Debt will increase from time to time as
approximately $9.1 million of undrawn proceeds from the sale of bonds
issued prior to 1997, and proceeds from the future sale of Special Purpose
Revenue Bonds, are drawn down.
(5) Adjusted to reflect the issuance and sale of the QUIPS offered hereby and
application of the proceeds therefrom in satisfaction of Short-Term Debt.
See "Use of Proceeds" and "Accounting Treatment."
14
<PAGE>
The following table summarizes certain financial information for HECO
consolidated, which is derived from audited financial information, and
unaudited financial information for MECO and HELCO, individually.
<TABLE>
<CAPTION>
HECO CONSOLIDATED MECO HELCO
--------------------- ----------------- -----------------
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1995 1996 1995 1996 1995 1996
---------- ---------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Current assets.......... $ 153,072 $ 176,414 $ 27,161 $ 30,701 $ 23,485 $ 26,345
Noncurrent assets....... 1,863,211 1,989,132 306,191 366,489 368,785 390,464
---------- ---------- -------- -------- -------- --------
$2,016,283 $2,165,546 $333,352 $397,190 $392,270 $416,809
========== ========== ======== ======== ======== ========
Common stock equity..... $ 696,905 $ 751,311 $126,458 $147,573 $136,929 $143,212
Cumulative preferred
stock
Not subject to
mandatory redemption.. 48,293 48,293 8,000 8,000 10,000 10,000
Subject to mandatory
redemption............ 39,955 36,160 6,055 5,960 7,500 7,200
Current liabilities..... 309,637 299,240 57,551 41,700 64,234 73,650
Noncurrent liabilities.. 921,493 1,030,542 135,288 193,957 173,607 182,747
---------- ---------- -------- -------- -------- --------
$2,016,283 $2,165,546 $333,352 $397,190 $392,270 $416,809
========== ========== ======== ======== ======== ========
<CAPTION>
YEARS ENDED YEARS ENDED YEARS ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
--------------------- ----------------- -----------------
1995 1996 1995 1996 1995 1996
---------- ---------- -------- -------- -------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues...... $ 981,990 $1,071,426 $128,707 $145,776 $135,730 $153,202
Operating income........ $ 102,722 $ 108,791 $ 16,575 $ 17,124 $ 15,959 $ 15,984
Net income for common
stock.................. $ 72,897 $ 81,348 $ 11,798 $ 14,744 $ 13,109 $ 14,673
</TABLE>
CAPITAL EXPENDITURE PROGRAMS AND FINANCING REQUIREMENTS
CAPITAL EXPENDITURE PROGRAMS
Capital expenditures include the costs of projects which are required to
meet expected load growth, to improve reliability, and to replace and upgrade
existing equipment. Capital expenditures requiring the use of cash totaled
approximately $188.2 million in 1996, of which $84.0 million was attributable
to HECO, $68.7 million to MECO and $35.5 million to HELCO. Approximately 66%
of the total 1996 capital expenditures was for transmission and distribution
projects and approximately 34% was for generation and general plant projects,
including MECO's Maalaea combustion turbine and Lanai and Molokai generation
and HELCO's Keahole combustion turbines. Cash contributions in aid of
construction received in 1996 totaled $9.7 million.
The Companies' current consolidated forecast of net capital expenditures,
which excludes the allowance for funds used during construction ("AFUDC") and
capital expenditures funded by third-party contributions in aid of
construction, for the five-year period 1997 through 2001 is approximately $711
million. Approximately 65% of forecast gross capital expenditures, including
AFUDC and third-party contributions in aid of construction, is for
transmission and distribution projects, with the remaining 35% primarily for
generation projects.
Capital expenditure estimates and the timing of construction projects are
reviewed periodically by management and may change significantly as a result
of many considerations, including changes in economic conditions, changes in
forecasts of kilowatthour sales and peak load, the availability of purchased
power, the availability of generating sites and transmission and distribution
corridors, the ability to obtain adequate and timely rate relief, escalations
in construction costs, demand side management programs and requirements of
environmental and other regulatory and permitting authorities.
15
<PAGE>
FINANCING REQUIREMENTS
The Companies' consolidated requirements for funds in the years 1997 through
2001, including net capital expenditures, debt retirements (exclusive of
reductions in levels of short-term borrowings) and sinking fund requirements,
are currently estimated to total $768 million. HECO's consolidated internal
sources, after payment of common stock and preferred stock dividends, are
currently expected to provide approximately 75% of the $768 million in total
requirements, with debt and equity financing providing the remaining
requirements. HECO currently estimates that it will require approximately
$23 million in new common equity, in addition to retained earnings, over the
five-year period 1997 through 2001. The PUC must approve issuances of long-
term debt and equity for HECO, MECO and HELCO, and has approved the issuance
of the QUIDS to be purchased by the Trust from the proceeds of the Common
Securities and the QUIPS offered hereby. Prior approval of the PUC is required
before the Substituted HECO QUIDS may be issued to effect the Exchange.
RATIOS OF EARNINGS TO FIXED CHARGES AND TO
COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS
The following table sets forth HECO's consolidated ratios of earnings to
fixed charges, and to combined fixed charges and preferred stock dividends,
for the periods indicated:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1992 1993 1994 1995 1996
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed Charges................... 3.03 3.25 3.47 3.46 3.58
Ratio of Earnings to Combined Fixed Charges and
Preferred Stock Dividends........................... 2.62 2.81 3.03 3.10 3.23
</TABLE>
In computing the Ratio of Earnings to Fixed Charges, earnings represent
Income Before Preferred Stock Dividends of HECO (reduced by Allowance for
Borrowed Funds Used During Construction) plus federal and state income taxes
and fixed charges. Fixed charges consist of interest on all indebtedness
(without reduction for the Allowance for Borrowed Funds Used During
Construction) plus amortization of net bond premium and expense, pre-tax
preferred stock dividend requirements of MECO and HELCO, and the estimated
interest component of rentals. In computing the Ratio of Earnings to Combined
Fixed Charges and Preferred Stock Dividends, pre-tax preferred stock dividend
requirements of HECO are added to fixed charges.
USE OF PROCEEDS
All of the proceeds from the sale of QUIPS and the Common Securities will be
invested by the Trust in QUIDS. The proceeds from the sale to the Trust of the
QUIDS will be used by each Company to finance capital expenditures or to repay
short-term borrowings incurred to finance capital expenditures. All or a
portion of the net proceeds may be invested temporarily in commercial paper,
in repurchase agreements or both until such short-term borrowings mature. As
of March 6, 1997, HECO's commercial paper outstanding totaled approximately
$133 million and its borrowings from HEI totaled approximately $33 million. As
of the same date, MECO's and HELCO's short-term borrowings from HECO totaled
approximately $21 million and $48 million, respectively. Such commercial paper
and inter-company borrowings bear interest at prevailing market rates and such
commercial paper had maturities as of that date of not more than 45 days.
ACCOUNTING TREATMENT
The financial statements of the Trust will be consolidated into HECO's
consolidated financial statements, with the QUIPS treated as minority interest
and shown in HECO's consolidated balance
16
<PAGE>
sheet as "HECO-Obligated Preferred Securities of Subsidiary holding solely
subordinated debentures of HECO, MECO and HELCO." The financial statement
footnotes of HECO will further identify these securities as "HECO--Obligated
% Cumulative Quarterly Income Preferred Securities, Series 1997, of HECO
Capital Trust I, a wholly-owned subsidiary holding solely % Junior
Subordinated Deferrable Interest Debentures, Series 1997, of HECO and its
wholly-owned subsidiaries, MECO and HELCO" and will describe the terms of the
applicable securities. It is expected that all future reports filed by HECO
under the Exchange Act will present information regarding the Trust. In
addition, since HECO intends to seek Staff Accounting Bulletin 53 treatment
for the Trust, the footnote to HECO's audited consolidated financial
statements will reflect that (i) the Common Securities of the Trust are
wholly-owned by HECO, (ii) the sole assets of the Trust are the QUIDS,
specifying principal amount, interest rate and maturity date of the QUIDS held
and (iii) the Guarantees, when taken together with HECO's obligations under
its QUIDS and its obligations under the Trust Agreement and the Expense
Agreement, effectively provide a full and unconditional guarantee, on a
subordinated basis, of amounts due on the QUIPS.
DESCRIPTION OF QUIPS
The QUIPS will be created pursuant to the terms of the Trust Agreement. The
following summary of the material terms and provisions of the QUIPS and the
Trust Agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the provisions of the Trust
Agreement. The form of the Trust Agreement has been filed as an exhibit to the
Registration Statement of which this Prospectus forms a part.
GENERAL
Pursuant to the terms of the Trust Agreement, the Trustees on behalf of the
Trust will issue the QUIPS and the Common Securities. The QUIPS will rank pari
passu, and payments will be made thereon pro rata based on aggregate
Liquidation Preference amounts, with the Common Securities of the Trust,
except that the QUIPS will be entitled to a preference in certain
circumstances with respect to Distributions and amounts payable on redemption
or liquidation over the Common Securities. See "--Subordination of Common
Securities."
The QUIPS will represent preferred undivided beneficial interests in the
assets of the Trust, and will be entitled to other benefits as described in
the Trust Agreement. The QUIDS will be the only assets of the Trust. Legal
title to the QUIDS will be held by the Property Trustee in trust for the
benefit of the Holders of the QUIPS and Common Securities. The Trust Guarantee
will be a guarantee on a subordinated basis with respect to the QUIPS but will
not guarantee payment of Distributions or amounts payable on redemption or
liquidation of the QUIPS when the Trust does not have funds on hand available
to make such payments. See "Description of Trust Guarantee."
DISTRIBUTIONS
Distributions on QUIPS will be payable at the annual rate of % of the
stated Liquidation Preference of $25, payable quarterly in arrears on March
31, June 30, September 30 and December 31 of each year. Distributions will
accumulate from March , 1997, the date of original issuance. The first
Distribution payment date for the QUIPS will be March 31, 1997. The amount of
Distributions payable for any period will be computed on the basis of a 360-
day year of twelve 30-day months, except for any period shorter than a full
calendar month, in which case such amount will be computed on the basis of the
actual number of days elapsed. In the event that any date on which
Distributions are payable on the QUIPS is not a Business Day, then payment of
the Distributions payable on such date will be made on the next succeeding day
that is a Business Day (and without any additional Distributions or other
payment in respect of any such delay), except that, if such
17
<PAGE>
Business Day is in the next succeeding calendar year, such payment shall be
made on the immediately preceding Business Day (without any reduction in
Distributions in respect of such early payment), in each case with the same
force and effect as if made on the date such payment was originally payable
(each date on which Distributions are payable in accordance with the
foregoing, a "Distribution Date"). A "Business Day" shall mean any day other
than a Saturday or a Sunday, or a day on which banking institutions in the
City of New York are authorized or required by law or executive order to
remain closed or a day on which the principal corporate trust office of the
Property Trustee or the Debenture Trustee (as defined herein) is closed for
business.
So long as no Event of Default under its Indenture has occurred and is
continuing, each of the Companies has the right under its Indenture to elect
to defer the payment of interest on its respective QUIDS at any time or from
time to time for a period (including any extensions thereof) not exceeding 20
consecutive quarters with respect to each Extension Period, provided that no
Extension Period may extend beyond the Stated Maturity of the QUIDS. As a
consequence of any such deferral, quarterly Distributions on the QUIPS in a
corresponding amount will be deferred by the Trust during any such Extension
Period. Unless all three of the Companies defer the payment of interest on
their QUIDS for the same Extension Period, Holders will receive partial
Distributions in the corresponding amounts not deferred. Distributions to
which Holders of the QUIPS are entitled but do not receive will accumulate
additional Distributions thereon at the rate per annum of % thereof,
compounded quarterly from the relevant payment date for such Distributions.
The term "Distributions" as used herein shall include any such additional
Distributions. During any such Extension Period, each of the deferring
Companies (and, if such deferring Company is MECO or HELCO, HECO) may not (i)
declare or pay any dividends or distributions on, or redeem, purchase,
acquire, or make a liquidation payment with respect to, any of its capital
stock, (ii) make any payment of principal, interest or premium, if any, on or
repay, repurchase or redeem any debt securities (including other junior
subordinated deferrable interest debentures of such Company) that rank pari
passu with or junior in interest to the QUIDS on which payment is being
deferred or (iii) make any guarantee payments with respect to any guarantee
issued by such Company if such guarantee ranks pari passu with or junior in
interest to the QUIDS on which payment is being deferred (other than (a)
dividends or distributions in shares of, or options, warrants or rights to
subscribe for or purchase shares of, its common stock and exchanges or
conversions of common stock of one class for common stock of another class,
(b) payments by HECO under the Trust Guarantee (or under any other similar
guarantee by HECO with respect to any securities of any of its subsidiaries,
provided that the proceeds from the issuance of such securities were used to
purchase junior subordinated deferrable interest debentures issued by any of
the Companies) and the Subsidiary Guarantees, and (c) purchases of its common
stock required to prevent the loss or secure the renewal or reinstatement of
any government license or franchise held by it). Prior to the termination of
any such Extension Period, the deferring Company may further extend the
interest payment period, provided that no Extension Period may exceed 20
consecutive quarters or extend beyond the Stated Maturity of the QUIDS. Upon
the termination of any such Extension Period and the payment of all amounts
then due on any Interest Payment Date, the deferring Company may elect to
begin a new Extension Period. See "Description of QUIDS--Option to Extend
Interest Payment Period" and "Certain Federal Income Tax Consequences--Stated
Interest and Original Issue Discount."
None of the Companies has a current intention of exercising its right to
defer payments of interest on its QUIDS by extending the interest payment
period on such QUIDS. Moreover, because of the consequences of exercising such
right, including a prohibition on the payment of dividends with respect to a
deferring Company's capital stock (and with respect to HECO's capital stock if
the deferring Company is MECO or HELCO), each of the Companies believes that
the likelihood of such exercise is remote.
The revenues of the Trust available for distribution to Holders of the QUIPS
will be limited to payments under the QUIDS (in which the Trust will invest
the proceeds from the issuance and sale of the QUIPS and the Common
Securities) and payments under the Expense Agreement. See
18
<PAGE>
"Description of QUIDS." If all of the Companies do not make interest payments
on the QUIDS, the Property Trustee will not have sufficient funds available to
pay full Distributions on the QUIPS. The payment of Distributions (if and to
the extent the Trust has funds legally available for the payment of such
Distributions and cash sufficient to make such payments) is guaranteed by HECO
on a subordinated basis as set forth herein under "Description of Trust
Guarantee."
Distributions on the QUIPS on each Distribution Date will be payable to the
Holders thereof as they appear on the register of the Trust on the relevant
record date, which, as long as the QUIPS remain in book-entry form, will be
one Business Day prior to such Distribution Date. Subject to any applicable
laws and regulations and the provisions of the Trust Agreement, each such
payment will be made as described under "--Book-Entry Issuance." In the event
that the QUIPS are not in book-entry form, the relevant record date for such
QUIPS shall be the date that is 15 days prior to the relevant Distribution
Date, whether or not a Business Day, and payments shall be made as described
under "--Payment and Paying Agency."
REDEMPTION OR EXCHANGE
MANDATORY REDEMPTION. Upon the repayment or redemption, in whole or in part,
of any QUIDS, whether at maturity or upon earlier redemption as provided in
any Indenture, the proceeds from such repayment or redemption shall be applied
by the Property Trustee to redeem a Like Amount (as defined below) of the
QUIPS and the Common Securities, upon not less than 30 nor more than 60 days
notice, at the Redemption Price, which is equal to the aggregate Liquidation
Preference of the QUIPS and Common Securities to be redeemed plus accumulated
and unpaid Distributions thereon to the date of redemption (the "Redemption
Date"). See "Description of QUIDS--Redemption."
Each of the Companies will have the right to redeem its QUIDS on or after
March , 2002, in whole at any time or in part from time to time, subject to
the conditions described under "Description of QUIDS--Redemption," at the
QUIDS Redemption Price, which is equal to the accrued and unpaid interest on
the QUIDS so redeemed to the date fixed for redemption, plus 100% of the
principal amount thereof (the "QUIDS Redemption Price"). In addition, the
Companies, at the direction of HECO, will have the right to redeem the QUIDS
at any time, in whole (but not in part), upon the occurrence of a Tax Event or
an Investment Company Event (each, as defined below, a "Special Event") and
subject to the further conditions described under "Description of QUIDS--
Redemption," at the QUIDS Redemption Price.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION OF QUIDS. If a Special Event in
respect of the QUIPS and Common Securities shall occur and be continuing, (i)
the Companies, at the direction of HECO, have the right to redeem the QUIDS in
whole (but not in part) at the QUIDS Redemption Price, and thereby cause a
mandatory redemption of the QUIPS and Common Securities in whole (but not in
part) at the Redemption Price, within 90 days following the occurrence of such
Special Event, or (ii) subject to obtaining prior approval from the PUC, HECO
may direct the Property Trustee to dissolve the Trust and, after satisfaction
of liabilities to creditors of the Trust as provided by applicable law and the
consummation of the Exchange of Substituted HECO QUIDS for the MECO QUIDS and
the HELCO QUIDS, cause the Distributable HECO QUIDS to be distributed to the
Holders of the QUIPS and Common Securities in liquidation of the Trust. Under
current United States federal income tax law, although the distribution of the
Distributable HECO QUIDS upon the dissolution of the Trust would not be a
taxable exchange to Holders of the QUIPS for United States federal income tax
purposes, the Exchange of the MECO QUIDS and the HELCO QUIDS for the
Substituted HECO QUIDS would likely be treated as such a taxable exchange. As
a result of such taxable exchange, each holder would recognize gain or loss as
described under "Certain Federal Income Tax Consequences--Distribution of
QUIDS to Holders of QUIPS." In addition, if the Trust is characterized for
United States federal income tax purposes as an association taxable as a
corporation at the time of dissolution or if there is
19
<PAGE>
a change in law or legal interpretation, or upon the occurrence of certain
other circumstances, the distribution of the Distributable HECO QUIDS could be
a taxable exchange to Holders of the QUIPS. See "Certain Federal Income Tax
Consequences--Distribution of QUIDS to Holders of QUIPS." If HECO does not
elect either option described above, the QUIPS will remain outstanding and, in
the event a Tax Event has occurred and is continuing, Additional Sums (as
defined below) may be payable on the QUIDS.
EXTENSION OR SHORTENING OF MATURITY OF QUIDS. HECO shall have the right to
extend or shorten the maturity of all of the QUIDS at any time (including the
maturity of the Distributable HECO QUIDS at the time that HECO exercises its
right to elect to dissolve the Trust and cause such QUIDS to be distributed to
the Holders of such QUIPS and Common Securities in liquidation of the Trust or
any time thereafter), provided that it can shorten or extend the maturity only
if certain conditions are met at the time such election is made and at the
time of such shortening or extension as described under "Description of
QUIDS--General."
"Additional Sums" means the additional amounts as may be necessary in order
that the amount of Distributions then due and payable by the Trust on the
outstanding QUIPS and Common Securities of the Trust shall not be reduced as a
result of any additional taxes, duties and other governmental charges to which
the Trust has become subject.
"Investment Company Event" means the receipt by HECO or the Trust of an
opinion of counsel, rendered by a law firm having a recognized federal
securities practice, to the effect that, as a result of the occurrence of a
change in law or regulation or a change (including a prospective change) in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act
Law"), there is more than an insubstantial risk that the Trust is or will be
considered an "investment company" that is required to be registered under the
Investment Company Act, which Change in 1940 Act Law becomes effective on or
after the date of original issuance of the QUIPS.
"Like Amount" means (i) with respect to a redemption of the QUIPS and Common
Securities, QUIPS and Common Securities having a Liquidation Preference (as
defined below) equal to that portion of the principal amount of QUIDS to be
contemporaneously redeemed in accordance with the Indentures and the proceeds
of which will be used to pay the Redemption Price of such QUIPS and to redeem
such Common Securities, and (ii) with respect to a distribution of
Distributable HECO QUIDS to Holders of QUIPS and Common Securities in
connection with the dissolution or liquidation of the Trust, Distributable
HECO QUIDS having a principal amount equal to the Liquidation Preference of
the QUIPS and the Common Securities of the Holder to whom such QUIDS are
distributed. "Liquidation Preference" means the stated liquidation preference
of $25 per QUIPS and Common Security.
"Tax Event" means the receipt by HECO or the Trust of an opinion of counsel,
rendered by a law firm having a recognized federal and state tax and
securities practice, to the effect that, as a result of a Tax Action, there is
more than an insubstantial risk that (i) the Trust is, or will be within 90
days of the date of such opinion, subject to United States federal income tax
with respect to income received or accrued on the QUIDS, (ii) interest payable
by any of the Companies on its respective QUIDS is not, or within 90 days of
the date of such opinion will not be, deductible by such Company, in whole or
in part, for United States federal income tax purposes, or (iii) the Trust is,
or will be within 90 days of the date of such opinion, subject to more than a
de minimis amount of other taxes, duties or other governmental charges. A "Tax
Action" includes (a) any amendment to or change (including any announced
prospective change) in the laws (or any regulations thereunder) of the United
States, or of any State or the District of Columbia, or of any political
subdivision or taxing authority thereof or therein, (b) any judicial decision
interpreting, applying or clarifying such laws or regulations or (c) any
administrative pronouncement or action that represents an official position
(including a clarification of an official position) of the governmental
authority or regulatory body making such administrative
20
<PAGE>
pronouncement or taking such action, in each such case that occurs or becomes
effective on or after the date of original issuance of the QUIPS.
After the liquidation date fixed for any distribution of Distributable HECO
QUIDS for QUIPS, (i) the QUIPS will no longer be deemed to be outstanding,
(ii) DTC or its nominee, as the record Holder of the QUIPS, will receive a
registered global certificate or certificates representing such QUIDS to be
delivered upon such distribution and (iii) any certificates representing the
QUIPS not held by DTC or its nominee will be deemed to represent such QUIDS
having a principal amount equal to the Liquidation Preference of such QUIPS,
and bearing accrued and unpaid interest in an amount equal to the accrued and
unpaid Distributions on the QUIPS, until such certificates are presented to
the Administrative Trustees or their agent for transfer or reissuance.
There can be no assurance as to the market prices for the QUIPS or the
Distributable HECO QUIDS that may be distributed in exchange for QUIPS if a
dissolution and liquidation of the Trust were to occur. Accordingly, the QUIPS
that an investor may purchase, or the Distributable HECO QUIDS that the
Holders of the QUIPS may receive on dissolution and liquidation of the Trust,
may trade at a discount to the price that the investor paid to purchase the
QUIPS offered hereby.
REDEMPTION PROCEDURES
QUIPS redeemed on each Redemption Date shall be redeemed at the Redemption
Price with the applicable proceeds from the contemporaneous repayment or
redemption of the QUIDS. Redemptions of the QUIPS shall be made and the
Redemption Price shall be payable on each Redemption Date only to the extent
that the Trust has funds on hand available for the payment thereof. See also
"--Subordination of Common Securities."
If the Trust gives a notice of redemption in respect of any of the QUIPS,
then, by 12:00 noon, New York City time, on the Redemption Date, to the extent
funds are available therefor, the Property Trustee will deposit irrevocably
with DTC funds sufficient to pay the Redemption Price and will give DTC
irrevocable instructions and authority to pay the Redemption Price to the
Holders of such QUIPS. See "--Book-Entry Issuance." If such QUIPS are not in
book-entry form, the Trust, to the extent funds are available therefor, will
irrevocably deposit with the paying agent for the QUIPS funds sufficient to
pay the Redemption Price and will give such paying agent irrevocable
instructions and authority to pay the Redemption Price to the Holders thereof
upon surrender of their certificates evidencing such QUIPS. Notwithstanding
the foregoing, Distributions payable on or prior to the Redemption Date for
any QUIPS called for redemption shall be payable to the Holders of such QUIPS
on the relevant record dates for the related Distribution Dates. If notice of
redemption shall have been given and funds irrevocably deposited as required,
then upon the date of such deposit, all rights of the Holders of such QUIPS so
called for redemption will cease, except the right of the Holders of such
QUIPS to receive the Redemption Price, but without interest on such Redemption
Price, and such QUIPS will cease to be outstanding. In the event that any
Redemption Date of QUIPS is not a Business Day, then payment of the Redemption
Price payable on such Redemption Date will be made on the next succeeding day
which is a Business Day (and without any additional Distributions or other
payment in respect of any such delay), except that, if such Business Day is in
the next succeeding calendar year, such payment will be made on the
immediately preceding Business Day (without any reduction in Distributions in
respect of such early payment), in each case with the same force and effect as
if made on the Redemption Date. In the event that payment of the Redemption
Price in respect of QUIPS called for redemption is improperly withheld or
refused and not paid either by the Trust or by HECO pursuant to the Trust
Guarantee, Distributions on such QUIPS will continue to accumulate, at the
then applicable rate, from the Redemption Date originally established by the
Trust for such QUIPS to the date such Redemption Price is actually paid, in
which case the actual payment date will be the date fixed for redemption for
purposes of calculating the Redemption Price.
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Subject to applicable laws (including, without limitation, Rule 14e-1 under
the Exchange Act and any other applicable United States federal securities
laws), HECO or its subsidiaries may at any time and from time to time purchase
outstanding QUIPS by tender, in the open market or by private agreement.
Payment of the Redemption Price and any distribution of Distributable HECO
QUIDS to Holders of QUIPS shall be made to the applicable record Holders
thereof as they appear on the register for such QUIPS on the relevant record
date, which shall be one Business Day prior to the relevant Redemption Date or
liquidation date, as applicable; provided, however, that in the event that the
QUIPS are not in book-entry form, the relevant record date for such QUIPS
shall be the date (whether or not a Business Day) that is 15 days prior to the
Redemption Date or liquidation date, as applicable.
If less than all of the QUIPS and Common Securities issued by the Trust are
to be redeemed on a Redemption Date, then the aggregate Liquidation Preference
of such QUIPS and Common Securities to be redeemed shall be allocated among
the QUIPS and Common Securities pro rata based on their respective aggregate
Liquidation Preferences. If the QUIPS continue to be in book-entry form at the
time of such redemption, the QUIPS to be redeemed will be redeemed in
accordance with the procedures of DTC. If at such time the QUIPS are not in
book-entry form, the particular QUIPS to be redeemed shall be selected not
more than 60 days prior to the Redemption Date by the Property Trustee from
the outstanding QUIPS not previously called for redemption, by lot or by such
method as the Property Trustee shall deem fair and appropriate and which may
provide for the selection for redemption of portions (equal to $25 or an
integral multiple of $25 in excess thereof) of the liquidation preference of
QUIPS of a denomination larger than $25. The Trust may not redeem fewer than
all of the outstanding QUIPS unless all accumulated and unpaid Distributions
have been paid on all QUIPS for all quarterly distribution periods terminating
on or prior to the Redemption Date. The Property Trustee shall promptly notify
the Trust registrar in writing of the QUIPS selected for redemption and, in
the case of any QUIPS selected for partial redemption, the Liquidation
Preference thereof to be redeemed. For all purposes of the Trust Agreement,
unless the context otherwise requires, all provisions relating to the
redemption of QUIPS shall relate, in the case of any QUIPS redeemed or to be
redeemed only in part, to the portion of the aggregate Liquidation Preference
of QUIPS which has been or is to be redeemed.
SUBORDINATION OF COMMON SECURITIES
Payment of Distributions on, and the Redemption Price of, the QUIPS and
Common Securities, as applicable, shall be made among the QUIPS and the Common
Securities pro rata based on the respective aggregate Liquidation Preference
of such QUIPS and Common Securities; provided, however, that if on any
Distribution Date or Redemption Date a Debenture Event of Default shall have
occurred and be continuing, no payment of any Distribution on, or Redemption
Price of, any of the Common Securities, and no other payment on account of the
redemption, liquidation or other acquisition of the Common Securities, shall
be made unless payment in full in cash of all accumulated and unpaid
Distributions on all of the outstanding QUIPS for all distribution periods
terminating on or prior thereto, or in the case of payment of the Redemption
Price the full amount of such Redemption Price on all of the outstanding QUIPS
then being redeemed, shall have been made or provided for, and all funds
immediately available to the Property Trustee shall first be applied to the
payment in full in cash of all Distributions on, or Redemption Price of, the
QUIPS then due and payable.
In the case of any Event of Default under the Trust Agreement resulting from
a Debenture Event of Default, HECO, as holder of the Common Securities, will
be deemed to have waived any right to act with respect to any such Event of
Default until the effect of all such Events of Default with respect to the
QUIPS have been cured, waived or otherwise eliminated. Until any such Events
of Default with respect to the QUIPS have been so cured, waived or otherwise
eliminated, the Property Trustee shall act solely on behalf of the Holders of
the QUIPS and not on behalf of HECO, as Holder of the Common
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Securities, and only the Holders of the QUIPS will have the right to direct
the Property Trustee to act on their behalf.
LIQUIDATION VALUE; LIQUIDATION DISTRIBUTION UPON DISSOLUTION
The amount payable on the QUIPS in the event of any liquidation of the Trust
is $25 per QUIPS plus accumulated and unpaid Distributions, which under
certain circumstances may be in the form of a distribution in Like Amount of
Distributable HECO QUIDS.
Pursuant to the Trust Agreement, the Trust shall automatically dissolve upon
expiration of its term and shall dissolve on the first to occur of: (i)
certain events of bankruptcy, dissolution or liquidation of HECO; (ii) the
distribution of a Like Amount of Distributable HECO QUIDS to the Holders of
the QUIPS and Common Securities upon the occurrence of a Special Event; (iii)
the redemption of all of the QUIPS and Common Securities as described under
"--Redemption or Exchange;" and (iv) the entry by a court of competent
jurisdiction of an order for the dissolution of the Trust.
If an early dissolution occurs as described in clause (i), (ii) or (iv)
above, the Trust shall be liquidated by the Trustees as expeditiously as the
Trustees determine to be possible by distributing, subject to obtaining prior
approval from the PUC and after satisfaction of liabilities to creditors of
the Trust as provided by applicable law, to the Holders of the QUIPS and
Common Securities a Like Amount of the Distributable HECO QUIDS, unless such
distribution is determined by the Property Trustee not to be practical, in
which event such Holders will be entitled to receive out of the assets of the
Trust available for distribution to Holders, after satisfaction of liabilities
to creditors of the Trust as provided by applicable law, an amount equal to,
in the case of Holders of QUIPS, the Liquidation Preference thereof plus
accumulated and unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"). If such Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available
to pay in full the aggregate Liquidation Distribution, then the amounts
payable directly by the Trust on the QUIPS shall be paid pro rata to the
Holders thereof based on their respective Liquidation Preferences. HECO, as
Holder of the Common Securities, will be entitled to receive distributions
upon any such liquidation pro rata with the Holders of the QUIPS, based on
their respective aggregate Liquidation Preferences, except that if a Debenture
Event of Default has occurred and is continuing, the QUIPS shall have a
priority over the Common Securities in the right to receive such Liquidation
Distributions and no Liquidation Distribution will be paid to the Holders of
the Common Securities unless and until receipt by all Holders of the QUIPS of
the entire Liquidation Distribution payable in respect thereof. See "--
Subordination of Common Securities."
EVENTS OF DEFAULT; NOTICE
Any one of the following events constitutes an "Event of Default" under the
Trust Agreement (an "Event of Default") with respect to the QUIPS (whatever
the reason for such Event of Default and whether it shall be voluntary or
involuntary or be effected by operation of law or pursuant to any judgment,
decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(i) the occurrence of a Debenture Event of Default under any of the
Indentures (see "Description of QUIDS--Debenture Events of Default"); or
(ii) default by the Property Trustee in the payment of any Distribution
when it becomes due and payable, and continuation of such default for a
period of 30 days; or
(iii) default by the Property Trustee in the payment of any Redemption
Price of any QUIPS or Common Security when it becomes due and payable; or
(iv) default in the performance, or breach, in any material respect, of
any covenant or warranty of the Trustees in the Trust Agreement (other than
a covenant or warranty a default in
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the performance of which or the breach of which is dealt with in clause
(ii) or (iii) above), and continuation of such default or breach for a
period of 60 days after there has been given, by registered or certified
mail, to the defaulting Trustee or Trustees by the Holders of at least 25%
in aggregate Liquidation Preference of the outstanding QUIPS, a written
notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" under the Trust
Agreement; or
(v) the occurrence of certain events of bankruptcy or insolvency with
respect to the Property Trustee and the failure by HECO to appoint a
successor Property Trustee within 60 days thereof.
Within 90 days after the occurrence of any Event of Default actually known
to the Property Trustee, the Property Trustee shall transmit notice of such
Event of Default to the Holders of the QUIPS, the Administrative Trustees and
HECO, as Depositor, unless such Event of Default shall have been cured or
waived. HECO, as Depositor, and the Administrative Trustees are required to
file annually with the Property Trustee a certificate as to whether or not
they are in compliance with all the conditions and covenants applicable to
them under the Trust Agreement.
If a Debenture Event of Default has occurred and is continuing, the QUIPS
shall have a preference over the Common Securities upon dissolution of the
Trust as described above. See "--Liquidation Value; Liquidation Distribution
Upon Dissolution."
ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF QUIPS
If an Event of Default has occurred and is continuing, then the Holders of
QUIPS would rely on the enforcement by the Property Trustee of its rights as a
Holder of the QUIDS against the respective Companies. If the Property Trustee
fails to enforce such rights, a Holder of QUIPS may, to the fullest extent
permitted by law and subject to the terms of the Trust Agreement and the
Indentures, institute a legal proceeding directly against the defaulting
Company (and against HECO as guarantor if the defaulting Company is MECO or
HELCO) to enforce the Property Trustee's rights with respect to QUIDS having a
principal amount equal to the aggregate Liquidation Preference of the QUIPS of
such Holder without first instituting a legal proceeding against the Property
Trustee or any other person. To the extent that any action under the
applicable Indenture is entitled to be taken by the holders of at least a
specified percentage of the principal amount of the outstanding QUIDS, Holders
of at least the same percentage of the Liquidation Preference of the
outstanding QUIPS may also take such action in the name of the Trust if such
action has not been taken by the Property Trustee. Notwithstanding the
foregoing, if a Debenture Event of Default has occurred and is continuing and
such event is attributable to the failure of one or more of the Companies to
pay principal of or interest on the related QUIDS on the date such principal
or interest is otherwise payable (and, in the case of such default by either
or both of MECO and HELCO, the failure of HECO to make such payment under the
Subsidiary Guarantees), then a Holder of QUIPS may institute a Direct Action
against the defaulting Company (and, if the defaulting Company is MECO or
HELCO, against HECO as guarantor) for enforcement of payment to such Holder of
the principal of or interest on the related QUIDS having a principal amount
equal to the aggregate Liquidation Preference of the QUIPS of such Holder
after the respective due date specified in the QUIDS. In connection with such
Direct Action, the defaulting Company (or HECO, as guarantor) will be
subrogated to the rights of such Holder of QUIPS under the Trust Agreement to
the extent of any payment made by such Company (or by HECO, as guarantor) to
such Holder of QUIPS in such Direct Action.
REMOVAL OF TRUSTEES
Unless a Debenture Event of Default shall have occurred and be continuing,
any Trustee may be removed at any time by the Holder of the Common Securities.
If a Debenture Event of Default has occurred and is continuing, the Property
Trustee and the Delaware Trustee may be removed at such time by the Holders of
a majority in Liquidation Preference of the outstanding QUIPS. In no event
will
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the Holders of the QUIPS have the right to vote to appoint, remove or replace
the Administrative Trustees, which voting rights are vested exclusively in
HECO as the Holder of the Common Securities. No resignation or removal of a
Trustee and no appointment of a successor trustee shall be effective until the
acceptance of appointment by the successor trustee in accordance with the
provisions of the Trust Agreement.
CO-TRUSTEES AND SEPARATE PROPERTY TRUSTEE
Unless an Event of Default shall have occurred and be continuing, at any
time or times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust Property
may at the time be located, HECO, as the Holder of the Common Securities, and
the Administrative Trustees shall have power to appoint one or more persons
either to act as a co-trustee, jointly with the Property Trustee, of all or
any part of the Trust's property, or to act as separate trustee of any such
property, in either case with such powers as may be provided in the instrument
of appointment, and to vest in such person or persons in such capacity any
property, title, right or power deemed necessary or desirable, subject to the
provisions of the Trust Agreement. In case a Debenture Event of Default has
occurred and is continuing, the Property Trustee alone shall have power to
make such appointment.
MERGER OR CONSOLIDATION OF TRUSTEES
Any entity into which the Property Trustee, the Delaware Trustee or any
Administrative Trustee that is not a natural person may be merged or converted
or with which it may be consolidated, or any entity resulting from any merger,
conversion or consolidation to which such Trustee shall be a party, or any
entity succeeding to all or substantially all the corporate trust business of
such Trustee, shall be the successor of such Trustee under the Trust
Agreement, provided such entity shall be otherwise qualified and eligible
under the Trust Agreement.
MERGER, CONSOLIDATION, CONVERSION, AMALGAMATION OR REPLACEMENT OF THE TRUST
The Trust may not merge with or into, consolidate, convert, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any entity, except as described
below or as otherwise set forth in the Trust Agreement. The Trust may, at the
request of HECO, with the consent of the Administrative Trustees and without
the consent of the Holders of the QUIPS, merge with or into, consolidate,
convert, amalgamate, be replaced by or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to a
trust organized as such under the laws of any State; provided that (i) such
successor entity either (a) expressly assumes all of the obligations of the
Trust with respect to the QUIPS or (b) substitutes for the QUIPS other
securities having substantially the same terms as the QUIPS (the "Successor
Securities") so long as the Successor Securities rank the same as the QUIPS
rank in priority with respect to Distributions and payments upon liquidation,
redemption and otherwise, (ii) HECO expressly appoints a trustee of such
successor entity possessing substantially the same powers and duties as the
Property Trustee as the holder of the QUIDS, (iii) the Successor Securities
are listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which
the QUIPS are then listed, if any, (iv) such merger, consolidation,
conversion, amalgamation, replacement, conveyance, transfer or lease does not
cause the QUIPS (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization, (v) such merger,
consolidation, amalgamation, replacement, conveyance, conversion, transfer or
lease does not adversely affect the rights, preferences and privileges of the
Holders of the QUIPS (including any Successor Securities) in any material
respect, (vi) such successor entity has a purpose substantially identical to
that of the Trust, (vii) prior to such merger, consolidation, conversion,
amalgamation, replacement, conveyance, transfer, or lease, HECO has received
an opinion of counsel to the Trust experienced in such matters to the effect
that (a) such merger, consolidation, conversion,
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amalgamation, replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders of the QUIPS
(including any Successor Securities) in any material respect and (b) following
such merger, consolidation, conversion, amalgamation, replacement, conveyance,
transfer or lease, neither the Trust nor such successor entity will be
required to register as an "investment company" under the Investment Company
Act, and (viii) HECO or any permitted successor or assignee owns all of the
common securities of such successor entity and guarantees the obligations of
such successor entity under the Successor Securities at least to the extent
provided by the Trust Guarantee and the Trust Agreement. Notwithstanding the
foregoing, the Trust shall not, except with the consent of Holders of 100% in
aggregate Liquidation Preference of the QUIPS, consolidate, convert,
amalgamate, merge with or into, be replaced by or convey, transfer or lease
its properties and assets as an entirety or substantially as an entirety to
any other entity or permit any other entity to consolidate, convert,
amalgamate, merge with or into, or replace it if such consolidation,
conversion, amalgamation, merger, replacement, conveyance, transfer or lease
would cause the Trust or the successor entity to be classified as other than a
grantor trust for United States federal income tax purposes.
VOTING RIGHTS; AMENDMENT OF THE TRUST AGREEMENT
Except as provided below and under "Description of Trust Guarantee--
Amendments and Assignment," and except as otherwise required by law, the Trust
Agreement and the Indentures, the Holders of the QUIPS will have no voting
rights.
The Trust Agreement may be amended from time to time by HECO and the
Trustees, without the consent of the Holders of the QUIPS (i) to cure any
ambiguity, to correct or supplement any provisions in the Trust Agreement that
may be inconsistent with any other provision, or to include any other
provisions with respect to matters or questions arising under the Trust
Agreement that shall not be inconsistent with the other provisions of the
Trust Agreement, or (ii) to modify, eliminate or add to any provisions of the
Trust Agreement to such extent as shall be necessary to ensure that the Trust
will be classified for United States federal income tax purposes as a grantor
trust at all times that any QUIPS and Common Securities are outstanding or to
ensure that the Trust will not be required to register as an "investment
company" under the Investment Company Act; provided, however, that in the case
of clause (i) above, such action shall not adversely affect in any respect the
interests of any Holder of QUIPS or Common Securities, and any amendments of
such Trust Agreement shall become effective when notice thereof is given to
the Holders of QUIPS and Common Securities. The Trust Agreement may be amended
by the Trustees and HECO with (i) the consent of Holders representing not less
than a majority (based upon Liquidation Preference) of the outstanding QUIPS
and Common Securities and (ii) receipt by the Trustees of an opinion of
counsel to the effect that such amendment or the exercise of any power granted
to the Trustees in accordance with such amendment will not affect the Trust's
status as a grantor trust for United States federal income tax purposes or the
Trust's exemption from regulation as an "investment company" under the
Investment Company Act; provided, that without the consent of each Holder of
QUIPS and Common Securities, the Trust Agreement may not be amended to (i)
change the amount or timing of any Distribution or Liquidation Distribution on
the QUIPS and Common Securities or otherwise adversely affect the amount of
any Distribution or Liquidation Distribution required to be made in respect of
the QUIPS and Common Securities as of a specified date, (ii) change the
redemption provisions of the Trust Securities, (iii) restrict the right of a
Holder of QUIPS and Common Securities to institute suit for the enforcement of
any such payment contemplated in clause (i) or (ii) above on or after the
related payment date, (iv) modify the purposes of the Trust, (v) authorize or
issue any beneficial interest in the Trust other than as contemplated by the
Trust Agreement, (vi) change the conditions precedent for HECO to elect to
dissolve the Trust and distribute the Distributable HECO QUIDS to Holders of
QUIPS or (vii) affect the limited liability of any Holder of QUIPS.
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So long as any QUIDS are held by the Property Trustee, the Trustees shall
not (i) direct the time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee or executing any trust or power
conferred on the Property Trustee with respect to the QUIDS, (ii) waive any
past default that is waiveable under the applicable Indenture, (iii) exercise
any right to rescind or annul a declaration that the principal of all the
QUIDS shall be due and payable or (iv) consent to any amendment, modification
or termination of the applicable Indenture or the QUIDS issued thereunder,
where such consent shall be required, without, in each case, obtaining the
prior approval of the Holders of a majority in aggregate Liquidation
Preference of all outstanding QUIPS; provided, however, that where a consent
under the applicable Indenture would require the consent of each holder of
QUIDS issued thereunder affected thereby, no such consent shall be given by
the Property Trustee without the prior consent of each Holder of the QUIPS.
The Trustees shall not revoke any action previously authorized or approved by
a vote of the Holders of the QUIPS except by subsequent vote of the Holders of
the QUIPS. The Property Trustee shall notify each Holder of record of the
QUIPS of any notice of default with respect to the QUIDS. In addition to
obtaining the foregoing approvals of the Holders of the QUIPS, prior to taking
any of the foregoing actions, the Trustees shall obtain an opinion of counsel
experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation or partnership, and will
continue to be classified as a grantor trust, for United States federal income
tax purposes on account of such action.
Any required approval of Holders of QUIPS may be given at a meeting of
Holders of QUIPS convened for such purpose or pursuant to written consent. The
Property Trustee will cause a notice of any meeting at which Holders of QUIPS
are entitled to vote, or of any matter upon which action by written consent of
such Holders is to be taken, to be given to each Holder of record of QUIPS in
the manner set forth in the Trust Agreement.
No vote or consent of the Holders of QUIPS will be required for the Trust to
redeem and cancel the QUIPS in accordance with the Trust Agreement.
Notwithstanding that Holders of QUIPS are entitled to vote or consent under
any of the circumstances described above, any of the QUIPS that are owned by
the Companies, the Trustees or any affiliate of the Companies or any Trustee,
shall, for purposes of such vote or consent, be treated as if they were not
outstanding.
PAYMENT AND PAYING AGENCY
If the QUIPS are not held by DTC or its nominee, payments in respect of the
QUIPS shall be made by check mailed by the paying agent (the "Paying Agent")
to the address of the Holder entitled thereto as such address shall appear on
the register maintained by the Property Trustee. The initial Paying Agent
shall be the Property Trustee and any co-paying agent may be chosen by the
Property Trustee which is acceptable to the Administrative Trustees and HECO.
In the event that the Property Trustee shall no longer be the Paying Agent,
the Administrative Trustees shall appoint a successor (which shall be a bank
or trust company having a combined capital and surplus of at least $50,000,000
and acceptable to HECO) to act as Paying Agent. The Paying Agent shall be
permitted to resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees and HECO and, if the Paying Agent is not then the
Property Trustee, to the Property Trustee.
BOOK-ENTRY ISSUANCE
DTC will act as securities depositary for all of the QUIPS. The QUIPS will
be issued only as fully-registered securities registered in the name of Cede &
Co. (DTC's nominee). One or more fully-registered global certificates will be
issued, representing in the aggregate the total number of the QUIPS, and will
be deposited with DTC.
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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
include securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations ("Direct Participants"). DTC is
owned by a number of its Direct Participants and by the New York Stock
Exchange, the American Stock Exchange, Inc. and the National Association of
Securities Dealers, Inc. 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 custodial relationships with Direct Participants, either
directly or indirectly ("Indirect Participants"). The rules applicable to DTC
and its Participants are on file with the Commission.
Purchases of QUIPS within the DTC system must be made by or through Direct
Participants, which will receive a credit for the QUIPS on DTC's records. The
ownership interest of each actual purchaser of each QUIPS ("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
purchases, but Beneficial Owners are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the Direct or Indirect Participants through which the
Beneficial Owners purchased QUIPS. Transfers of ownership interests in the
QUIPS 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 in QUIPS, except in the
event that use of the book-entry system for the QUIPS is discontinued. The
laws of some states may require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in a Global QUIDS.
DTC has no knowledge of the actual Beneficial Owners of the QUIPS; DTC's
records reflect only the identity of the Direct Participants to whose accounts
such QUIPS 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.
Redemption notices will be sent to Cede & Co. as the registered Holder of
the QUIPS. If less than all of the QUIPS are being redeemed, DTC will
determine the amount of the interest of each Direct Participant to be redeemed
in accordance with its procedures.
Although voting with respect to the QUIPS is limited to the Holders of
record of the QUIPS, in those instances in which a vote is required, neither
DTC nor Cede & Co. will itself consent or vote with respect to QUIPS. Under
its usual procedures, DTC would mail an omnibus proxy (the "Omnibus Proxy") to
the Property Trustee 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 such QUIPS 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, and the voting
rights of Direct Participants, Indirect Participants and 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.
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Distribution payments on the QUIPS will be made by the Property Trustee to
DTC. DTC's practice is to credit Direct Participants' accounts on the relevant
payment date in accordance with their respective holdings shown on DTC's
records unless DTC has reason to believe that it will not receive payments on
such payment date. Payments by Participants to Beneficial Owners will be
governed by standing instructions and customary practices and will be the
responsibility of such Participant and not of DTC, the Property Trustee, the
Trust or the Companies, subject to any statutory or regulatory requirements as
may be in effect from time to time. Payment of Distributions to DTC is the
responsibility of the Property Trustee, disbursement of such payments to
Direct Participants is the responsibility of DTC, and disbursements of such
payments to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
DTC may discontinue providing its services as securities depositary with
respect to the QUIPS at any time by giving reasonable notice to the Property
Trustee and HECO. In the event that a successor securities depositary is not
obtained, definitive QUIPS certificates representing such QUIPS are required
to be printed and delivered. HECO, at its option, may decide to discontinue
use of the system of book-entry transfers through DTC (or a successor
depositary). After a Debenture Event of Default, the Holders of a majority in
Liquidation Preference of QUIPS may determine to discontinue the system of
book-entry transfers through DTC. In any such event, definitive certificates
representing the QUIPS will be printed and delivered.
The information in this section concerning DTC and DTC's book-entry system
has been obtained from sources that the Trust and the Companies believe to be
accurate, but the Trust and the Companies assume no responsibility for the
accuracy thereof. Neither the Trust nor the Companies has any 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.
REGISTRAR AND TRANSFER AGENT
The Property Trustee will act as registrar and transfer agent for the QUIPS.
Registration of transfers of QUIPS will be effected without charge by or on
behalf of the Trust, but upon payment of any tax or other governmental charges
that may be imposed in connection with any transfer or exchange. The Trust
will not be required to register or cause to be registered the transfer of
QUIPS after such QUIPS have been called for redemption, during the period from
15 days before mailing of notice of redemption and ending on such notice date
or after the date of liquidation of the Trust.
INFORMATION CONCERNING THE PROPERTY TRUSTEE
The Property Trustee, other than during the occurrence and continuance of an
Event of Default, undertakes to perform only such duties as are specifically
set forth in the Trust Agreement and, after such Event of Default, must
exercise the same degree of care and skill as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this provision,
the Property Trustee is under no obligation to exercise any of the powers
vested in it by the Trust Agreement at the request of any Holder of QUIPS
unless it is offered reasonable indemnity against the costs, expenses and
liabilities that might be incurred thereby. If no Event of Default has
occurred and is continuing and the Property Trustee is required to decide
between alternative causes of action or construe ambiguous provisions in the
Trust Agreement or is unsure of the application of any provision of the Trust
Agreement, and the matter is not one on which Holders of QUIPS are entitled
under the Trust Agreement to vote, then the Property Trustee shall take such
action as is directed by HECO and if not so directed, shall take such action
as it deems advisable and in the best interests of the Holders of the QUIPS
and the Common Securities and will have no liability except for its own
negligence or willful misconduct.
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MISCELLANEOUS
The Administrative Trustees are authorized and directed to conduct the
affairs of and to operate the Trust in such a way that it will not be deemed
to be an "investment company" required to be registered under the Investment
Company Act, or be classified as an association taxable as a corporation, a
partnership or other than as a grantor trust for United States federal income
tax purposes, and so that the QUIDS will be treated as indebtedness of the
respective Companies for United States federal income tax purposes. In this
connection, each of the Companies and the Administrative Trustees are
authorized to take any action, not inconsistent with applicable law, the
certificate of trust of the Trust or the Trust Agreement, that the Companies
(or any of them) and the Administrative Trustees determine in their discretion
to be necessary or desirable for such purposes. HECO and the Trustees may
amend the Trust Agreement, without the consent of the Holders of the QUIPS and
even if such amendment would adversely affect the interests of such Holders,
as shall be necessary to ensure that the Trust will be classified for United
States federal income tax purposes as a grantor trust and will not be required
to register as an "investment company" under the Investment Company Act. See
"--Voting Rights; Amendment of the Trust Agreement."
Holders of the QUIPS have no preemptive or similar rights.
The Trust may not borrow money or issue debt or mortgage or pledge any of
its assets.
DESCRIPTION OF QUIDS
The QUIDS of each of the Companies are to be issued under the respective
Junior Indenture of such Company, as supplemented from time to time (as so
supplemented, the "HECO Indenture," the "MECO Indenture" and the "HELCO
Indenture," respectively, and, collectively, the "Indentures"), between each
such Company and The Bank of New York, as trustee (the "Debenture Trustee").
Except in instances where certain elections must be made by all Companies at
the direction of HECO under all of the Indentures, and the provisions
providing for the Exchange and as otherwise described below, the provisions of
the Indentures are substantially similar in all material respects. This
summary of the material terms and provisions of the QUIDS and the Indentures
does not purport to be complete and is subject to, and is qualified in its
entirety by reference to, the Indentures, the form of which is filed as an
exhibit to the Registration Statement of which this Prospectus forms a part.
Unless the context otherwise requires, the term QUIDS includes the Substituted
HECO QUIDS.
GENERAL
Concurrently with the issuance of the QUIPS, the Trust will invest the
proceeds thereof and the consideration paid by HECO for the Common Securities
in the QUIDS. The QUIDS will bear interest at the annual rate of % of the
principal amount thereof from the date of original issuance, payable quarterly
in arrears on March 31, June 30, September 30 and December 31 of each year
(each, an "Interest Payment Date"), commencing March 31, 1997, to the person
in whose name each QUIDS is registered, subject to certain exceptions, at the
close of business on the Business Day next preceding such Interest Payment
Date, provided that if the QUIDS are issued in certificated form and not held
by the Trust, the record dates for payment of interest will be the date
(whether or not a Business Day) that is 15 days prior to the relevant Interest
Payment Date (the "Regular Record Date"). It is anticipated that, until the
liquidation, if any, of the Trust, each QUIDS will be held in the name of the
Property Trustee in trust for the benefit of the Holders of the QUIPS. The
amount of interest payable for any period will be computed on the basis of a
360-day year of twelve 30-day months, except for any period shorter than a
calendar month, in which case such amount will be computed on the basis of the
actual number of days elapsed. In the event that any date on which interest is
payable on the QUIDS is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that, if such Business Day is in the next succeeding calendar
year, such
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payment shall be made on the immediately preceding Business Day (without any
reduction of interest or other payments in respect of such early payment), in
each case with the same force and effect as if made on the date such payment
was originally payable. Accrued interest that is not paid on the applicable
Interest Payment Date will bear additional interest on the amount thereof (to
the extent permitted by law) at the rate per annum of % thereof, compounded
quarterly. The term "interest" as used herein shall include quarterly interest
payments, interest on quarterly interest payments not paid on the applicable
Interest Payment Date and Additional Sums (as defined below), as applicable.
The QUIDS will be issued by each of the Companies under the applicable
Indenture. The QUIDS will mature on March , 2027, which maturity may be
shortened or extended at any time at the election of HECO (which election shall
apply to the MECO QUIDS and the HELCO QUIDS, as well as the HECO QUIDS or, if
issued, all of the Distributable HECO QUIDS) for one or more periods, but in no
event to a date earlier than March , 2002 or to a date later than March ,
2046 (such maturity date, as it may be shortened or extended, the "Stated
Maturity"), provided that at the time such election is made and at the time of
any such shortening or extension (i) none of the Companies is in bankruptcy,
otherwise insolvent or in liquidation, (ii) none of the Companies is in default
in the payment of any interest or principal on the QUIDS, (iii) the Trust is
not in arrears on payments of Distributions on the QUIPS and no deferred
Distributions are accumulated and (iv) the QUIDS are rated not less than BBB-
by Standard & Poor's or Baa3 by Moody's Investors Service, Inc., or the
equivalent by any other nationally recognized statistical rating organization.
The QUIDS of each Company will be unsecured and will rank junior and be
subordinate in right of payments to all Senior Debt (as defined below) of the
respective issuing Company and will rank pari passu with any other series of
junior subordinated deferrable interest debentures issued by that Company.
Since HECO receives dividends and interest payments from MECO and HELCO, and
since certain of the operating assets of the Companies are owned by MECO and
HELCO, the HECO QUIDS will also be effectively subordinated to all existing and
future liabilities of MECO and HELCO. The Indentures do not limit the
incurrence or issuance of other secured or unsecured debt of the applicable
Company, whether thereunder or under any existing or other indenture that such
Company may enter into in the future or otherwise. See "--Subordination."
ADDITIONAL SUMS
If the Trust is required to pay any additional taxes, duties or other
governmental charges ("Additional Sums"), each of the Companies will pay as
additional amounts on its respective QUIDS its proportionate share of such
amounts as shall be required so that the Distributions payable by the Trust
shall not be reduced as a result of any such additional taxes, duties or other
governmental charges, subject to the conditions described under "Description of
QUIPS--Redemption or Exchange--Special Event Redemption or Distribution of
QUIDS."
DENOMINATIONS, REGISTRATION AND TRANSFER
The QUIDS will be issuable only in registered form without coupons in
denominations of $25 and any integral multiple thereof. QUIDS will be
exchangeable for other QUIDS issued by the same Company, of any authorized
denominations, of a like aggregate principal amount, having the same date of
original issuance and Stated Maturity and bearing the same interest rate.
QUIDS may be presented for exchange as provided above, and may be presented
for registration of transfer (with the form of transfer endorsed thereon, or a
satisfactory written instrument of transfer, duly executed), at the office of
the appropriate securities registrar or at the office of any transfer agent
designated by the respective Companies for such purpose, without service charge
and upon payment of any taxes and other governmental charges as described in
the applicable Indenture. Each of the Companies will appoint the Debenture
Trustee as the initial securities registrar and transfer agent
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under the applicable Indenture. Each of the Companies may at any time rescind
the designation of any such securities registrar or transfer agent or approve
a change in the location through which any such securities registrar or
transfer agent acts, provided that such Company maintains a transfer agent in
each Place of Payment for such QUIDS. Each of the Companies may at any time
designate additional transfer agents with respect to its respective QUIDS.
In the event of any redemption, neither any of the Companies nor the
securities registrar shall be required to (i) issue, register the transfer of
or exchange the respective QUIDS of such Company during a period beginning at
the opening of business 15 days before the day of mailing of notice of
redemption of any QUIDS and ending at the close of business on the day of
mailing of the relevant notice of redemption or (ii) transfer or exchange any
QUIDS so selected for redemption, except, in the case of any QUIDS being
redeemed in part, any portion thereof not to be redeemed.
GLOBAL QUIDS
The QUIDS may be issued in whole or in part in the form of one or more
Global QUIDS that will be deposited with, or on behalf of, a depository (the
"Depository"). Global QUIDS may be issued only in fully registered form and in
either temporary or permanent form. Unless and until it is exchanged in whole
or in part for the individual QUIDS represented thereby, a Global QUIDS may
not be transferred except as a whole by the Depository for such Global QUIDS
to a nominee of such Depository or by a nominee of such Depository to such
Depository or another nominee of such Depository or by the Depository or any
nominee to a successor Depository or any nominee of such successor. HECO
anticipates that the following provisions will generally apply to depository
arrangements.
Upon the issuance of a Global QUIDS and the deposit of such Global QUIDS
with or on behalf of the Depository, the Depository for such Global QUIDS or
its nominee will credit on its book-entry registration and transfer system the
respective principal amounts of the individual QUIDS represented by such
Global QUIDS to the accounts of Participants. Such accounts shall be
designated by the dealers, underwriters or agents with respect to such QUIDS.
Ownership of beneficial interests in a Global QUIDS will be limited to
Participants or persons that may hold interests through Participants.
Ownership of beneficial interests in such Global QUIDS will be shown on, and
the transfer of that ownership will be effected only through, records
maintained by the applicable Depository or its nominee (with respect to
interests of Participants) and the records of Participants (with respect to
interests of persons who hold through Participants). The laws of some states
require that certain purchasers of securities take physical delivery of such
securities in definitive form. Such laws may impair the ability to transfer
beneficial interests in a Global QUIDS.
So long as the Depository for a Global QUIDS, or its nominee, is the
registered owner of such Global QUIDS, such Depository or such nominee, as the
case may be, will be considered the sole owner or holder of the QUIDS
represented by such Global QUIDS for all purposes under the Indenture
governing such QUIDS. Except as provided below, owners of beneficial interests
in a Global QUIDS will not be entitled to have any of the individual QUIDS of
the series represented by such Global QUIDS registered in their names, will
not receive or be entitled to receive physical delivery of any such QUIDS in
definitive form and will not be considered the owners or holders thereof under
the applicable Indenture.
Payments of principal of and premium, if any, and interest on individual
QUIDS represented by a Global QUIDS registered in the name of a Depository or
its nominee will be made to the Depository or its nominee, as the case may be,
as the registered owner of the Global QUIDS representing such QUIDS. None of
the Companies, the Debenture Trustee, any Paying Agent or the Securities
Registrar for such QUIDS will have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of the Global QUIDS representing such QUIDS or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
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The Companies expect that the Depository for the QUIDS or its nominee, upon
receipt of any payment of principal, premium, if any, or interest in respect
of a permanent Global QUIDS representing any of such QUIDS, immediately will
credit Participants' accounts with payments in amounts proportionate to their
respective beneficial interest in the principal amount of such Global QUIDS
representing such QUIDS as shown on the records of such Depository or its
nominee. The Companies also expect that payments by Participants to owners of
beneficial interests in such Global QUIDS held through such Participants will
be governed by standing instructions and customary practices, as is now the
case with securities held for the accounts of customers in bearer form or
registered in "street name." Such payments will be the responsibility of such
Participants.
A Global QUIDS shall be exchangeable for QUIDS registered in the names of
persons other than the Depository or its nominee only if (i) the Depository
notifies the Companies that it is unwilling or unable to continue as a
depository for such Global QUIDS and no successor depository shall have been
appointed, or if at any time the Depository ceases to be a clearing agency
registered under the Exchange Act at a time when the Depository is required to
be so registered to act as such depository, (ii) HECO in its sole discretion
on behalf of the Companies determines that such Global QUIDS shall be so
exchangeable, or (iii) there shall have occurred and be continuing an Event of
Default with respect to such Global QUIDS. Any Global QUIDS that is
exchangeable pursuant to the preceding sentence shall be exchangeable for
definitive certificates registered in such names as the Depository shall
direct. It is expected that such instructions will be based upon directions
received by the Depository from its Participants with respect to ownership of
beneficial interests in such Global QUIDS. In the event that QUIDS are issued
in definitive form, such QUIDS will be in denominations of $25 and integral
multiples thereof and may be transferred or exchanged at the offices described
below.
Payments on QUIDS represented by a Global QUIDS will be made to the
Depository, as the depository for the QUIDS. In the event QUIDS are issued in
definitive form, principal and interest (at maturity or earlier redemption)
will be payable, the transfer of the QUIDS will be registrable, and QUIDS will
be exchangeable for QUIDS of other denominations of a like aggregate principal
amount, at the corporate office of the Debenture Trustee in New York, New
York, or at the offices of any Paying Agent or transfer agent appointed by the
applicable Company, provided that payment of interest may also be made as
described under "--Payment and Paying Agents" below to the address of the
persons entitled thereto or by wire transfer.
PAYMENT AND PAYING AGENTS
During the period that QUIDS are not held by a Depository or the Trust,
payment of principal of and premium, if any, and any interest on QUIDS at
maturity or earlier redemption will be made at the office of the Debenture
Trustee in the City of New York or at the office of such Paying Agent or
Paying Agents as the Companies, may designate from time to time upon surrender
of the QUIDS. During such period, at the option of the Companies, payment of
any interest other than at maturity or earlier redemption shall may be made
(i) by check mailed to the address of the person entitled thereto as such
address shall appear in the Securities Register or (ii) by transfer to an
account maintained by the person entitled thereto as specified in the
Securities Register, provided that proper transfer instructions have been
received by the Regular Record Date; provided, however, that such payment, at
the written request of a holder of at least $10,000,000 aggregate principal
amount of QUIDS, will be payable by wire transfer in immediately available
funds pursuant to the terms of the Indentures. Payment of any such interest on
QUIDS will be made to the person in whose name such QUIDS is registered at the
close of business on the Regular Record Date for such interest, except in the
case of Defaulted Interest. The Companies may at any time designate additional
Paying Agents or rescind the designation of any Paying Agent; however, the
Companies will at all times be required to maintain a Paying Agent in each
place of payment for the QUIDS.
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Any moneys deposited with the Debenture Trustee or any Paying Agent, or then
held by HECO in trust, for the payment of the principal of and premium, if
any, or interest on any QUIDS and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall, at
the request of HECO, be repaid to HECO and the holder of such QUIDS shall
thereafter look, as a general unsecured creditor, only to HECO for payment
thereof.
REDEMPTION
The QUIDS are redeemable prior to maturity (i) at the option of each of the
respective Companies on or after March , 2002, in whole at any time or in
part from time to time, at the QUIDS Redemption Price or (ii) at the option of
HECO on behalf of the Companies at any time in whole (but not in part), upon
the occurrence and continuation of a Special Event, at the QUIDS Redemption
Price. QUIDS will not be subject to any sinking fund. QUIDS in denominations
larger than $25 may be redeemed in part but only in integral multiples of $25.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of QUIDS to be redeemed at
its registered address. Unless HECO defaults in payment of the redemption
price, on and after the redemption date interest ceases to accrue on such
QUIDS or portions thereof called for redemption.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as no Event of Default under an Indenture has occurred and is
continuing, each Company has the right under the applicable Indenture to defer
the payment of interest at any time or from time to time for a period
(including any extensions thereof) not exceeding 20 consecutive quarters with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of the QUIDS. At the end of such Extension Period,
the deferring Company must pay all interest then accrued and unpaid (together
with interest thereon at the annual rate of %, compounded quarterly, to the
extent permitted by applicable law). During an Extension Period, interest will
continue to accrue and beneficial owners of QUIDS (or beneficial owners of
QUIPS) will be required to accrue interest income for United States federal
income tax purposes. See "Description of QUIPS--Distributions" and "Certain
Federal Income Tax Consequences--Stated Interest and Original Issue Discount."
During an Extension Period, each deferring Company (and, if such deferring
Company is MECO or HELCO, HECO) will not be permitted, subject to certain
exceptions set forth herein, to declare or pay any cash distributions with
respect to its capital stock or debt securities that rank pari passu with or
junior to the QUIDS so deferred as described under "--Certain Covenants."
CERTAIN COVENANTS
Each of the Companies (and, in the case of clause (C) below if such Company
is MECO or HELCO, HECO) will covenant that it will not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire, or make a
liquidation payment with respect to, any of such Company's capital stock or
(ii) make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any debt securities (including other junior subordinated
deferrable interest debentures of such Company) that rank pari passu with or
junior in interest to its QUIDS or (iii) make any guarantee payments with
respect to any guarantee issued by such Company if such guarantee ranks pari
passu with or junior in interest to its QUIDS (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of, its common stock and exchanges or conversions of common
stock of one class for common stock of another class, (b) payments by HECO
under the Trust Guarantee (or under any other guarantee by HECO with respect
to any securities of its subsidiaries, provided that the proceeds from the
issuance of such securities were applied to
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purchase junior subordinated deferrable interest debentures of the Company or
any such subsidiary) and the Subsidiary Guarantees and (c) purchases of its
common stock required to prevent the loss or secure the renewal or
reinstatement of any government license or franchise held by HECO or any of its
subsidiaries) if at such time (A) there shall have occurred any event of which
such Company has actual knowledge that (1) with the giving of notice or the
lapse of time, or both, would constitute a Debenture Event of Default with
respect to its QUIDS and (2) in respect of which such Company shall not have
taken reasonable steps to cure, (B) HECO shall be in default with respect to
its payment of any obligations under the Trust Guarantee, (C) such Company
shall have given notice of its election of an Extension Period as provided in
the applicable Indenture with respect to its QUIDS and shall not have rescinded
such notice, or such Extension Period, or any extension thereof, shall be
continuing or (D) in the case of HECO, there shall have occurred a default
under either Subsidiary Guarantee. HECO will also covenant (i) to maintain
directly or indirectly 100% ownership of the Common Securities of the Trust,
provided that certain successors which are permitted pursuant to such Indenture
may succeed to HECO's ownership of the Common Securities, (ii) not to
voluntarily dissolve, wind-up or liquidate the Trust, except (a) in connection
with a distribution of Distributable HECO QUIDS to the Holders of the QUIPS in
liquidation of the Trust or (b) in connection with certain mergers,
consolidations or amalgamations permitted by the Trust Agreement, and (iii) to
use its reasonable efforts, consistent with the terms and provisions of the
Trust Agreement, to cause the Trust to remain classified as a grantor trust and
not as an association taxable as a corporation for United States federal income
tax purposes.
MODIFICATION OF INDENTURE
From time to time any of the Companies and the Debenture Trustee may, without
the consent of the holders of the QUIDS of such Company, amend, waive or
supplement the applicable Indenture for specified purposes, including, among
other things, curing ambiguities, defects or inconsistencies and qualifying, or
maintaining the qualification of, such Indenture under the Trust Indenture Act
(provided that any such action does not adversely affect the interest of the
holders of such QUIDS or the Holders of the QUIPS so long as they remain
outstanding). Each Indenture contains provisions permitting the applicable
Company and the Debenture Trustee, with the consent of the holders of not less
than a majority in aggregate principal amount of the outstanding QUIDS affected
thereby, to modify such Indenture in a manner affecting the rights of the
Holders of such QUIDS; provided that no such modification may, without the
consent of the holder of each outstanding QUIDS so affected, (i) change the
Stated Maturity of QUIDS, or reduce the principal amount thereof, or reduce the
rate or extend the time of payment of interest thereon (except such change or
extension as is contemplated thereby) or (ii) reduce the percentage of
principal amount of QUIDS, the holders of which are required to consent to any
such modification of such Indenture, provided that so long as any of the QUIPS
remain outstanding, no such modification may be made that adversely affects the
Holders of such QUIPS and no termination of the Indenture may occur, and no
waiver of any Debenture Event of Default or compliance with any covenant under
such Indenture may be effective, without the prior consent of the Holders of at
least a majority of the aggregate Liquidation Preference of such QUIPS unless
and until the principal of the QUIDS and all accrued and unpaid interest
thereon have been paid in full and certain other conditions are satisfied.
In addition, each of the Companies and the Debenture Trustee may execute,
without the consent of any holder of QUIDS, any supplemental indenture for the
purpose of creating any new series of junior subordinated deferrable interest
debentures.
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DEBENTURE EVENTS OF DEFAULT
Each Indenture provides that any one or more of the following described
events with respect to the QUIDS issued thereunder that has occurred and is
continuing constitutes a "Debenture Event of Default" with respect to such
QUIDS:
(i) failure for 30 days to pay any interest on such series of such QUIDS,
when due (subject to the deferral of any due date in the case of an
Extension Period); or
(ii) failure to pay any principal or premium, if any, on such QUIDS when
due whether at maturity, upon redemption, upon acceleration or otherwise;
or
(iii) failure to observe or perform in any material respect certain other
covenants contained in such Indenture for 90 days after written notice to
the applicable Company from the Debenture Trustee or the holders of at
least 25% in aggregate principal amount of such outstanding QUIDS (provided
that such 90-day period shall be automatically extended if corrective
action is initiated by the applicable Company within such period and is
being diligently pursued); or
(iv) certain events in bankruptcy, insolvency or reorganization of HECO
and, if such Indenture is the MECO Indenture or the HELCO Indenture, of
MECO or HELCO, respectively.
The holders of a majority in aggregate outstanding principal amount of QUIDS
issued under any Indenture have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Debenture Trustee
under such Indenture. The Debenture Trustee or the holders of not less than
25% in aggregate outstanding principal amount of such QUIDS may declare the
principal due and payable immediately upon a Debenture Event of Default, and
should the Debenture Trustee or such holders of such QUIDS fail to make such
declaration, the Holders of at least 25% in aggregate Liquidation Preference
of the QUIPS shall have such right. If a Debenture Event of Default specified
in clause (iv) above occurs, the principal of and interest on the QUIDS shall
become and be immediately due and payable without any declaration or other act
on the part of the Debenture Trustee or any holder of QUIDS. The holders of a
majority in aggregate outstanding principal amount of such QUIDS may annul
such declaration and waive the default if the default (other than the non-
payment of the principal of such QUIDS which has become due solely by such
acceleration) has been cured and a sum sufficient to pay all matured
installments of interest and principal due otherwise than by acceleration has
been deposited with the Debenture Trustee, provided that if the principal of
the QUIDS has been declared due and payable by the Holders of the QUIPS, no
rescission of such acceleration will be effective unless consented to by the
Holders of a majority in aggregate Liquidation Preference of the QUIPS and
provided further that should the holders of such QUIDS fail to annul such
declaration and waive such default, the Holders of a majority in aggregate
Liquidation Preference of the QUIPS shall have such right.
The holders of a majority in aggregate outstanding principal amount of the
QUIDS issued under any Indenture, or the Holders of a majority in aggregate
Liquidation Preference of the QUIPS, may, on behalf of all holders, waive any
past default under such Indenture, except a default in the payment of
principal or interest (unless such default has been cured and a sum sufficient
to pay all matured installments of interest and principal due otherwise than
by acceleration has been deposited with the Debenture Trustee) or a default in
respect of a covenant or provision which under such Indenture cannot be
modified or amended without the consent of the holder of each of such
outstanding QUIDS. Each of the Companies is required to file annually with the
Debenture Trustee a certificate as to whether or not such Company is in
compliance with all the conditions and covenants applicable to it under such
Indenture.
In case a Debenture Event of Default shall occur and be continuing as to
QUIDS issued under any Indenture, the Property Trustee will have the right to
declare the principal of and the interest on such QUIDS and any other amounts
payable under such Indenture, to be forthwith due and payable and to enforce
its other rights as a creditor with respect to such QUIDS.
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ENFORCEMENT OF CERTAIN RIGHTS BY HOLDERS OF QUIPS
If a Debenture Event of Default has occurred and is continuing under any
Indenture and such event is attributable to the failure of the respective
Company to pay interest or principal on its QUIDS issued thereunder on the
date such interest or principal is otherwise payable, a Holder of QUIPS may
institute a Direct Action for payment after the respective due date specified
in such QUIDS. The Indentures may not be amended to remove the foregoing right
to bring a Direct Action without the prior written consent of the Holders of
all of the QUIPS. Notwithstanding any payment made to such Holder of QUIPS in
connection with a Direct Action, the respective Company shall remain obligated
to pay the principal of or interest on the QUIDS held by the Trust or the
Property Trustee and shall be subrogated to the rights of the Holder of such
QUIPS with respect to payments on the QUIPS to the extent of any payments made
by such Company to such Holder in any Direct Action. The Holders of QUIPS will
not be able to exercise directly any other remedy available to the holders of
the QUIDS.
The Holders of the QUIPS would not be able to exercise directly any remedies
other than those set forth in the preceding paragraph available to the holders
of the QUIDS unless the Property Trustee or the Debenture Trustee, acting for
the benefit of the Property Trustee, fails to do so for 60 days. In such
event, the Holders of at least 25% in aggregate Liquidation Preference of the
outstanding QUIPS will have such right to institute proceedings.
CONSOLIDATION, MERGER, SALE OF ASSETS AND OTHER TRANSACTIONS
Each Indenture provides that the applicable Company shall not consolidate
with or merge into any other entity or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to any
entity, and no entity shall consolidate with or merge into such Company or
convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety (either in one transaction or in a series of
transactions) to such Company, unless (i) in case such Company consolidates
with or merges into another entity, or conveys, transfers or leases its
properties and assets substantially as an entirety to any entity, the
successor entity is organized under the laws of the United States or any state
or the District of Columbia, and such successor entity expressly assumes such
Company's obligations on the QUIDS issued under such Indenture; (ii)
immediately after giving effect thereto, no Debenture Event of Default, and no
event which, after notice or lapse of time or both, would become a Debenture
Event of Default, shall have happened and be continuing; (iii) such
transaction is permitted under the Trust Agreement or Trust Guarantee and does
not give rise to any breach or violation of the Trust Agreement or Trust
Guarantee, and (iv) certain other conditions as prescribed in such Indenture
are met.
The provisions of the Indentures do not afford holders of the QUIDS
protection in the event of a highly leveraged or other transaction involving
the Companies, or in the event of a change in control thereof, that may
adversely affect holders of the QUIDS.
SATISFACTION AND DISCHARGE
Each Indenture provides that when, among other things, all QUIDS of a
particular series issued thereunder not previously delivered to the Debenture
Trustee for cancellation (i) have become due and payable or (ii) will become
due and payable at their Stated Maturity within one year, and the applicable
Company deposits or causes to be deposited with the Debenture Trustee trust
funds, in trust, for the purpose and in an amount in the currency or
currencies in which the QUIDS are payable sufficient to pay and discharge the
entire indebtedness on such QUIDS not previously delivered to the Debenture
Trustee for cancellation, for the principal and interest to the date of the
deposit or to the Stated Maturity, as the case may be, then such Indenture
will cease to be of further effect (except as to such Company's obligations to
pay all other sums due pursuant to such Indenture and to provide the officers'
certificates and opinions of counsel described therein), and such Company will
be deemed to have satisfied and discharged such Indenture.
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DISTRIBUTION OF QUIDS; EXCHANGE OF SUBSTITUTED HECO QUIDS FOR MECO AND HELCO
QUIDS
Under certain circumstances involving the dissolution of the Trust, and
subject to obtaining prior approval from the PUC, Distributable HECO QUIDS may
be distributed to the Holders of the QUIPS in liquidation of the Trust after
satisfaction of liabilities to creditors of the Trust as provided by
applicable law. If distributed to Holders of QUIPS in liquidation, such QUIDS
will initially be issued in the form of one or more global securities and DTC,
or any successor depositary for the QUIPS, will act as depositary for such
QUIDS. It is anticipated that the depositary arrangements for such QUIDS would
be substantially identical to those in effect for the QUIPS. If such QUIDS are
distributed to the Holders of QUIPS upon the liquidation of the Trust, HECO
will use its best efforts to list the Distributable HECO QUIDS on the New York
Stock Exchange or such other stock exchanges, if any, on which the QUIPS are
then listed. There can be no assurance as to the market price of any such
QUIDS that may be distributed to the Holders of QUIPS. For a description of
DTC and the terms of the depositary matters, see "Description of QUIPS--Book-
Entry Issuance."
In order to effect a distribution of QUIDS to Holders of the QUIPS in
liquidation of the Trust, HECO will issue to the Trust Substituted HECO QUIDS
in exchange for the MECO QUIDS and the HELCO QUIDS in the aggregate principal
amount of such MECO QUIDS and HELCO QUIDS, and the Substituted HECO QUIDS,
along with the HECO QUIDS, will thereupon be distributed to the Holders of the
QUIPS. Thereafter, the MECO QUIDS and HELCO QUIDS shall be held by HECO as the
record Holder thereof, and the Subsidiary Guarantees will be released and
discharged.
SUBORDINATION
In each Indenture, the applicable Company has covenanted and agreed that any
QUIDS issued thereunder will be subordinate and junior in right of payment to
all Senior Debt of such Company to the extent provided in such Indenture. Upon
any payment or distribution of assets to creditors upon any liquidation,
dissolution, winding-up, reorganization, assignment for the benefit of
creditors, marshaling of assets or any bankruptcy, insolvency, debt
restructuring or similar proceedings in connection with any insolvency or
bankruptcy proceeding of such Company, the holders of Senior Debt of each such
Company will first be entitled to receive payment in full of principal of and
premium, if any, and interest, if any, on such Senior Debt before the Property
Trustee, on behalf of the Holders of the QUIPS (or, in the case of
Distributable HECO QUIDS distributed to the Holders of the QUIPS, such
Holders), will be entitled to receive or retain any payment in respect of the
principal of and premium, if any, or interest, if any, on the QUIDS.
In the event of the acceleration of the maturity of any QUIDS of any of the
Companies, the holders of all Senior Debt of such Company outstanding at the
time of such acceleration will first be entitled to receive payment in full of
all amounts due thereon (including any amounts due upon acceleration) before
the holders of such QUIDS will be entitled to receive or retain any payment in
respect of the principal of or premium, if any, or interest, if any, on such
QUIDS.
No payments on account of principal or interest, if any, in respect of the
QUIDS of any of the Companies may be made if there shall have occurred and be
continuing a default in any payment with respect to Senior Debt of such
Company, or an event of default with respect to any such Senior Debt resulting
in the acceleration of the maturity thereof, or if any judicial proceeding
shall be pending with respect to any such default.
"Debt" means with respect to any person, whether recourse is to all or a
portion of the assets of such person and whether or not contingent, (i) every
obligation of such person for money borrowed; (ii) every obligation of such
person evidenced by bonds, debentures, notes or other similar instruments,
including obligations incurred in connection with the acquisition of property,
assets or businesses; (iii) every reimbursement obligation of such person with
respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of such person; (iv) every obligation of such
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person issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business); (v) every capital lease obligation of
such person; and (vi) every obligation of the type referred to in clauses (i)
through (v) above of another person and all dividends of another person the
payment of which, in either case, such person has guaranteed or is responsible
or liable, directly or indirectly, as obligor or otherwise.
"Senior Debt" means with respect to any of the Companies the principal of
(and premium, if any) and interest, if any (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating
to such Company whether or not such claim for post-petition interest is
allowed in such proceeding), on Debt, whether incurred on or prior to the date
of the Indenture of such Company or thereafter incurred, unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are not superior in right of
payment to the QUIDS or to other Debt which is pari passu with, or
subordinated to, the QUIDS; provided, however, that Senior Debt shall not be
deemed to include (i) any Debt of such Company which, when incurred and
without respect to any election under Section 1111 (b) of the Bankruptcy Code,
was without recourse to such Company, (ii) any Debt of such Company to any of
its subsidiaries, (iii) Debt to any employee of such Company, (iv) any
liability for taxes, and (v) indebtedness or monetary obligations to trade
creditors or assumed by such Company or any of its subsidiaries in the
ordinary course of business in connection with the obtaining of materials or
services.
Certain of the operating assets of HECO and its consolidated subsidiaries
are owned by MECO and HELCO. Accordingly, the HECO QUIDS and the Substituted
HECO QUIDS will be effectively subordinated to all existing and future
liabilities of HECO's subsidiaries. Holders of Distributable HECO QUIDS should
look only to the assets of HECO for payments of principal of and premium, if
any, and interest thereon.
The Indenture places no limitation on the amount of additional Senior Debt
that may be incurred by any of the Companies. The electric public utility
business is capital intensive, and the Companies anticipate that from time to
time they will incur substantial additional indebtedness constituting Senior
Debt.
GOVERNING LAW
The Indenture and the QUIDS will be governed by, and construed in accordance
with, the internal laws of the State of New York.
INFORMATION CONCERNING THE DEBENTURE TRUSTEE
The Debenture Trustee shall have and be subject to all the duties and
responsibilities specified with respect to an indenture trustee under the
Trust Indenture Act. Subject to such provisions, the Debenture Trustee is
under no obligation to exercise any of the powers vested in it by the
Indenture at the request of any holder of QUIDS, unless offered reasonable
indemnity by such holder against the costs, expenses and liabilities which
might be incurred thereby. The Debenture Trustee is not required to expend or
risk its own funds or otherwise incur personal financial liability in the
performance of its duties if the Debenture Trustee reasonably believes that
repayment or adequate indemnity is not reasonably assured to it.
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DESCRIPTION OF TRUST GUARANTEE
The Trust Guarantee will be executed and delivered by HECO concurrently with
the issuance by the Trust of its QUIPS for the benefit of the Holders from
time to time of such QUIPS. The Bank of New York will act as indenture trustee
("Trust Guarantee Trustee") under the Trust Guarantee for the purposes of
compliance with the Trust Indenture Act and the Trust Guarantee will be
qualified as an Indenture under the Trust Indenture Act. This summary of the
material terms and provisions of the Trust Guarantee does not purport to be
complete and is subject to, and qualified in its entirety by reference to the
provisions of the Trust Guarantee. The form of the Trust Guarantee has been
filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. The Trust Guarantee Trustee will hold the Trust Guarantee for
the benefit of the Holders of the QUIPS.
GENERAL
HECO will irrevocably agree to pay in full on a subordinated basis, to the
extent set forth herein, the Guarantee Payments (as defined below) to the
Holders of the QUIPS, as and when due, regardless of any defense, right of
set-off or counterclaim that the Trust may have or assert, other than the
defense of payment. The following payments with respect to the QUIPS, to the
extent not paid by or on behalf of the Trust (the "Guarantee Payments"), will
be subject to the Trust Guarantee: (i) any accumulated and unpaid
Distributions required to be paid on such QUIPS, to the extent that the Trust
has funds on hand available therefor at such time, (ii) the Redemption Price
with respect to any QUIPS called for redemption to the extent the Trust has
funds on hand available therefor at such time, or (iii) upon a voluntary or
involuntary dissolution, winding up or liquidation of the Trust (unless the
Distributable HECO QUIDS are distributed to Holders of QUIPS), the lesser of
(a) the Liquidation Distribution and (b) the amount of assets of the Trust
remaining available for distribution to Holders of QUIPS. HECO's obligation to
make a Guarantee Payment may be satisfied by direct payment of the required
amounts by HECO to the Holders of the QUIPS or by causing the Trust to pay
such amounts to such Holders.
The Trust Guarantee will be an irrevocable guarantee on a subordinated basis
of the Trust's obligations under the QUIPS, but will apply only to the extent
that the Trust has funds sufficient to make such payments, and is not a
guarantee of collection.
If any of the Companies do not make interest payments on the QUIDS held by
the Trust, the Trust will not be able to pay Distributions on the QUIPS and
will not have funds legally available therefor. Each Trust Guarantee will rank
subordinate and junior in right of payment to all Senior Debt of HECO. See "--
Status of the Trust Guarantee." Certain of the operating assets of HECO and
its consolidated subsidiaries are owned by such subsidiaries. In addition,
HECO receives interest and dividends from such subsidiaries. Accordingly,
HECO's obligations under the Trust Guarantee will be effectively subordinated
to all existing and future liabilities of MECO and HELCO, and claimants should
look only to the assets of HECO for payments thereunder.
HECO has, through the Trust Guarantee, the Trust Agreement, the HECO QUIDS,
the Subsidiary Guarantees, the HECO Indenture and the Expense Agreement, taken
together, fully, irrevocably and unconditionally guaranteed all of the Trust's
obligations under the QUIPS. No single document standing alone or operating in
conjunction with fewer than all of the other documents constitutes such
guarantee. It is only the combined operation of these documents that has the
effect of providing a full, irrevocable and unconditional guarantee of the
Trust's obligations under the QUIPS. See "Relationship Among the QUIPS, the
QUIDS and the Guarantees."
STATUS OF THE TRUST GUARANTEE
The Trust Guarantee will constitute an unsecured obligation of HECO and will
rank subordinate and junior in right of payment to all Senior Debt of HECO.
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The Trust Guarantee will rank pari passu with all similar guarantees issued
by HECO in the future. The Trust Guarantee will constitute a guarantee of
payment and not of collection (i.e., the guaranteed party may institute a
legal proceeding directly against HECO to enforce its rights under the Trust
Guarantee without first instituting a legal proceeding against any other
person or entity). The Trust Guarantee will be held for the benefit of the
Holders of the QUIPS. The Trust Guarantee will not be discharged except by
payment of the Guarantee Payments in full to the extent not paid by the Trust
or upon distribution to the Holders of the QUIPS of the Distributable HECO
QUIDS. The Trust Guarantee does not place a limitation on the amount of
additional Senior Debt that may be incurred or issued by any of the Companies.
The electric public utility business is capital intensive and for this and
other reasons the Companies anticipate that from time to time they will incur
substantial additional indebtedness constituting Senior Debt.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes which do not materially adversely affect
the rights of Holders of the QUIPS (in which case no vote will be required),
the Trust Guarantee may not be amended without the prior approval of the
Holders of not less than a majority of the aggregate Liquidation Preference of
the outstanding QUIPS. The manner of obtaining any such approval will be as
set forth under "Description of QUIPS--Voting Rights; Amendment of the Trust
Agreement." All guarantees and agreements contained in the Trust Guarantee
shall bind the successors, assigns, receivers, trustees and representatives of
HECO and shall inure to the benefit of the Holders of the related QUIPS then
outstanding.
EVENTS OF DEFAULT
An event of default under the Trust Guarantee will occur upon the failure of
HECO to perform any of its payment or other obligations thereunder. The
Holders of not less than a majority in aggregate Liquidation Preference of the
QUIPS have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trust Guarantee Trustee in respect
of the Trust Guarantee or to direct the exercise of any trust or power
conferred upon the Trust Guarantee Trustee under the Trust Guarantee.
Any Holder of the QUIPS may institute a legal proceeding directly against
HECO to enforce its rights under the Trust Guarantee without first instituting
a legal proceeding against the Trust, the Trust Guarantee Trustee or any other
person or entity.
HECO, as guarantor, is required to file annually with the Trust Guarantee
Trustee a certificate as to whether or not HECO is in compliance with all the
conditions and covenants applicable to it under the Trust Guarantee.
INFORMATION CONCERNING THE GUARANTEE TRUSTEE
The Trust Guarantee Trustee, other than during the occurrence and
continuance of a default by HECO in performance of the Trust Guarantee,
undertakes to perform only such duties as are specifically set forth in the
Trust Guarantee and, after default with respect to the Trust Guarantee, must
exercise the same degree of care and skill as a prudent person would exercise
or use in the conduct of his or her own affairs. Subject to this provision,
the Trust Guarantee Trustee is under no obligation to exercise any of the
powers vested in it by the Trust Guarantee at the request of any Holder of any
QUIPS unless it is offered reasonable indemnity against the costs, expenses
and liabilities that might be incurred thereby.
TERMINATION OF THE TRUST GUARANTEE
The Trust Guarantee will terminate and be of no further force and effect
upon full payment of the Redemption Price of the QUIPS, upon full payment of
the amounts payable upon liquidation of the
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Trust or upon distribution of the Distributable HECO QUIDS to the Holders of
the QUIPS. The Trust Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of QUIPS must
restore payment of any sums paid under such QUIPS or the Trust Guarantee.
GOVERNING LAW
The Trust Guarantee will be governed by, and construed in accordance with,
the internal laws of the State of New York.
THE EXPENSE AGREEMENT
In the Expense Agreement entered into by each of the Companies, the
Companies have agreed to provide funds to the Trust as needed to pay to each
person or entity to whom the Trust becomes indebted or liable, the full
payment of any costs, expenses or liabilities of the Trust, other than
obligations of the Trust to pay to the Holders of any QUIPS the amounts due
such Holders pursuant to the terms of the QUIPS. Each Company is obligated to
contribute its share of any such payments pro rata based on the aggregate
principal amount of its respective QUIDS, and HECO has fully, irrevocably and
unconditionally agreed to pay the amounts owed by MECO and HELCO under the
Expense Agreement if either or both of them fail to make such payments when
due.
DESCRIPTION OF SUBSIDIARY GUARANTEES
The MECO Indenture and the HELCO Indenture will each include a full,
unconditional and irrevocable HECO guarantee, on a subordinated basis, of all
payments in respect of the MECO QUIDS and the HELCO QUIDS (the "Subsidiary
Guarantees"). The Subsidiary Guarantees do not require HECO to pay any
interest payments deferred by MECO or HELCO during a valid Extension Period.
The Subsidiary Guarantees will be enforceable regardless of any defense, right
of set-off or counterclaim that HECO may have or assert.
HECO's obligations under the Subsidiary Guarantees will constitute unsecured
obligations of HECO and will rank subordinate and junior to all other existing
liabilities of HECO and will rank pari passu with the most senior preferred
stock (if any) issued from time to time by HECO and with any guarantee now or
hereafter entered into by HECO in respect of any preferred security of any
affiliate of HECO. Accordingly, the rights of the holders of MECO QUIDS and
HELCO QUIDS to receive payments under the Subsidiary Guarantees will be
subject to the rights of the holders of any obligations that are senior in
priority to the obligations under the Subsidiary Guarantees. Furthermore, the
holders of HECO obligations that are senior to the obligations under the
Subsidiary Guarantees (including, but not limited to, obligations constituting
senior indebtedness of HECO) will be entitled to the same rights upon payment
default or dissolution, liquidation and reorganization in respect of the
Subsidiary Guarantees that inure to the holders of senior indebtedness of HECO
as against the holders of HECO QUIDS. The terms of the MECO QUIDS and HELCO
QUIDS provide that each holder, by acceptance thereof, agrees to the
subordination provisions and other terms of the Subsidiary Guarantees.
Each of the Subsidiary Guarantees will terminate and be of no further force
or effect upon payment in full of the QUIDS Redemption Price of the MECO QUIDS
and the HELCO QUIDS, respectively, upon payment in full of the Redemption
Price of the QUIPS, upon payment in full of the amounts payable upon
liquidation of the Trust or upon distribution of the Distributable HECO QUIDS
to the Holders of the QUIPS; provided, however, that each of the Subsidiary
Guarantees will continue to be effective or will be reinstated, as the case
may be, if at any time any Holder of QUIPS or Distributable HECO QUIDS must
restore payment of any sums paid under the QUIPS, the Distributable HECO QUIDS
or the applicable Subsidiary Guarantee.
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RELATIONSHIP AMONG THE QUIPS,
THE QUIDS AND THE GUARANTEES
FULL AND UNCONDITIONAL GUARANTEE
Taken together, HECO's obligations under the HECO QUIDS, the HECO Indenture,
the Subsidiary Guarantees, the Trust Agreement, the Expense Agreement and the
Trust Guarantee provide, in the aggregate, a full, irrevocable and
unconditional guarantee of payments of distributions and other amounts due on
the QUIPS. No single document standing alone or operating in conjunction with
fewer than all of the other documents constitutes such guarantee. It is only
the combined operation of these documents that has the effect of providing a
full, irrevocable and unconditional guarantee of the Trust's obligations under
the QUIPS. Payments of Distributions and other amounts due on the QUIPS (to
the extent the Trust has funds available for the payment of such Distributions
and other amounts) are irrevocably guaranteed by HECO as and to the extent set
forth under "Description of Trust Guarantee." If and to the extent that HECO
does not make payments on the HECO QUIDS, or if MECO or HELCO does not make
payments on the MECO QUIDS or the HELCO QUIDS, as the case may be, and HECO
does not make payments under the Subsidiary Guarantees, the Trust will not pay
Distributions or other amounts due on the QUIPS. The Trust Guarantee does not
cover payment of Distributions when the Trust does not have sufficient funds
to pay such Distributions. In such event, a Holder of QUIPS may institute a
Direct Action against any of the Companies which has failed to make payment,
and against HECO on its Subsidiary Guarantees if MECO or HELCO has failed to
make payment, to enforce payment of such Distributions to such Holder after
the respective due dates. The obligations of HECO under the HECO QUIDS, the
Trust Guarantee, the Expense Agreement and the Subsidiary Guarantees are
subordinate and junior in right of payment to all Senior Debt of HECO.
SUFFICIENCY OF PAYMENTS
As long as payments of interest and other payments are made when due on the
QUIDS, such payments will be sufficient to cover Distributions and other
payments due on the QUIPS, primarily because (i) the aggregate principal
amount of the QUIDS will be equal to the sum of the aggregate stated
Liquidation Preference of the QUIPS and Common Securities; (ii) the interest
rate and interest and other payment dates on the QUIDS will match the
Distribution rate and Distribution and other payment dates for the QUIPS;
(iii) the Companies shall pay under the Expense Agreement for all and any
costs, expenses and liabilities of the Trust except the Trust's obligations to
Holders of the QUIPS under the QUIPS; and (iv) the Trust Agreement further
provides that the Trust will not engage in any activity that is not consistent
with the limited purposes of the Trust.
ENFORCEMENT RIGHTS OF HOLDERS OF QUIPS
A Holder of any QUIPS may institute a legal proceeding directly against HECO
to enforce its rights under the Trust Guarantee without first instituting a
legal proceeding against the Trust Guarantee Trustee, the Trust or any other
person or entity. See "Description of QUIPS--Enforcement of Certain Rights by
Holders of QUIPS" for a description of the enforcement rights of Holders of
QUIPS under the Trust Agreement.
A default or event of default under any Senior Debt of any of the Companies
will not constitute a default or Event of Default under the Indenture of such
Company. However, in the event of payment defaults under, or acceleration of,
Senior Debt of such Company, the subordination provisions of each Indenture
provide that no payments may be made in respect of the QUIDS issued thereunder
until such Senior Debt has been paid in full or any payment default thereunder
has been cured or waived. Failure to make required payments on any such QUIDS
would constitute an Event of Default under such Indenture.
LIMITED PURPOSE OF TRUST
The QUIPS evidence a beneficial interest in the Trust, and the Trust exists
for the sole purpose of issuing the QUIPS and Common Securities and investing
the proceeds thereof in QUIDS. A principal
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difference between the rights of a Holder of a QUIPS and a holder of a QUIDS
is that a holder of a QUIDS is entitled to receive from the applicable Company
(or from HECO under the Subsidiary Guarantees) the principal amount of and
interest accrued on QUIDS held, while a Holder of QUIPS is entitled to receive
Distributions from the Trust (or from HECO under the Trust Guarantee) if and
to the extent the Trust has funds available for the payment of such
Distributions.
RIGHTS UPON DISSOLUTION
Upon any voluntary or involuntary dissolution, winding-up or liquidation of
the Trust not involving a distribution of the Distributable HECO QUIDS, the
Holders of the QUIPS will be entitled to receive, out of assets held by the
Trust after satisfaction of creditors of the Trust as provided by applicable
law, the Liquidation Distribution in cash. See "Description of QUIPS--
Liquidation Value; Liquidation Distribution Upon Dissolution." Upon any
voluntary or involuntary liquidation or bankruptcy of any of the Companies,
the Property Trustee, as holder of the QUIDS of such Company, would be a
subordinated creditor of such Company, subordinated in right of payment to all
Senior Debt of such Company, but entitled to receive payment in full of
principal and interest before any stockholders of such Company receive
payments or distributions. Since HECO is the guarantor under the Trust
Guarantee and the Subsidiary Guarantees and is obligated (either directly or
as guarantor) under the Expense Agreement to pay for all costs, expenses and
liabilities of the Trust (other than the Trust's obligations to the Holders of
the QUIPS), the positions of a Holder of QUIPS and a Holder of QUIDS relative
to other creditors and to stockholders of HECO in the event of liquidation or
bankruptcy of HECO would be substantially the same.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the material United States federal income tax
consequences of the purchase, ownership and disposition of QUIPS. This summary
only addresses the tax consequences to a person that acquires QUIPS on their
original issue at their original offering price and that is (i) an individual
citizen or resident of the United States, (ii) a corporation or partnership
organized in or under the laws of the United States or any state thereof or
the District of Columbia or (iii) an estate or trust the income of which is
subject to United States federal income tax regardless of its source or (iv) a
trust the administration of which is subject to the primary supervision of a
court within the United States and for which one or more United States
fiduciaries have the authority to control all substantial decisions (a "United
States Person"). This summary does not address all tax consequences that may
be applicable to a United States Person that is a beneficial owner of QUIPS,
nor does it address the tax consequences to (i) persons that are not United
States Persons, (ii) persons that may be subject to special treatment under
United States federal income tax law, such as banks, insurance companies,
thrift institutions, regulated investment companies, real estate investment
trusts, tax-exempt organizations and dealers in securities or currencies,
(iii) persons that will hold QUIPS as part of a position in a "straddle" or as
part of a "hedging," "conversion" or other integrated investment transaction
for federal income tax purposes, (iv) persons whose functional currency is not
the United States dollar or (v) persons that do not hold QUIPS as capital
assets.
The statements of law and legal conclusions set forth in this summary
constitute the opinion of Goodsill Anderson Quinn & Stifel, counsel to HECO
and the Trust ("Tax Counsel"). This summary is based upon the Internal Revenue
Code of 1986, as amended (the "Code"), Treasury Regulations, Internal Revenue
Service rulings and pronouncements and judicial decisions now in effect, all
of which are subject to change at any time. Such changes may be applied
retroactively in a manner that could cause the tax consequences to vary
substantially from the consequences described below, possibly adversely
affecting a beneficial owner of QUIPS. In particular, legislation has been
proposed that could adversely affect HECO's ability to deduct interest on the
QUIDS, which may in turn permit HECO to cause a redemption of the QUIPS or a
dissolution of the Trust and a distribution of Distributable HECO
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QUIDS. See "--Possible Tax Law Changes." The authorities on which this summary
is based are subject to various interpretations and it is therefore possible
that the United States federal income tax treatment of the purchase, ownership
and disposition of QUIPS may differ from the treatment described below.
PROSPECTIVE INVESTORS ARE ADVISED TO CONSULT WITH THEIR OWN TAX ADVISORS IN
LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES AS TO THE UNITED STATES FEDERAL
TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF QUIPS, AS WELL
AS THE EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.
CLASSIFICATION OF THE TRUST
Tax Counsel is of the opinion that, under current law and assuming
compliance with the terms of the Trust Agreement and certain other documents,
the Trust will be classified as a grantor trust and not as an association
taxable as a corporation for United States federal income tax purposes. As a
result, each beneficial owner of QUIPS (a "Security Holder") will be treated
as owning an undivided beneficial interest in the QUIDS. Accordingly, each
Security Holder will be required to include in its gross income its pro rata
share of any original issue discount ("OID") accrued with respect to the QUIDS
whether or not cash is actually distributed to the Security Holders. See "--
Stated Interest and Original Issue Discount." No amount included in income of
Security Holders with respect to the QUIPS will be eligible for the dividends-
received deduction.
STATED INTEREST AND ORIGINAL ISSUE DISCOUNT
Tax Counsel is of the opinion that, under new Treasury Regulations
applicable to debt instruments issued on or after August 13, 1996, generally,
stated interest on a debt instrument will give rise to OID unless the
likelihood of late payment or nonpayment is a "remote contingency." Under each
of the Indentures, the applicable Company has the right to defer the payment
of interest on its QUIDS at any time or from time to time for a period
(including any extensions thereof) not exceeding 20 consecutive quarters with
respect to each Extension Period, provided that no Extension Period may extend
beyond the Stated Maturity of such QUIDS. Each of the Companies has
represented that the likelihood of it exercising its option to defer payments
of interest is remote because exercising the option would, among other things,
prevent such Company (and HECO, if the deferring Company is MECO or HELCO)
from declaring dividends on its capital stock. Accordingly, Tax Counsel is of
the opinion that the QUIDS should be considered as issued without OID and,
therefore, except as set forth below, stated interest on the QUIDS will
generally be taxable to a Security Holder as ordinary income at the time it is
paid or accrued in accordance with the Security Holder's method of accounting
for United States federal income tax purposes.
Notwithstanding the foregoing, should any Company elect an Extension Period,
such Company's QUIDS would at that time be treated as having been reissued
with OID. Consequently, Security Holders (even if they used the cash method of
accounting for United States federal income tax purposes) would be required to
include OID in income on an economic accrual basis with respect to such QUIDS
during such Extension Period and thereafter for as long as such QUIDS remain
outstanding. The amount of OID that would accrue in any quarterly period would
approximately equal the amount of interest that accrues in that quarterly
period at the stated interest rate. Stated interest on the QUIDS of any of the
Companies with respect to which such Company had not exercised its right to
defer payments of interest would continue to be taxable to a Security Holder
at the time it was paid or accrued in accordance with such Security Holder's
method of accounting for United States federal income tax purposes. A Security
Holder that disposed of QUIPS before the record date for any Distribution Date
following an Extension Period would include interest in gross income as it
accrued on QUIDS but would not receive any interest payments related thereto
from the Trust.
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DISTRIBUTION OF QUIDS TO HOLDERS OF QUIPS
Tax Counsel is of the opinion that, under current United States federal
income tax law, the Exchange of the MECO QUIDS and the HELCO QUIDS for the
Substituted HECO QUIDS would likely be treated as a taxable exchange for
United States federal income tax purposes with respect to a Security Holder's
pro rata share of MECO QUIDS and HELCO QUIDS. As a result, each Security
Holder would recognize gain or loss in an amount equal to the difference
between (i) the fair market value of such Security Holder's pro rata share of
the Substituted HECO QUIDS received by the Trust in exchange for MECO QUIDS
and HELCO QUIDS prior to such distribution and (ii) such Security Holder's
adjusted tax basis in its pro rata share of MECO QUIDS and HELCO QUIDS
exchanged therefor. Under current United States federal income tax law, the
Exchange would not be a taxable exchange with respect to a Security Holder's
pro rata share of HECO QUIDS and such Security Holder would not recognize any
gain or loss with respect thereto. See "Description of QUIPS--Redemption or
Exchange--Special Event Redemption or Distribution of QUIDS" and "Description
of QUIDS--Distribution of QUIDS; Exchange of Substituted HECO QUIDS for MECO
and HELCO QUIDS."
Upon the distribution of the Distributable HECO QUIDS to the Security
Holders, each Security Holder would receive directly its pro rata share
thereof previously held indirectly through the Trust and, with respect to such
Security Holder's pro rata share of HECO QUIDS (but not Substituted HECO
QUIDS), would have a holding period and aggregate adjusted tax basis in HECO
QUIDS equal to the holding period and aggregate adjusted tax basis such
Security Holder had in its pro rata share of HECO QUIDS before such
distribution. Under current United States federal income tax law, Tax Counsel
is of the opinion that, the distribution of the Distributable HECO QUIDS upon
the dissolution of the Trust would not be a taxable exchange to Holders of the
QUIPS for United States federal income tax purposes. If, however, the Trust
were characterized for United States federal income tax purposes as an
association taxable as a corporation at the time of dissolution, or if there
were a change in law or legal interpretation, or upon the occurrence of
certain other circumstances, the distribution of the Distributable HECO QUIDS
could be a taxable exchange to Holders of the QUIPS. See "Description of
QUIPS--Redemption or Exchange--Special Event Redemption or Distribution of
QUIDS" and "Description of QUIDS--Distribution of QUIDS; Exchange of
Substituted HECO QUIDS for MECO and HELCO QUIDS."
Following such a distribution, Tax Counsel is of the opinion that, a
Security Holder would generally include in gross income interest in respect of
the Distributable HECO QUIDS received in the manner described under "Stated
Interest and Original Issue Discount," except that the Substituted HECO QUIDS
may be treated as having been issued either with OID or at a premium,
depending on their fair market value at the time of the Exchange and the
Security Holder's tax basis in the QUIPS at the time of the Exchange. Issuance
of the Distributable HECO QUIDS with OID or at a premium could significantly
change the amounts of interest income included in gross income by a Security
Holder in taxable years following distribution, as well as the amount of any
gain or loss recognized by a Security Holder upon a subsequent disposition of
Distributable HECO QUIDS. It is not possible to predict the precise tax
consequences to a Security Holder in this regard, and Security Holders should
consult their own tax advisors as to such consequences. However, if the
Substituted HECO QUIDS are treated as having been issued with OID, Security
Holders (even if they use the cash method of accounting for United States
federal income tax purposes) would be required to include OID in income on an
economic accrual basis with respect to such Substituted HECO QUIDS.
SALES OR REDEMPTION OF QUIPS
Gain or loss will be recognized by a Security Holder on a sale of QUIPS
(including a redemption for cash) in an amount equal to the difference between
the amount realized (which, for this purpose, will exclude amounts
attributable to accrued interest not previously included in income as interest
or OID) and the Security Holder's adjusted tax basis in the QUIPS sold or
redeemed. The tax basis of a Security Holder in its QUIPS would be increased
by any OID included in income and decreased by
46
<PAGE>
any subsequent payments of interest. Gain or loss recognized by a Security
Holder on QUIPS held for more than one year will generally be taxable as long-
term capital gain or loss.
The QUIPS may trade at a price that does not fully reflect the value of
accrued but unpaid interest with respect to the underlying QUIDS. A Security
Holder that disposes of its QUIPS between record dates for payments of
Distributions will nevertheless be required to include in income as ordinary
income accrued but unpaid interest on the QUIDS through the date of
disposition. Such Security Holder will recognize a capital loss on the
disposition of its QUIPS to the extent the selling price (which may not fully
reflect the value of accrued but unpaid interest) is less than the Security
Holder's adjusted tax basis in the QUIPS. Subject to certain limited
exceptions, capital losses cannot be applied to offset ordinary income for
federal income tax purposes.
BACKUP WITHHOLDING TAX AND INFORMATION REPORTING
The amount of interest or OID paid or accrued on the QUIPS held of record by
United States Persons (other than corporations and other exempt Security
Holders) will be reported annually to the Internal Revenue Service. It is
anticipated that such interest or OID will be reported to holders on Form 1099
and delivered by January 31 following each calendar year. "Backup" withholding
at a rate of 31% will apply to payments of interest to non-exempt United
States Persons unless the Security Holder furnishes its taxpayer
identification number in the manner prescribed in applicable Treasury
Regulations, certifies that such number is correct, certifies as to no loss of
exemption from backup withholding and meets certain other conditions.
Payment of the proceeds from the disposition of QUIPS to or through the
United States office of a broker is subject to information reporting and
backup withholding unless the Holder or beneficial owner establishes an
exemption from information reporting and backup withholding.
Any amounts withheld from a Security Holder under the backup withholding
rules will be allowed as a refund or a credit against such Security Holder's
United States federal income tax liability, provided the required information
is furnished to the Internal Revenue Service.
POSSIBLE TAX LAW CHANGES
On February 6, 1997, President Clinton released the administration's fiscal
year 1998 budget proposal, including a proposal for tax legislation that
would, among other things, generally deny a deduction for interest (and OID)
on a corporate debt instrument with (i) a maximum weighted average maturity of
more than 40 years or (ii) a maximum term of more than 15 years that is not
shown as indebtedness on the separate balance sheet of the issuer or, where
the instrument is issued to a related party (other than a corporation), where
the holder or some other related party issues a related instrument that is not
shown as indebtedness on the issuer's consolidated balance sheet. For purposes
of determining the weighted average maturity or the term of an instrument, any
right to extend would be treated as exercised. The above described provisions
were proposed to be effective for instruments issued on or after the date of
"first committee action," the meaning of which is unclear. The House Ways and
Means Committee began a full committee hearing on the President's fiscal year
1998 budget proposal on February 11, 1997. There can be no assurance as to
whether the effective date guidance contained in the President's legislative
proposal will be followed if the proposed legislation is enacted, or whether
future legislative or administrative proposals or final legislation enacted
after the date hereof will not adversely affect the ability of the Companies
to deduct the interest on the QUIDS. A change in law consistent with the
President's legislative proposal, if it were to apply retroactively to the
issuance of the QUIPS, would give rise to a Tax Event, which would in turn
permit HECO to cause a redemption of the QUIPS or a distribution of
Distributable HECO QUIDS upon dissolution of the Trust upon receipt of an
opinion of counsel, as described more fully under "Description of QUIPS--
Redemption or Exchange--Special Event Redemption or Distribution of QUIDS."
Such a change in law would not alter the United States federal income tax
consequences of the purchase, ownership and disposition of QUIPS.
47
<PAGE>
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement,
HECO and the Trust have agreed that the Trust will sell to each of the
Underwriters named below, and each of such Underwriters, for whom Goldman,
Sachs & Co. and Dean Witter Reynolds Inc. are acting as representatives, has
severally agreed to purchase from the Trust, the respective number of QUIPS
set forth opposite its name below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER QUIPS
----------- ---------
<S> <C>
Goldman, Sachs & Co. ..............................................
Dean Witter Reynolds Inc. .........................................
---------
Total............................................................ 2,000,000
=========
</TABLE>
Subject to the terms and conditions set forth in the Underwriting Agreement,
the Underwriters are committed to take and pay for all such QUIPS offered
hereby, if any are taken.
The Underwriters propose to offer the QUIPS in part directly to the public
at the initial public offering price set forth on the cover page of this
Prospectus and in part to certain securities dealers at such price less a
concession of $ per QUIPS. The Underwriters may allow, and such dealers may
reallow, a concession not to exceed $ per QUIPS to certain brokers and
dealers. After the QUIPS are released for sale to the public, the offering
price and other selling terms may from time to time be varied by the
representatives.
In view of the fact that the proceeds from the sale of the QUIPS will be
used to purchase the QUIDS of HECO and its subsidiaries, the Underwriting
Agreement provides that HECO will pay as Underwriters' Compensation for the
Underwriters' arranging the investment therein of such proceeds an amount of
$ per QUIPS for the accounts of the several Underwriters.
HECO and the Trust have agreed that, during the period beginning from the
date of the Underwriting Agreement and continuing to and including the earlier
of (i) the termination of trading restrictions on the QUIPS, as determined by
the Underwriters, and (ii) 30 days after the closing date, they will not, and
HECO will cause MECO and HELCO to not, offer, sell, contract to sell or
otherwise dispose of any QUIPS, any other beneficial interests in the assets
of the Trust, or any preferred securities or any other securities of the Trust
or the Companies which are substantially similar to the QUIPS, including any
guarantee of such securities, or any securities convertible into or
exchangeable for or representing the right to receive securities, preferred
securities or any such substantially similar securities of either the Trust or
the Companies, without the prior written consent of the representatives of the
Underwriters, except for the QUIPS offered in connection with this offering.
Prior to this offering, there has been no public market for the QUIPS. The
QUIPS have been approved for listing on the New York Stock Exchange, subject
to official notice of issuance. Trading on the New York Stock Exchange is
expected to commence within the 30-day period after the initial delivery of
the QUIPS. The representatives of the Underwriters have advised HECO that they
intend to make a market in the QUIPS prior to commencement of trading on the
New York Stock Exchange, but are not obligated to do so and may discontinue
market making at any time without notice. No assurance can be given as to the
liquidity of the trading market for the QUIPS.
During and after the offering, the Underwriters may purchase and sell the
QUIPS in the open market. These transactions may include overallotment and
stabilizing transactions and purchases to cover syndicate short positions
created in connection with the offering. The Underwriters also may
48
<PAGE>
impose a penalty bid, whereby selling concessions allowed to syndicate members
or other broker-dealers in respect of the QUIPS sold in the offering for their
account may be reclaimed by the syndicate if such QUIPS are repurchased by the
syndicate in stabilizing or covering transactions. These activities may
stabilize, maintain or otherwise affect the market price of the QUIPS, which
may be higher than the price that might otherwise prevail in the open market;
and these activities, if commenced, may be discontinued at any time. These
transactions may be effected on the New York Stock Exchange, in the over-the-
counter market or otherwise.
HECO and the Trust have agreed to indemnify the several Underwriters against
and contribute toward certain liabilities, including liabilities under the
Securities Act.
Certain of the Underwriters or their affiliates have provided from time to
time, and expect to provide in the future, investment or commercial banking
services to HECO and its affiliates, for which such Underwriters or their
affiliates have received or will receive customary fees and commissions.
LEGAL OPINIONS
Certain matters of Delaware law relating to the legality of the QUIPS, the
validity of the Trust Agreement and the creation of the Trust will be passed
upon by Richards, Layton & Finger, special Delaware counsel to the Companies
and the Trust. The legality of the Trust Guarantee, the Subsidiary Guarantees
and the QUIDS will be passed upon for the Companies by Goodsill Anderson Quinn
& Stifel, Honolulu, Hawaii, and for the Underwriters by Winthrop, Stimson,
Putnam & Roberts, New York, New York. Certain matters relating to United
States federal income tax considerations will be passed upon for the Companies
by Goodsill Anderson Quinn & Stifel.
EXPERTS
The consolidated financial statements of HECO and its subsidiaries as of
December 31, 1996 and 1995, and for each of the years in the three year period
ended December 31, 1996, which financial statements have been incorporated by
reference in HECO's Current Report on Form 8-K filed on March 13, 1997, which
is incorporated by reference herein, and the consolidated financial statements
and schedule of HECO and its subsidiaries as of December 31, 1995 and 1994,
and for each of the years in the three year period ended December 31, 1995,
which financial statements and schedule have been incorporated by reference
and included in HECO's Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, as amended by Form 10-K/A dated April 30, 1996, which is
incorporated by reference herein, have been incorporated by reference herein
in reliance upon the reports of KPMG Peat Marwick LLP, independent certified
public accountants, also incorporated by reference herein, and upon the
authority of said firm as experts in auditing and accounting.
49
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRE-
SENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES DE-
SCRIBED IN THIS PROSPECTUS OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITA-
TION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF HAWAIIAN ELECTRIC COMPANY, INC., ITS SUB-
SIDIARIES OR THE TRUST SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-----------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information.................................................... 5
Incorporation of Certain Information
by Reference............................................................ 5
Risk Factors............................................................. 7
HECO Capital Trust I..................................................... 12
Hawaiian Electric Company, Inc. and Subsidiaries......................... 13
Selected Consolidated Financial Information.............................. 14
Capital Expenditure Programs and Financing Requirements.................. 15
Ratios of Earnings to Fixed Charges and to Combined Fixed Charges and
Preferred Stock Dividends............................................... 16
Use of Proceeds.......................................................... 16
Accounting Treatment..................................................... 16
Description of QUIPS..................................................... 17
Description of QUIDS..................................................... 30
Description of Trust Guarantee........................................... 40
Description of Subsidiary Guarantees..................................... 42
Relationship Among the QUIPS, the QUIDS and the Guarantees............... 43
Certain Federal Income Tax Consequences.................................. 44
Underwriting............................................................. 48
Legal Opinions........................................................... 49
Experts.................................................................. 49
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2,000,000 PREFERRED SECURITIES
HECO CAPITAL TRUST I
% CUMULATIVE QUARTERLY INCOME PREFERRED SECURITIES, SERIES 1997 (QUIPS SM)
GUARANTEED TO THE EXTENT HECO CAPITAL TRUST I HAS FUNDS AS SET FORTH HEREIN BY
HAWAIIAN ELECTRIC COMPANY, INC.
GOLDMAN, SACHS & CO.
DEAN WITTER REYNOLDS INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with the issuance and distribution of
the securities being registered, other than Underwriters' Compensation, are:
<TABLE>
<S> <C>
Filing Fee for Registration Statement................................ $ 15,152
Legal Fees and Expenses*............................................. 100,000
Accounting Fees and Expenses*........................................ 50,000
Blue Sky Fees and Expenses*.......................................... 10,000
Printing and Engraving Fees*......................................... 40,000
Fees and Expenses of Registrars, Transfer Agents, Paying Agents and
Trustees*........................................................... 15,000
Fees of rating agencies*............................................. 35,000
Listing Fees*........................................................ 30,000
Miscellaneous*....................................................... 34,848
--------
Total*............................................................. $330,000
========
</TABLE>
- --------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
HECO's Articles of Incorporation, as amended, provide that, subject to
certain exceptions, HECO shall 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 HECO, 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 HECO 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 HECO, in which such person
is adjudged to be liable for negligence or misconduct in the performance of
that person's duty to HECO, 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.
A similar indemnity in the Restated Articles of Incorporation of Hawaiian
Electric Industries, Inc. ("HEI"), HECO's parent corporation, is extended to
persons serving at the request of HEI as a director, officer employee or agent
of another enterprise, which could include HECO. The indemnification
provisions in the 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, including in their
capacities as officers and directors of subsidiaries of HEI. 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 certain officers and directors, some of whom are officers and directors of
HECO, to the fullest extent authorized or permitted by law, which could among
other things protect certain officers and directors of HECO 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 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.
II-1
<PAGE>
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.
The Trust Agreement of the Trust provides that no Trustee, affiliate of any
Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee, or any employee or agent
of the Trust or its affiliates (each an "Indemnified Person") shall be liable,
responsible or accountable in damages or otherwise to the Trust or any
employee or agent of the Trust or its affiliates for any loss, damage or claim
incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by the Trust Agreement or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence (or, in the
case of the Property Trustee, negligence) or willful misconduct with respect
to such acts or omissions. The Trust Agreement also provides that, to the
fullest extent permitted by applicable law, HECO shall indemnify and hold
harmless each Indemnified Person from and against any loss, damage or claim
incurred by such Indemnified Person by reason of any act or omission performed
or omitted by such Indemnified Person in good faith on behalf of the Trust and
in a manner such Indemnified Person reasonably believed to be within the scope
of authority conferred on such Indemnified Person by the Trust Agreement,
except that no Indemnified Person shall be entitled to be indemnified in
respect of any loss, damage or claim incurred by such Indemnified Person by
reason of gross negligence (or, in the case of the Property Trustee,
negligence) or willful misconduct with respect to such acts of omissions. The
Trust Agreement further provides that, to the fullest extent permitted by
applicable law, expenses (including legal fees) incurred by an Indemnified
Person in defending any claim, demand, action, suit or proceeding shall, from
time to time, be advanced by the Trust prior to the final disposition of such
claim, demand, action, suit or proceeding upon receipt of an undertaking by or
on behalf of the Indemnified Person to repay such amount if it shall be
determined that the Indemnified Person is not entitled to be indemnified for
the underlying cause of action as authorized by the Trust Agreement.
ITEM 16. EXHIBITS.
<TABLE>
<C> <S>
1 Form of Underwriting Agreement for offering of QUIPS.
4(a) Certificate of Trust of HECO Capital Trust I.*
4(b) Trust Agreement for HECO Capital Trust I.*
4(c) Form of Amended and Restated Trust Agreement to be used in connection
with the issuance of QUIPS by HECO Capital Trust I.
4(d) Form of HECO Junior Indenture with The Bank of New York, as Trustee,
to be used in connection with the issuance of QUIDS by HECO.
4(e) Form of QUIPS for issuance by HECO Capital Trust I (included in
Exhibit 4(c)).
4(f) Form of QUIDS for issuance by HECO (included in Exhibit 4(d)).
4(g) Form of Trust Guarantee Agreement between The Bank of New York, as
Trust Guarantee Trustee, and HECO.
4(h) Form of Subsidiary Junior Indenture with The Bank of New York, as
Trustee, to be used in connection with Subsidiary Guarantees by
HECO.
4(i) Form of Agreement as to Expenses and Liabilities among HECO Capital
Trust I, HECO, MECO and HELCO.
5(a) Opinion of Goodsill Anderson Quinn & Stifel.
5(b) Opinion of Richards, Layton & Finger.
8 Tax Opinion of Goodsill Anderson Quinn & Stifel.
12(a) Computation of Ratio of Earnings to Fixed Charges.
12(b) Computation of Ratio of Earnings to Combined Fixed Charges and
Dividends on Preferred Stock.
23(a) Consent of KPMG Peat Marwick LLP.
23(b) Consent of Goodsill Anderson Quinn & Stifel as to opinion (included
in Exhibit 5(a)).
</TABLE>
II-2
<PAGE>
<TABLE>
<S> <C>
23(c) Consent of Richards, Layton & Finger as to opinion (included in
Exhibit 5(b)).
23(d) Consent of Goodsill Anderson Quinn & Stifel as to opinion re tax
matters (included in Exhibit 8).
24(a) Powers of Attorney for HECO and HECO officers and directors.*
24(b) Power of Attorney for HECO Capital Trust I (included in Exhibit
4(b)).*
25(a) Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the HECO Junior
Indenture.
25(b) Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the MECO Junior
Indenture with respect to the related Subsidiary Guarantee by HECO.
25(c) Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trustee under the HELCO Junior
Indenture with respect to the related Subsidiary Guarantee by HECO.
25(d) Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Trust Guarantee Trustee under
the Trust Guarantee Agreement.
25(e) Statement of Eligibility under the Trust Indenture Act of 1939, as
amended, of The Bank of New York, as Property Trustee under the
Trust Agreement of HECO Capital Trust I.
</TABLE>
- --------
* Previously filed with this Registration Statement.
ITEM 17. UNDERTAKINGS.
Each of the undersigned registrants hereby undertakes:
(1) That, for purposes of determining any liability under the Securities
Act of 1933, each filing of HECO'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 this 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.
(2) To provide to the underwriters at the closing specified in the
underwriting agreement, certificates in such denominations and registered
in such names as required by the underwriter to permit prompt delivery to
each purchaser.
(3) That, for the purposes of determining any liability under the
Securities Act of 1933:
(i) The information omitted from the form of prospectus filed as part
of this Registration Statement in reliance upon Rule 430A and contained
in the form of prospectus filed by the registrant pursuant to Rule
424(b)(1) or (4) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.
(ii) Each post-effective amendment that contains a form of prospectus
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
each registrant pursuant to the provisions described under Item 15 above, or
otherwise, each registrant 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 a registrant of expenses incurred or paid by a director, officer or
controlling person of a registrant 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, the respective
registrant 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, HAWAIIAN
ELECTRIC COMPANY, INC. 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 AMENDMENT NO. 1 TO THE 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 13TH DAY OF MARCH, 1997.
Hawaiian Electric Company, Inc.
/s/ Paul A. Oyer
By: _________________________________
Paul A. Oyer
Financial Vice President and
Treasurer
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 1 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING
PERSONS IN THEIR CAPACITIES WITH HAWAIIAN ELECTRIC COMPANY, INC. AND ON THE
DATES INDICATED.
SIGNATURES TITLE DATE
T. Michael May* President and
- ------------------------------------- Director (Chief March 13, 1997
T. MICHAEL MAY Executive Officer)
Paul A. Oyer* Financial Vice
- ------------------------------------- President and March 13, 1997
PAUL A. OYER Treasurer
(Principal
Financial Officer)
Ernest T. Shiraki* Controller
- ------------------------------------- (Principal March 13, 1997
ERNEST T. SHIRAKI Accounting Officer)
Robert F. Clarke* Chairman of the
- ------------------------------------- Board and Director March 13, 1997
ROBERT F. CLARKE
Edwin L. Carter* Director
- ------------------------------------- March 13, 1997
EDWIN L. CARTER
Richard Henderson* Director
- ------------------------------------- March 13, 1997
RICHARD HENDERSON
Diane J. Plotts* Director
- ------------------------------------- March 13, 1997
DIANE J. PLOTTS
Paul C. Yuen Director
- ------------------------------------- March 13, 1997
PAUL C. YUEN
/s/ Paul A. Oyer
*By__________________________________
PAUL A. OYER
For himself and as Attorney-In-Fact for the above mentioned officers and
directors
II-4
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, HECO CAPITAL
TRUST I HAS DULY CAUSED THIS AMENDMENT NO. 1 TO THE REGISTRATION STATEMENT ON
FORM S-3 TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF HONOLULU, STATE OF HAWAII, ON MARCH 13, 1997.
HECO Capital Trust I
By: Hawaiian Electric Company, Inc.,
as Depositor
By: /s/ Paul A. Oyer
_________________________________
Paul A. Oyer
Financial Vice President and
Treasurer
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NO. DESCRIPTION PAGE
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<C> <S> <C>
1 Form of Underwriting Agreement for offering of QUIPS.
4(a) Certificate of Trust of HECO Capital Trust I.*
4(b) Trust Agreement for HECO Capital Trust I.*
4(c) Form of Amended and Restated Trust Agreement to be used
in connection with the issuance of QUIPS by HECO
Capital Trust I.
4(d) Form of HECO Junior Indenture with The Bank of New
York, as Trustee, to be used in connection with the
issuance of QUIDS by HECO.
4(e) Form of QUIPS for issuance by HECO Capital Trust I
(included in Exhibit 4(c)).
4(f) Form of QUIDS for issuance by HECO (included in Exhibit
4(d)).
4(g) Form of Trust Guarantee Agreement between The Bank of
New York, as Trust Guarantee Trustee, and HECO.
4(h) Form of Subsidiary Junior Indenture with The Bank of
New York, as Trustee, to be used in connection with
Subsidiary Guarantees by HECO.
4(i) Form of Agreement as to Expenses and Liabilities among
HECO Capital Trust I, HECO, MECO and HELCO.
5(a) Opinion of Goodsill Anderson Quinn & Stifel.
5(b) Opinion of Richards, Layton & Finger.
8 Tax Opinion of Goodsill Anderson Quinn & Stifel.
12(a) Computation of Ratio of Earnings to Fixed Charges.
12(b) Computation of Ratio of Earnings to Combined Fixed
Charges and Dividends on Preferred Stock.
23(a) Consent of KPMG Peat Marwick LLP.
23(b) Consent of Goodsill Anderson Quinn & Stifel as to
opinion (included in Exhibit 5(a)).
23(c) Consent of Richards, Layton & Finger as to opinion
(included in Exhibit 5(b)).
23(d) Consent of Goodsill Anderson Quinn & Stifel as to
opinion re tax matters (included in Exhibit 8).
24(a) Powers of Attorney for HECO and HECO officers and
directors.*
24(b) Power of Attorney for HECO Capital Trust I (included in
Exhibit 4(b)).*
25(a) Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The Bank of New York, as
Trustee under the HECO Junior Indenture.
25(b) Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The Bank of New York, as
Trustee under the MECO Junior Indenture with respect
to the related Subsidiary Guarantee by HECO.
25(c) Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The Bank of New York, as
Trustee under the HELCO Junior Indenture with respect
to the related Subsidiary Guarantee by HECO.
25(d) Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The Bank of New York, as Trust
Guarantee Trustee under the Trust Guarantee Agreement.
25(e) Statement of Eligibility under the Trust Indenture Act
of 1939, as amended, of The Bank of New York, as
Property Trustee under the Trust Agreement of HECO
Capital Trust I.
</TABLE>
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* Previously filed with this Registration Statement.
<PAGE>
EXHIBIT 1
2,000,000 Preferred Securities
HECO CAPITAL TRUST I
__% Cumulative Quarterly Income Preferred Securities, Series 1997 ("QUIPS"/sm/)
(liquidation preference $25 per preferred security)
guaranteed to the extent HECO Capital Trust I has funds as set forth herein by
HAWAIIAN ELECTRIC COMPANY, INC.
UNDERWRITING AGREEMENT
----------------------
March __, 1997
Goldman, Sachs & Co.
Dean Witter Reynolds Inc.
As representatives of the several
Underwriters named in Schedule I hereto
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
The undersigned, HECO Capital Trust I (the "Trust"), a statutory
business trust created under the Business Trust Act of the State of Delaware
(Title 12, Chapter 38 of the Delaware Code, 12 Del. C. Section 3801 et seq.)
(the "Delaware Act"), proposes to issue and sell to the several underwriters
named in Schedule I hereto (the "Underwriters," which term, when the context
permits, shall also include any underwriters substituted as hereinafter in
Section 11 hereof provided), for whom you are acting as representatives (in such
capacity, you shall hereinafter be referred to as the "Representatives"),
2,000,000 of its __% Cumulative Quarterly Income Preferred Securities, Series
1997 (liquidation preference $25 per preferred security), representing preferred
undivided beneficial interests in the assets of the Trust (the "Trust Preferred
Securities"), as follows:
__________________________
/sm/ QUIPS is a servicemark of Goldman, Sachs & Co.
<PAGE>
SECTION 1. Purchase and Sale. (a) On the basis of the
-----------------
representations and warranties herein contained, and subject to the terms and
conditions herein set forth, the Trust shall issue and sell to each of the
Underwriters named in Schedule I hereto, and each Underwriter shall purchase
from the Trust at the time and place herein specified, severally and not
jointly, the number of Trust Preferred Securities set forth opposite the name of
such Underwriter in Schedule I hereto at a purchase price of $25.00 per Trust
Preferred Security.
(b) Hawaiian Electric Company, Inc. ("HECO" and, together with the
Trust, the "Offerors"), a corporation incorporated under the laws of the Kingdom
of Hawaii, (i) agrees to issue, or cause to be issued, to the Trust the
Debentures and the Guarantees (each as defined herein) concurrently with the
issue and sale of the Trust Preferred Securities as contemplated herein and (ii)
guarantees the timely performance by the Trust of its obligations under this
Section 1. The Trust agrees to purchase the Debentures with the proceeds of the
Trust Securities (as defined herein) as contemplated herein.
(c) Because the proceeds of the sale of the Trust Preferred
Securities, together with the proceeds from the sale by the Trust to HECO of the
Common Securities (as defined herein), will be used to purchase the Debentures,
HECO hereby agrees to pay on the Closing Date (as defined herein) to Goldman,
Sachs & Co., for the accounts of the several Underwriters, as compensation for
their arranging the investment therein of such proceeds, an amount equal to
$_________ per Preferred Security (or $_____________ in the aggregate).
SECTION 2. Description of Trust Preferred Securities. (a) The
-----------------------------------------
Trust Preferred Securities will be guaranteed, to the extent of funds held by
the Trust, by HECO with respect to distributions and payments upon liquidation,
redemption and otherwise (the "Trust Guarantee" and, together with the
Subsidiary Guarantees (as defined herein), the "Guarantees") pursuant to, and to
the extent set forth in, the Guarantee Agreement dated as of March __, 1997
between The Bank of New York, as trustee (the "Trust Guarantee Trustee"), and
HECO (the "Trust Guarantee Agreement"). Under an agreement as to expenses and
liabilities among the Obligors (as defined herein) and the Trust dated as of
March __, 1997 (the "Expense Agreement"), the Obligors will agree, for the
benefit of each person or entity to whom the Trust becomes indebted or liable,
to pay any costs, expenses or liabilities of the Trust, subject to certain
exceptions therein.
(b) The proceeds from the sale of the Trust Preferred Securities will
be combined with the proceeds from the sale by the Trust to HECO of its common
securities representing undivided beneficial interests in the assets of the
Trust (the "Trust Common Securities" and, together with the Trust Preferred
Securities, the "Trust Securities") and will be used by the Trust to purchase
(i) $31,546,400 principal amount of __% Junior Subordinated Deferrable Interest
Debentures, Series 1997, due March __, 2027 issued by HECO (the "HECO
Debentures" and, together with the Substituted HECO Debentures (as defined
herein) and the Guarantees, the "HECO Securities"), (ii) $10,000,000 principal
amount of __% Junior Subordinated Deferrable Interest Debentures, Series 1997,
due March __, 2027 issued by Hawaii Electric Light Company, Inc. ("HELCO" and,
together with MECO (as defined herein), the "Subsidiaries"), a corporation
incorporated under the laws of the Republic of Hawaii (the "HELCO Debentures"
and, together with the MECO Debentures (as defined herein), the "Subsidiary
Debentures"), and
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<PAGE>
(iii) $10,000,000 principal amount of __% Junior Subordinated Deferrable
Interest Debentures, Series 1997, due March __, 2027 issued by Maui Electric
Company, Limited ("MECO" and, together with HECO and HELCO, the "Obligors"), a
corporation incorporated under the laws of the Territory of Hawaii (the "MECO
Debentures" and, together with the HECO Debentures and the HELCO Debentures, the
"Debentures"); provided, however, that, at the option of HECO pursuant to the
HECO Indenture (as defined herein), the date of maturity of all of the
Debentures, and any Substituted HECO Debentures (as defined herein), may be
shortened to a date not earlier than March __, 2002 or extended to a date not
later than March __, 2046. The Subsidiary Debentures will be fully, irrevocably
and unconditionally guaranteed by HECO on a subordinated basis (the "Subsidiary
Guarantees") as set forth in the Subsidiary Indentures (as defined herein).
(c) The HECO Debentures will be issued pursuant to a Junior Indenture
dated as of March __, 1997, between The Bank of New York, as trustee (the
"Debenture Trustee"), and HECO (such Junior Indenture, as so supplemented, the
"HECO Indenture"). The HELCO Debentures will be issued pursuant to a Junior
Indenture dated as of March __, 1997, among the Debenture Trustee, HELCO and
HECO (such Junior Indenture, as so supplemented, the "HELCO Indenture" and,
together with the MECO Indenture (as defined herein), the "Subsidiary
Indentures"). The MECO Debentures will be issued pursuant to a Junior Indenture
dated as of March __, 1997, among the Debenture Trustee, MECO and HECO (such
Junior Indenture, as so supplemented, the "MECO Indenture" and, together with
the HECO Indenture and the HELCO Indenture, the "Indentures"). Upon the
occurrence of an Early Dissolution Event (as defined in the Trust Agreement (as
defined herein)) specified in Section 8.02(a), (b) or (d) of the Trust
Agreement, provided that any necessary approval of the Public Utilities
Commission of the State of Hawaii (the "PUC") shall have been obtained, HECO
will issue to the Trust, pursuant to and in accordance with the HECO Indenture
and in exchange for the Subsidiary Debentures then held by the Trust, additional
__% Junior Subordinated Deferrable Interest Debentures due March __, 2027,
Series 1997, in the aggregate principal amount of such Subsidiary Debentures
(the "Substituted HECO Debentures" and, together with the HECO Debentures, on or
after the distribution thereof in accordance with the terms of the Trust
Agreement, the "Distributable HECO Debentures").
(d) The Trust Securities will be issued pursuant to an Amended and
Restated Trust Agreement of the Trust dated as of March __, 1997 among HECO, as
depositor, the Administrative Trustees (as defined herein), The Bank of New
York, as property trustee (the "Property Trustee"), The Bank of New York
(Delaware), as Delaware trustee (the "Delaware Trustee"), and the holders, from
time to time, of undivided beneficial interests in the assets of the Trust (the
"Trust Agreement"). The Trust Preferred Securities and the HECO Securities are
referred to herein as the "Securities."
SECTION 3. Representations and Warranties of the Offerors. Each of
----------------------------------------------
the Offerors jointly and severally represents and warrants to the several
Underwriters, and covenants and agrees with the several Underwriters, that:
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<PAGE>
(a) HECO is duly organized under the laws of the Kingdom of Hawaii and
is validly existing as a corporation in good standing under the laws of the
State of Hawaii and has the necessary corporate power and authority to conduct
the business that it is described in the Prospectus (as defined herein) as
conducting, to own and operate the properties owned and operated by it in such
business, to issue the HECO Securities, to enter into and perform its
obligations under this Underwriting Agreement, the Trust Agreement, the
Indentures, the Trust Guarantee Agreement, the Expense Agreement and the HECO
Securities, to purchase, own and hold the Trust Common Securities issued by the
Trust and to consummate the transactions herein and therein contemplated; the
only subsidiaries of HECO are the Subsidiaries and the Trust; each of HELCO and
MECO is duly organized under the laws of the Republic of Hawaii and the
Territory of Hawaii, respectively, and each is validly existing as a corporation
in good standing under the laws of the State of Hawaii, and has the necessary
corporate power and authority to conduct the business that it is described in
the Prospectus as conducting, to own and operate the properties owned and
operated by it in such business, to issue the Subsidiary Debentures issued by
such Subsidiary, to enter into and perform its obligations under the Subsidiary
Indenture to which it is a party, the Expense Agreement and such Subsidiary
Debentures and to consummate the transactions herein and therein contemplated;
all of the issued and outstanding shares of common stock of the Subsidiaries
have been duly and validly issued and are fully-paid and non-assessable and are
directly owned by HECO, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity other than the lien of the indenture
securing HECO's first mortgage bonds; and none of such common stock was issued
in violation of preemptive or similar rights of any securityholder of the
Subsidiaries.
(b) The Trust has been duly created and is validly existing as a
business trust in good standing under the Delaware Act, has the power and
authority to own its property, to conduct its business as described in the
Prospectus, to issue and sell the Trust Securities, to enter into and perform
its obligations under this Underwriting Agreement and the Trust Securities and
to consummate the transactions herein contemplated; the Trust has no
subsidiaries and is duly qualified to transact business and in good standing in
each jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a material
adverse effect on the Trust; the Trust has conducted and will conduct no
business other than the transactions contemplated by this Underwriting Agreement
and described in the Prospectus; the Trust is not a party to or otherwise bound
by any agreement other than those described in the Prospectus, and is not a
party to any action, suit or proceeding of any nature; the Trust is not an
association taxable as a corporation for United States federal income tax
purposes; and the Trust is and will be treated as a consolidated subsidiary of
HECO pursuant to generally accepted accounting principles.
(c) The Offerors have filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File Nos.
333-20757 and 333-20757-01) and a Preliminary Prospectus (as defined herein) for
the registration of the Securities under the Securities Act of 1933, as amended
(the "Securities Act"), and such registration statement, as amended, has become
effective under the Securities Act. The Offerors qualify for use of Form S-3
for the registration of the Securities. Such registration statement, as amended
at the time it (or the most recent post-effective amendment thereto) became
effective under the Securities Act, including the information deemed to be part
thereof pursuant to Rule 430A(b) under the
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<PAGE>
Securities Act, is hereinafter referred to as the "Registration Statement." The
prospectus constituting a part of the Registration Statement, including the
documents incorporated or deemed to be incorporated by reference therein
pursuant to Item 12 of Form S-3 under the Securities Act, in the form
transmitted for filing to the Commission pursuant to Rule 424(b)(1) or (b)(4)
under the Securities Act and as it may thereafter be amended or supplemented
pursuant to Section 6(d) hereof, is hereinafter referred to as the "Prospectus"
(except that if any revised prospectus shall be provided to the Underwriters by
the Offerors for use in connection with the offering of the Securities that
differs from the Prospectus transmitted for filing to the Commission pursuant to
Rule 424(b) under the Securities Act, the term "Prospectus" shall refer to such
revised prospectus from and after the time it is first provided to the
Underwriters for such use). For purposes hereof, "Preliminary Prospectus" shall
mean any preliminary prospectus included in the Registration Statement prior to
the time the Registration Statement became effective or was transmitted for
filing to the Commission pursuant to Rule 424(a) under the Securities Act.
(d) After the date hereof and during the time specified in Section
6(d) hereof, the Offerors will not file any amendment to the Registration
Statement or amendment or supplement to the Prospectus, without prior notice to
the Underwriters and to Winthrop, Stimson, Putnam & Roberts, counsel for the
Underwriters ("Counsel for the Underwriters"), or any such amendment or
supplement to which Counsel for the Underwriters shall reasonably object on
legal grounds in writing.
(e) The Registration Statement, at the time it became effective under
the Securities Act, the Indentures, the Trust Agreement and the Trust Guarantee
Agreement, at such time, and any Preliminary Prospectus, when delivered to the
Underwriters for their use in marketing the Trust Preferred Securities, fully
complied, and the Prospectus, when delivered to the Underwriters for their use
in making confirmations of sales of the Trust Preferred Securities and at the
Closing Date, as it may then be amended or supplemented, will fully comply, in
all material respects with the applicable provisions of the Securities Act and
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and in
each case the rules and regulations of the Commission thereunder or pursuant to
such rules and regulations did or will be deemed to comply therewith. The
documents incorporated or deemed to be incorporated by reference in the
Prospectus pursuant to Item 12 of Form S-3, on the date filed with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), fully complied and will fully comply in all material respects
with the applicable provisions of the Exchange Act and the rules and regulations
of the Commission thereunder or pursuant to such rules and regulations did or
will be deemed to comply therewith. On the date the Registration Statement was
declared effective by the Commission under the Securities Act, the Registration
Statement did not, and on the date that any post-effective amendment to the
Registration Statement becomes effective under the Securities Act, the
Registration Statement, as amended by any such post-effective amendment, will
not, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. At the time that any Preliminary Prospectus was delivered to
the Underwriters for their use in marketing the Trust Preferred Securities, such
Preliminary Prospectus did not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. At the time the Prospectus is delivered to the Underwriters for
their use in making
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<PAGE>
confirmations of sales of the Trust Preferred Securities and at the Closing
Date, the Prospectus, as it may then be amended or supplemented, will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. The documents
incorporated or deemed to be incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-3, on the date filed with the Commission pursuant
to the Exchange Act, did not and will not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing representations and warranties in this
Section 3(e) shall not apply to statements or omissions from the Registration
Statement or the Prospectus (x) made in reliance upon and in conformity with
written information furnished to the Offerors by any Underwriter through
Goldman, Sachs & Co. expressly for use therein which, for purposes of this
Underwriting Agreement, shall be deemed to consist of the matters described in
the stabilization paragraph on page 2 of the Prospectus, the second paragraph
under the table set forth under "Underwriting" in the Prospectus and the
penultimate sentence of the fifth paragraph under the table set forth under
"Underwriting" in the Prospectus (collectively, the "Underwriter Information")
and (y) with respect to the statements of eligibility on Form T-1 filed as
exhibits to the Registration Statement.
(f) The consolidated financial statements of HECO and the
Subsidiaries incorporated by reference in the Prospectus present fairly in all
material respects the financial position of HECO and the Subsidiaries as of the
dates indicated and the results of its operations for the periods specified; and
such consolidated financial statements have been prepared in conformity with
generally accepted accounting principles consistently applied in all material
respects with respect to the periods involved, except as may be noted therein
and, in the case of unaudited financial statements, subject to year-end and
audit adjustments.
(g) The Trust Common Securities have been duly authorized by the
Trust Agreement and, when issued and delivered by the Trust to HECO against
payment therefor as described in the Registration Statement and the Prospectus,
will constitute validly issued undivided beneficial interests in the assets of
the Trust and will be entitled to the benefits of the Trust Agreement; the
issuance of the Trust Common Securities is not subject to preemptive or other
similar rights; at the Closing Date, all of the Trust Common Securities will be
directly owned by HECO free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity other than the lien of the indenture
securing HECO's first mortgage bonds; and the Trust Common Securities will
conform in all material respects to the description thereof contained in the
Prospectus.
(h) This Underwriting Agreement has been duly authorized, executed
and delivered by each of the Trust and HECO.
(i) The Trust Agreement has been duly qualified under the Trust
Indenture Act, has been duly authorized by HECO and, at the Closing Date, will
have been duly executed and delivered by HECO and each of the Administrative
Trustees and, assuming due authorization, execution and delivery of the Trust
Agreement by the Property Trustee and the Delaware Trustee, will constitute a
valid and binding instrument of HECO and the Administrative Trustees,
enforceable against HECO and the Administrative Trustees in accordance with its
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<PAGE>
terms, except as limited by applicable bankruptcy, insolvency, fraudulent
conveyance or transfer, reorganization or other similar laws affecting
creditors' rights and by general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law); and the Trust
Agreement will conform in all material respects to the description thereof in
the Prospectus.
(j) The Trust Guarantee Agreement has been duly qualified under the
Trust Indenture Act, has been duly authorized by HECO and, at the Closing Date,
will have been duly executed and delivered by HECO and, assuming due
authorization, execution and delivery of the Trust Guarantee Agreement by the
Trust Guarantee Trustee, will constitute a valid and binding instrument of HECO,
enforceable against HECO in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, fraudulent conveyance or transfer,
reorganization or other similar laws affecting creditors' rights and by general
equitable principles (regardless of whether enforceability is considered in a
proceeding in equity or at law); and the Trust Guarantee and the Trust Guarantee
Agreement will conform in all material respects to the descriptions thereof
contained in the Prospectus.
(k) The Trust Preferred Securities have been duly authorized by the
Trust Agreement and, on the Closing Date, will have been duly executed by an
Administrative Trustee and, when issued and delivered against payment therefor
in accordance with the provisions of this Underwriting Agreement and the Trust
Agreement, will constitute validly issued and (subject to the terms of the Trust
Agreement) fully paid and non-assessable undivided beneficial interests in the
assets of the Trust and will be entitled to the benefits of the Trust Agreement;
the issuance of the Trust Preferred Securities is not subject to preemptive or
other similar rights; holders of Trust Preferred Securities will be entitled to
the same limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware; and the Trust Preferred Securities will conform in all material
respects to the description thereof contained in the Prospectus.
(l) Each of the HECO Indenture and, with respect to the Subsidiary
Guarantees, the Subsidiary Indentures has been duly qualified under the Trust
Indenture Act, has been duly authorized by HECO and, at the Closing Date, will
have been duly executed and delivered by HECO and, assuming due authorization,
execution and delivery of the Indentures by the Debenture Trustee, will
constitute a valid and binding instrument of HECO, enforceable against HECO in
accordance with its terms, except as limited by applicable bankruptcy,
insolvency, fraudulent conveyance or transfer, reorganization or other similar
laws affecting creditors' rights and by general equitable principles (regardless
of whether enforceability is considered in a proceeding in equity or at law);
and the HECO Indenture and the Subsidiary Guarantees will conform in all
material respects to the description thereof contained in the Prospectus.
(m) The Subsidiary Indenture to which each Subsidiary is a party has
been duly authorized by such Subsidiary and, at the Closing Date, will have been
duly executed and delivered by such Subsidiary and, assuming due authorization,
execution and delivery of such Subsidiary Indenture by the Debenture Trustee,
will constitute a valid and binding instrument of such Subsidiary, enforceable
against such Subsidiary in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, fraudulent conveyance or transfer,
reorganization or other similar laws affecting creditors' rights and by general
equitable principles (regardless of whether
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<PAGE>
enforceability is considered in a proceeding in equity or at law); and the
Subsidiary Indentures will conform in all material respects to the description
thereof contained in the Prospectus.
(n) The HECO Debentures have been duly authorized and, on the Closing
Date, will have been duly executed by HECO and, when authenticated in the manner
provided for in the HECO Indenture and delivered against payment therefor by the
Trust as described in the Prospectus, will constitute valid and binding
obligations of HECO, enforceable against HECO in accordance with their terms,
except as limited by applicable bankruptcy, insolvency, fraudulent conveyance or
transfer, reorganization or other similar laws affecting creditors' rights and
by general equitable principles (regardless of whether enforceability is
considered in a proceeding in equity or at law), and will be entitled to the
benefits of such Indenture; and the HECO Debentures will conform in all material
respects to the description thereof contained in the Prospectus.
(o) The Substituted HECO Debentures have been duly authorized by HECO
and, if and when approved by the PUC and then executed and authenticated in the
manner provided for in the HECO Indenture and delivered in exchange for the
Subsidiary Debentures as described in the Prospectus, will constitute valid and
binding obligations of HECO, enforceable against HECO in accordance with their
terms, except as limited by applicable bankruptcy, insolvency, fraudulent
conveyance or transfer, reorganization or other similar laws affecting
creditors' rights and by general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law), and will be
entitled to the benefits of the HECO Indenture; and the Substituted HECO
Debentures will conform in all material respects to the description thereof
contained in the Prospectus.
(p) The Subsidiary Debentures issued by each Subsidiary have been
duly authorized and, on the Closing Date, will have been duly executed by such
Subsidiary and, when authenticated in the manner provided for in the applicable
Subsidiary Indenture and delivered against payment therefor by the Trust as
described in the Prospectus, will constitute valid and binding obligations of
such Subsidiary, enforceable against such Subsidiary in accordance with their
terms, except as limited by applicable bankruptcy, insolvency, fraudulent
conveyance or transfer, reorganization or other similar laws affecting
creditors' rights and by general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law), and will be
entitled to the benefits of such Subsidiary Indenture; and the Subsidiary
Debentures will conform in all material respects to the description thereof
contained in the Prospectus.
(q) The Expense Agreement has been duly authorized by each Obligor
and, at the Closing Date, will have been duly executed and delivered by each
Obligor and will constitute a valid and binding instrument of each Obligor,
enforceable against such Obligor in accordance with its terms, except as limited
by applicable bankruptcy, insolvency, fraudulent conveyance or transfer,
reorganization or other similar laws affecting creditors' rights and by general
equitable principles (regardless of whether enforceability is considered in a
proceeding in equity or at law); and the Expense Agreement will conform in all
material respects to the description thereof contained in the Prospectus.
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(r) T. Michael May, Paul A. Oyer and Marvin A. Hawthorne, in their
capacities as administrative trustees (the "Administrative Trustees") under the
Trust Agreement, are officers of HECO and have been duly authorized by HECO to
execute and deliver the Trust Agreement.
(s) The Trust is not, and as a result of the offering and sale of the
Trust Preferred Securities and the application of the proceeds thereof as
described in the Prospectus, will not be an "investment company" or an entity
"controlled" by an "investment company" within the meaning of the Investment
Company Act of 1940, as amended (the "Investment Company Act").
(t) The Trust is not in violation of its Certificate of Trust filed
in the office of the Secretary of State of the State of Delaware on December 31,
1996 (the "Trust Certificate") or the Trust Agreement; the execution and
delivery by the Obligors and the Trust of, and the performance by the Obligors
and the Trust of their respective obligations under, this Underwriting
Agreement, the Securities, the Subsidiary Debentures, the Indentures, the Trust
Agreement, the Trust Guarantee Agreement, the Expense Agreement and the other
agreements and instruments contemplated hereby and thereby to which they are a
party do not and will not conflict with any existing law, court or
administrative regulation, decree or order to which any of the Obligors or the
Trust is subject or result in a breach of or a default under any agreement,
indenture, mortgage, lease, deed or trust or other instrument to which it is a
party or by which it or its property is bound.
(u) Neither any Obligor nor the Trust will take or omit to take any
action the taking or omission of which will in any way cause or result in the
proceeds from the sale of the Trust Preferred Securities to be applied in a
manner other than as provided in the Trust Agreement, the Indentures, the Trust
Guarantee Agreement, the Expense Agreement and this Underwriting Agreement and
as described in the Prospectus.
(v) Except as set forth or contemplated in the Prospectus, as it may
then be amended or supplemented, the Obligors possess adequate franchises,
licenses, permits, and other rights to conduct their respective businesses and
operations as now conducted, without any known conflicts with the rights of
others, where the failure to possess such franchise, license, permit or other
right, or where such conflict, would have a material adverse effect on the
consolidated financial position, stockholder's equity or results of operations
of HECO and the Subsidiaries taken as a whole.
(w) To the knowledge of each of the Trust and HECO, there is no
action, suit, proceeding or formal investigation at law or in equity or before
or by any governmental, regulatory or administrative agency pending or
threatened against the Trust or the Obligors that would have a material adverse
effect on (i) the transactions contemplated by the Trust Agreement, the
Indentures, the Trust Guarantee Agreement, the Expense Agreement, this
Underwriting Agreement or any agreement or instrument to which any of the
Obligors or the Trust is a party and that are used or contemplated for use in
the consummation of the transactions contemplated hereby or thereby or (ii) the
validity or enforceability of the Securities,
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the Subsidiary Debentures, the Trust Agreement, the Indentures, the Trust
Guarantee Agreement, the Expense Agreement or this Underwriting Agreement.
(x) The PUC has issued an order approving the issuance of HECO
Securities (but not the Substituted HECO Debentures) by HECO and of the
Subsidiary Debentures by the Subsidiaries on terms not inconsistent with those
set forth in this Underwriting Agreement and described in the Prospectus and
such order is in full force and effect; and no approval of any other
governmental agency or public body is necessary in connection with the issuance
of the HECO Securities by HECO or the Subsidiary Debentures by the Subsidiaries,
other than such approvals, authorizations, registrations or qualifications as
may be required from the PUC with respect to the issuance by HECO of the
Substituted HECO Debentures or under Blue Sky or other state or foreign
securities laws or as may have been obtained;
(y) HECO is a holding company within the meaning of the Public
Utility Holding Company Act of 1935, as amended; however, by virtue of having
filed appropriate applications under Section 3(a)(2) of such Act, HECO is exempt
from all provisions thereunder other than Section 9(a)(2) thereof, and will
remain so exempt, subject to, future timely filings of annual exemption
statements and such filings as are required by Section 33 of such Act with
respect to interests of HECO or any of its affiliates in any foreign utility
company, unless and except insofar as the Commission shall find such exemption
detrimental to the public interest or the interest of investors or consumers;
SECTION 4. Offering. The Offerors are advised by the
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Representatives that the Underwriters propose to make a public offering of the
Trust Preferred Securities as soon after the date hereof as in their judgment
the Underwriters deem advisable. The Offerors are further advised by the
Representatives that the Trust Preferred Securities will be offered to the
public at the initial public offering price specified in the Prospectus.
SECTION 5. Time and Place of Closing; Certificates. Delivery of
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certificates for the Trust Preferred Securities and payment of the purchase
price therefor by wire transfer of immediately available funds shall be made
through the facilities of The Depository Trust Company, New York, New York
("DTC"), pursuant to such arrangements and instructions as shall be agreed upon
by the Offerors and the Representatives at 10:00 A.M. (Eastern time) on March
__, 1997, or at such other time on the same or such other day as shall be agreed
upon by the Offerors and the Representatives, or as may be established in
accordance with Section 11 hereof. The time and date of such delivery and
payment are herein called the "Closing Date."
Certificates for the Trust Preferred Securities shall be in definitive
form and registered in such denominations as the Representatives shall request
not later than the business day prior to the Closing Date. For purposes of this
Underwriting Agreement, "business day" means any day on which the New York Stock
Exchange, Inc. (the "NYSE") is open for bidding.
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On the Closing Date, HECO will pay, or cause to be paid, the
compensation payable at such time to the Underwriters pursuant to Section 1(c)
hereof by wire transfer in immediately available funds to an account designated
by, or by cashier's check payable to, Goldman, Sachs & Co., for the accounts of
the several Underwriters.
SECTION 6. Covenants of the Offerors. Each of the Offerors jointly
-------------------------
and severally covenants and agrees with the several Underwriters that:
(a) Not later than the Closing Date, HECO will deliver to the
Representatives a copy of the Registration Statement in the form that it became
effective under the Securities Act or a conformed copy thereof, certified by an
officer of HECO to be in such form.
(b) The Offerors will deliver to the Underwriters as many copies of
the Prospectus (and any amendments or supplements thereto) as the Underwriters
may reasonably request.
(c) The Offerors will cause the Prospectus to be transmitted for
filing to the Commission pursuant to and in compliance with Rule 424(b) under
the Securities Act and will advise the Representatives promptly of the issuance
of any stop order under the Securities Act with respect to the Registration
Statement or the institution of any proceedings therefor of which either of the
Offerors shall have received notice. Each of the Offerors will use reasonable
efforts to prevent the issuance of any such stop order and to secure the prompt
removal thereof if issued.
(d) During such period of time as the Underwriters are required by
law to deliver a prospectus relating to any of the Securities, if any event
relating to or affecting the Offerors, or of which the Offerors shall be advised
by the Representatives in writing, shall occur that in the opinion of the
Representatives and HECO should be set forth in a supplement or amendment to the
Prospectus in order to make the Prospectus not misleading in the light of the
circumstances when it is delivered to a purchaser of any of the Securities, or
if it shall be necessary in the opinion of the Representatives and HECO at any
such time to amend the Registration Statement or amend or supplement the
Prospectus in order to comply with the requirements of the Securities Act, the
Exchange Act or the Trust Indenture Act or, in each case, the rules and
regulations of the Commission thereunder, the Offerors will amend or supplement
the Prospectus so that, as amended or supplemented, it will not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances when
the Prospectus is delivered to a purchaser, not misleading or amend the
Registration Statement or amend or supplement the Prospectus so that, as amended
or supplemented, the Registration Statement or the Prospectus will comply with
such requirements.
(e) HECO will, on behalf of the Trust, make generally available to
the Trust's security holders, as soon as practicable, an earning statement
(which need not be audited) covering a period of at least twelve months
beginning after the "effective date of the registration statement" within the
meaning of Rule 158 under the Securities Act, which earning statement
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shall be in such form, and be made generally available to security holders in
such a manner, as to meet the requirements of the last paragraph of Section
11(a) of and Rule 158 under the Securities Act.
(f) The Offerors will furnish such proper information as may be
lawfully required, and will otherwise cooperate with the Underwriters, to
qualify the Trust Preferred Securities and, if applicable, the Distributable
HECO Debentures for offer and sale under the state securities or blue sky laws
of such jurisdictions as the Representatives may reasonably designate, provided
that the Offerors shall not be required to qualify as a foreign corporation or
dealer in securities or to file any general consents to service of process under
the laws of any jurisdiction.
(g) HECO will, except as herein provided, pay all fees, expenses and
taxes incident to the performance of each Offeror's obligations under this
Underwriting Agreement, including, but not limited to, (i) the preparation and
filing of the Registration Statement and any post-effective amendment thereto,
(ii) the printing, issuance and delivery of the certificates for the Trust
Preferred Securities to the Underwriters, (iii) the qualification of the Trust
Preferred Securities and, if applicable, the Distributable HECO Debentures under
the state securities or blue sky laws of various jurisdictions in accordance
with the provisions of Section 6(f) hereof, including the reasonable fees and
disbursements of Counsel for the Underwriters in connection therewith and with
the preparation of any Blue Sky Survey (and any supplement thereto) relating to
any of the Securities up to a maximum of $15,000, (iv) the printing and delivery
to the Underwriters of reasonable quantities of copies of the Registration
Statement, any Blue Sky Survey (and any supplement thereto) relating to any of
the Securities, any Preliminary Prospectus and the Prospectus and any amendment
or supplement thereto, (v) the ratings of the Trust Preferred Securities and, if
applicable, the Distributable HECO Debentures by one or more nationally
recognized statistical rating agencies, (vi) the listing of the Trust Preferred
Securities on the NYSE and, if applicable, the Distributable HECO Debentures on
the NYSE, or such other exchange or other organization, and the registration
thereof under the Exchange Act in accordance with Section 6(i) hereof and (vii)
all other costs and expenses incident to the performance of its obligations
hereunder that are not otherwise specifically provided for in this Section 6(g).
If this Underwriting Agreement shall be terminated in accordance with the
provisions of Section 7 (other than paragraph (l) thereof) or 8 hereof, the
Obligors will reimburse the Underwriters for all out-of-pocket expenses,
including fees and disbursements of Counsel for the Underwriters, reasonably
incurred by the Underwriters in contemplation of the performance of this
Underwriting Agreement. The Obligors shall not in any event be liable to the
Underwriters for damages on account of loss of anticipated profits.
(h) Each of the Offerors will not, and HECO will cause each of HELCO
and MECO to not, offer, sell, contract to sell or otherwise dispose of any Trust
Preferred Securities, any other beneficial interests in the assets of the Trust,
or any preferred securities or any other securities of the Trust or the Obligors
that are substantially similar to the Trust Preferred Securities, including any
guarantee of such securities, or any securities convertible into or exchangeable
for or that represent the right to receive securities, preferred securities or
any such substantially similar securities of either the Trust or the Obligors,
except for the Securities, without the consent of the Representatives until the
earlier to occur of (i) 30 days after the
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<PAGE>
Closing Date and (ii) the date of the termination of the trading restrictions on
the Trust Preferred Securities, as determined by the Underwriters.
(i) The Offerors will use their best efforts to cause the Trust
Preferred Securities to be duly authorized for listing on the NYSE, subject to
notice of issuance, and to be registered under the Exchange Act; and, upon any
distribution of the Distributable HECO Debentures to holders of the Trust
Preferred Securities, HECO will use its best efforts to have the Distributable
HECO Debentures listed on the NYSE, or such other exchange or other organization
on which the Trust Preferred Securities are then listed, and to have the
Distributable HECO Debentures registered under the Exchange Act.
SECTION 7. Conditions of Underwriters' Obligations. The obligations
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of the Underwriters to purchase and pay for the Trust Preferred Securities shall
be subject to the accuracy on the date hereof and on the Closing Date of the
representations and warranties made herein on the part of the Offerors and of
any certificates furnished by the Offerors on the Closing Date and to the
following conditions:
(a) The Prospectus shall have been transmitted for filing to the
Commission in the manner and within the time period required by Rule 424(b)
under the Securities Act.
(b) No stop order suspending the effectiveness of the Registration
Statement shall be in effect at or prior to the Closing Date; no proceedings for
such purpose shall be pending before, or, to the knowledge of the Offerors or
the Underwriters, threatened by, the Commission on the Closing Date.
(c) At the Closing Date, the Representatives shall have received an
opinion of Goodsill Anderson Quinn & Stifel, counsel for the Obligors, dated the
Closing Date, to the effect that:
(i) HECO has been duly incorporated under the laws of the Kingdom
of Hawaii, is validly existing as a corporation in good standing under the
laws of the State of Hawaii and has the corporate power and authority to
carry on the business stated in the Prospectus as being conducted by it;
and all shares of its issued and outstanding common stock have been duly
and validly issued and are fully paid and non-assessable;
(ii) MECO and HELCO are corporations duly incorporated under the
laws of the Territory of Hawaii and the Republic of Hawaii, respectively,
and are validly existing and in good standing under the laws of the State
of Hawaii and have the corporate power and authority to carry on the
business as stated in the Prospectus as being conducted by them; and all of
the issued and outstanding shares of common stock of the Subsidiaries have
been duly and validly issued and are fully-paid and non-assessable;
(iii) other than litigation and proceedings referred to in the
Prospectus, to the best of such counsel's knowledge, (A) HECO and the
Subsidiaries are not engaged in, or threatened with, any litigation and (B)
there are no governmental proceedings, or any governmental proceedings
threatened, with respect to any of HECO and the Subsidiaries
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<PAGE>
or their property, that, in the case of either clause (A) or (B) above,
such counsel (or other counsel who have permitted such counsel to rely on
their opinions or reports as to litigation or proceedings that are not
being principally handled by such counsel) has concluded is reasonably
expected to have a material adverse effect on HECO and Subsidiaries taken
as a whole;
(iv) HECO is the record holder of all outstanding common stock of
the Subsidiaries, free and clear of any perfected encumbrance or security
interest other than of the lien of the indenture securing HECO's first
mortgage bonds;
(v) the PUC has issued an order approving the issuance of HECO
Securities (but not the Substituted HECO Debentures) by HECO and of the
Subsidiary Debentures by the Subsidiaries on terms not inconsistent with
those set forth in this Underwriting Agreement and described in the
Prospectus and, to the best of such counsel's knowledge, such order remains
in full force and effect on the date of such opinion; and no approval of
any other governmental agency or public body is required in connection with
the issuance of HECO Securities by HECO or the Subsidiary Debentures by the
Subsidiaries, other than such approvals, authorizations, registrations or
qualifications as may be required from the PUC with respect to the issuance
by HECO of the Substituted HECO Debentures or under Blue Sky or other state
or foreign securities laws (as to which such counsel has not been requested
to and does not express any opinion) or as may have been obtained;
(vi) HECO is a holding company within the meaning of the Public
Utility Holding Company Act of 1935, as amended; however, by virtue of
having filed appropriate applications under Section 3(a)(2) of such Act,
HECO is exempt from all provisions thereunder other than Section 9(a)(2)
thereof, and will remain so exempt, subject to future timely filings of
annual exemption statements and such filings as are required by Section 33
of such Act with respect to interests of HECO or any of its affiliates in
any foreign utility company, unless and except insofar as the Commission
shall find such exemption detrimental to the public interest or the
interest of investors or consumers;
(vii) the Trust is not, and as a result of the offering and sale of
the Trust Preferred Securities and the application of the proceeds thereof
as described in the Prospectus, will not be an "investment company" or an
entity "controlled" by an "investment company" within the meaning of the
Investment Company Act;
(viii) the Registration Statement, at the time it was declared
effective by the Commission under the Securities Act, and the Prospectus,
at the time it was transmitted for filing to the Commission pursuant to
Rule 424(b) under the Securities Act, complied as to form in all material
respects with the Securities Act and the Trust Indenture Act and in each
case the rules and regulations of the Commission thereunder; each document
incorporated by reference in the Prospectus as originally filed pursuant to
the Exchange Act complied as to form when so filed in all material respects
with the Exchange Act and the rules and regulations of the Commission
thereunder; and the Registration Statement has become, and on the Closing
Date is, effective under the Securities Act and, to the
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<PAGE>
best of such counsel's knowledge, no proceedings for a stop order with
respect thereto are threatened or pending under Section 8 of the Securities
Act;
(ix) nothing has come to the attention of such counsel to cause them
to believe that the Registration Statement, at the time it was declared
effective by the Commission under the Securities Act, 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 the Prospectus, at the time it was transmitted for
filing to the Commission pursuant to Rule 424(b) under the Securities Act
or on the Closing Date, included or includes any untrue statement of a
material fact or omitted or omits to state a material fact necessary in
order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading;
(x) the statements summarizing the provisions of the Securities and
the Subsidiary Debentures (other than any such statements describing DTC's
book-entry system), the Indentures, the Trust Agreement, the Guarantees and
the Trust Guarantee Agreement and the Expense Agreement, and the statements
under "Hawaiian Electric Company, Inc. and Subsidiaries" relating to HECO
and involving matters of law or legal conclusions, contained in the
Prospectus are accurate summaries of such documents and matters in all
material respects;
(xi) this Underwriting Agreement has been duly authorized by all
necessary corporate action of and duly executed and delivered by HECO on
behalf of itself and as depositor under the Trust Agreement; and the Trust
Preferred Securities have been duly executed and delivered by more than one
Administrative Trustee;
(xii) the Trust Agreement has been duly authorized by all necessary
corporate action of HECO and duly executed and delivered by HECO and the
Administrative Trustees and, to such counsel's knowledge, has been duly
qualified under the Trust Indenture Act;
(xiii) the Trust Guarantee Agreement has been duly authorized by all
necessary corporate action of and duly executed and delivered by HECO and
constitutes a valid and binding instrument of HECO, enforceable against
HECO in accordance with its terms and, to such counsel's knowledge, has
been duly qualified under the Trust Indenture Act;
(xiv) each of the HECO Indenture and, with respect to the Subsidiary
Guarantees, the Subsidiary Indentures has been duly authorized by all
necessary corporate action of and duly executed and delivered by HECO and
constitutes a valid and binding instrument of HECO, enforceable against
HECO in accordance with its terms and, to such counsel's knowledge, has
been duly qualified under the Trust Indenture Act;
(xv) the Subsidiary Indenture to which each Subsidiary is a party has
been duly authorized by all necessary corporate action of and duly executed
and delivered by such Subsidiary and constitutes a valid and binding
instrument of such Subsidiary, enforceable against such Subsidiary in
accordance with its terms;
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(xvi) the HECO Debentures have been duly authorized by all necessary
corporate action of and duly executed by HECO and, when authenticated in
the manner provided for in the HECO Indenture and delivered against payment
therefor by the Trust as described in the Prospectus, will constitute valid
and binding obligations of HECO, enforceable against HECO in accordance
with their terms, and will be entitled to the benefits of such Indenture;
(xvii) the Substituted HECO Debentures have been duly authorized by all
necessary corporate action of HECO and, if and when approved for issuance
by the PUC and then executed and authenticated in the manner provided for
in the HECO Indenture and delivered in exchange for the Subsidiary
Debentures as described in the Prospectus, will constitute valid and
binding obligations of HECO, enforceable against HECO in accordance with
their terms, and will be entitled to the benefits of the HECO Indenture;
(xviii) the Subsidiary Debentures issued by each Subsidiary have been
duly authorized by all necessary corporate action of and duly executed by
such Subsidiary and, when authenticated in the manner provided for in the
applicable Indenture and delivered against payment therefor by the Trust as
described in the Prospectus, will constitute valid and binding obligations
of such Subsidiary, enforceable against such Subsidiary in accordance with
their terms, and will be entitled to the benefits of such Indenture;
(xix) the Expense Agreement has been duly authorized by all necessary
corporate action of and duly executed and delivered by each Obligor and
constitutes a valid and binding instrument of each Obligor, enforceable
against such Obligor in accordance with its terms;
(xx) the execution and delivery by each of the Obligors and the Trust
of such of this Underwriting Agreement, the Securities, the Subsidiary
Debentures, the Indentures, the Trust Agreement, the Trust Guarantee
Agreement and the Expense Agreement to which it is a party did not, and the
consummation by such Obligor or the Trust of the transactions contemplated
hereby and thereby to be performed by it and the fulfillment of the terms
hereof and thereof will not result in a breach of any of the terms or
provisions of, or constitute a default under, any material indenture,
mortgage, deed of trust or other agreement or instrument to which such
Obligor or the Trust is a party and of which such counsel has knowledge, or
the Amended Articles of Incorporation, as amended, or By-Laws of such
Obligor or contravene or conflict with any order, rule or regulation known
to such counsel as applicable to such Obligor or the Trust of any court or
of any federal or state regulatory body or administrative agency or other
governmental body having jurisdiction over such Obligor or the Trust or any
of its properties, or any statute or constitutional provision of the State
of Hawaii applicable to such Obligor or the Trust, except that such counsel
need not express an opinion with respect to compliance with federal, state
or foreign securities or blue sky laws; and
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(xxi) those portions of the Registration Statement and the
Prospectus that are stated therein to have been made on such counsel's
authority (including such counsel's opinion set forth under "Certain
Federal Income Tax Consequences" in the Prospectus) have been reviewed by
such counsel and, as to matters of law and legal conclusions, are, subject
to the qualifications set forth therein, correct.
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, the laws of the State
of Hawaii and, subject to clause (B) below, the laws of the State of New York,
(B) such counsel may rely, as to matters involving the application of laws of
the State of New York, upon the opinion of Counsel for the Underwriters rendered
pursuant to Section 7(e) hereof, (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 upon request to Counsel for the Underwriters), (D) such counsel may
rely, as to matters of fact, upon certificates and representations of officers
and employees of the Obligors (provided that copies of such certificates will be
furnished to Counsel for the Underwriters), (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 Obligors in such
litigation or proceedings (provided that copies of such opinions will be
furnished upon request to Counsel for the Underwriters), (F) for purposes of the
opinion expressed in paragraph (iii) 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 Statement and the
Prospectus or with respect to the statements of eligibility on Form T-1 filed as
exhibits to the Registration Statement, (H) such counsel may state, with respect
to the matters set forth in paragraph (ix) 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 paragraphs (x) and (xxi) above), (I) such
counsel may limit the matters set forth in paragraphs (xiii) through (xix) above
by the application of applicable bankruptcy, insolvency, fraudulent conveyance
or transfer, reorganization or other similar laws affecting creditors' rights
and of general equitable principles (regardless of whether enforceability is
considered in a proceeding in equity or at law) and, if applicable, by the
effect of applicable public policy on the enforceability of provisions relating
to contribution or indemnification, (J) 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 Trust Preferred Securities and preparing the pertinent
documents and the lawyers having supervisory responsibility for the client
relationship with the Obligors 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 (iii) above, such review of
internal litigation files or inquiries of other counsel as such counsel deems
necessary) and (K) such counsel may include therein such other customary
qualifications.
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reasonably acceptable to the Representatives and Counsel for the Underwriters.
References to the Registration Statement and the Prospectus in this Section 7(c)
shall include any amendments or supplements thereto at the Closing Date.
(d) At the Closing Date, the Representatives shall have received an
opinion of Richards, Layton & Finger, P.A., special Delaware counsel for HECO
and the Trust, dated the Closing Date, to the effect that:
(i) the Trust has been duly created and is validly existing in good
standing as a business trust under the Business Trust Act; and all filings
required under the laws of the State of Delaware with respect to the
creation and valid existence of the Trust as a business trust have been
made;
(ii) under the Trust Agreement and the Business Trust Act, the Trust
has the trust power and authority (A) to own property and to conduct its
business, all as described in the Prospectus, (B) to issue and sell the
Trust Securities in accordance with the Trust Agreement, and as described
in the Prospectus, and to perform its other obligations under the Trust
Agreement, this Underwriting Agreement and the Trust Securities, (C) to
execute and deliver this Underwriting Agreement and (D) to consummate the
transactions contemplated by this Underwriting Agreement;
(iii) assuming that the Trust Agreement has been duly authorized,
executed and delivered by the parties thereto, the Trust Agreement
constitutes a valid and binding obligation of each of HECO and the
Administrative Trustees, and is enforceable against HECO and the
Administrative Trustees, in accordance with its terms, except as limited by
bankruptcy, insolvency, moratorium, receivership, reorganization,
liquidation, fraudulent conveyance or transfer and other similar laws
relating to or affecting creditors' rights generally, principles of equity,
including applicable law relating to fiduciary duties (regardless of
whether considered in a proceeding in equity or at law), and the effect of
applicable public policy on the enforceability of provisions relating to
contribution or indemnification;
(iv) the Trust Common Securities have been duly authorized by the
Trust Agreement and are validly issued undivided beneficial interests in
the assets of the Trust;
(v) the Trust Preferred Securities have been duly authorized by the
Trust Agreement and are duly and validly issued and, subject to the
qualifications set forth in paragraph (vi) below, fully paid and non-
assessable undivided beneficial interests in the assets of the Trust;
(vi) the holders of the Trust Preferred Securities, as beneficial
owners of the Trust, will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit
organized under the General Corporation Law of the State of Delaware (in
this regard, such counsel may note that the holders of the Trust Preferred
Securities may be obligated, pursuant to the Trust Agreement, to provide
(A) indemnity or security in connection with and pay taxes or governmental
charges arising from transfers or exchanges of certificates for Trust
Preferred Securities and the issuance
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of replacement certificates for Trust Preferred Securities and (B) security
or indemnity in connection with requests of or directions to the Property
Trustee to exercise its rights and powers under the Trust Agreement);
(vii) under the Trust Agreement and the Business Trust Act, the
issuance of the Trust Securities is not subject to preemptive rights;
(viii) the issuance and sale by the Trust of the Trust Securities, the
execution, delivery and performance by the Trust of this Underwriting
Agreement, and the consummation of the transactions contemplated by this
Underwriting Agreement, do not violate (A) the Trust Certificate or the
Trust Agreement or (B) any applicable Delaware law, rule or regulation; and
(ix) under the Trust Agreement and the Business Trust Act, the
issuance and sale by the Trust of the Trust Securities and the execution
and delivery by the Trust of this Underwriting Agreement, and the
performance by the Trust of its obligations hereunder, have been duly
authorized by all necessary trust action on the part of, and, upon the due
execution and delivery of this Underwriting Agreement by HECO as depositor
under the Trust Agreement and the certificates for the Trust Preferred
Securities by more than one Administrative Trustee on behalf of the Trust,
and the countersignature of the Trust Preferred Securities by an authorized
officer of the Property Trustee in accordance with the Trust Agreement,
this Underwriting Agreement and the Trust Preferred Securities will have
been duly executed and delivered by the Trust.
In rendering such opinion, (A) 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 upon request to Counsel for the Underwriters), (B) such counsel may
rely, as to matters of fact, upon certificates and representations of the Trust
(provided that copies of such certificates will be furnished upon request to
Counsel for the Underwriters), (C) such counsel may state that it is expressing
an opinion only as to the laws of the State of Delaware and (D) such counsel may
include therein such other customary qualifications reasonably acceptable to the
Representatives and Counsel for the Underwriters. References to the Prospectus
in this Section 7(d) shall include any amendments or supplements thereto at the
Closing Date.
(e) At the Closing Date, the Representatives shall have received an
opinion of Counsel for the Underwriters, dated the Closing Date, with respect to
certain matters relating to the execution and delivery by HECO of this
Underwriting Agreement, the description of the Securities, the validity of the
Indentures and the HECO Securities, the Registration Statement and the
Prospectus, as amended or supplemented to the Closing Date, and such other
related matters as the Representatives may reasonably request.
(f) On the date hereof, the Representatives shall have received a
letter from KPMG Peat Marwick LLP, HECO's independent certified public
accountants (the "Accountants"), dated the date hereof, to the effect that:
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<PAGE>
(i) The Accountants are independent certified public accountants
with respect to HECO and the Subsidiaries within the meaning of the
Securities Act and the applicable rules and regulations of the Commission
thereunder;
(ii) In the opinion of the Accountants, the financial statements and
any supplementary financial information and schedules examined by them and
included or incorporated by reference in the Prospectus comply as to form
in all material respects with the applicable accounting requirements of the
Securities Act or the Exchange Act, as applicable, and the related rules
and regulations of the Commission thereunder; and, if applicable, the
Accountants have made a review in accordance with standards established by
the American Institute of Certified Public Accountants of the consolidated
interim financial statements, pro forma financial information or condensed
financial statements derived from audited financial statements of HECO and
the Subsidiaries for the periods specified in such letter, as indicated in
their reports thereon, copies of which have been furnished to the
Representatives;
(iii) In the opinion of the Accountants, the unaudited selected
financial information with respect to the consolidated results of
operations and financial position of HECO for the five most recent fiscal
years incorporated by reference from HECO's Current Report on Form 8-K
dated March __, 1997 in the Prospectus agrees with the corresponding
amounts (after restatement where applicable) in the audited consolidated
financial statements for the five such fiscal years that were included or
incorporated by reference in HECO's Annual Reports on Form 10-K and such
Form 8-K for such fiscal years, as applicable, to the extent that such
unaudited selected financial information was derived from such audited
financial statements;
(iv) On the basis of limited procedures, not constituting an
examination 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 HECO and the Subsidiaries, inspection of the minute
books of HECO and the Subsidiaries since the date of the latest audited
financial statements included or incorporated by reference in the
Prospectus, inquiries of officials of HECO and the 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 the Accountants 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 HECO'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 Exchange Act as it applies to Form 10-Q and the
related rules and regulations of the Commission thereunder or are not
in conformity with generally accepted accounting principles applied on
a basis substantially consistent with the basis for the audited
consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included or incorporated by
reference in the Prospectus;
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<PAGE>
(B) any other unaudited income statement data and balance sheet
items included in the Prospectus do not agree with the corresponding
items in the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data and
items were not determined on a basis substantially consistent with the
basis for the corresponding amounts in the audited consolidated
financial statements included or incorporated by reference in the
Prospectus;
(C) 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 Securities Act and the rules and
regulations of the Commission thereunder or the pro forma adjustments
have not been properly applied to the historical amounts in the
compilation of those statements;
(D) as of a specified date not more than five business days prior
to the date of such letter, there have been any changes in the
consolidated capital stock or any increase in the consolidated long-
term debt of HECO and the Subsidiaries or any decreases in
consolidated net assets or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, 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; or
(E) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus to
the specified date referred to in paragraph (D) above there were any
decreases in consolidated revenues or operating profit or the total
amount of consolidated net income or other items specified by the
Representatives, or any increases in any items specified by the
Representatives, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Representatives, except in each case for
increases or decreases that the Prospectus discloses have occurred or
may occur or that are described in such letter; and
(v) In addition to the examination referred to in their report or
reports 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, the Accountants
have carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards, with
respect to certain amounts, percentages and financial information specified
by the Representatives that are derived from the general accounting records
of HECO and the Subsidiaries and that appear in the Prospectus (excluding
documents incorporated by reference) or in Part II of, or in exhibits and
schedules to, the Registration Statement specified by the Representatives
or in documents incorporated by reference in the Prospectus specified by
the Representatives, and have compared certain of such amounts,
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<PAGE>
percentages and financial information with the accounting records of HECO
and the Subsidiaries and have found them to be in agreement.
References to the Registration Statement and the Prospectus in this Section 7(f)
shall include any amendments or supplements thereto at the Closing Date.
(g) At the Closing Date, the Representatives shall have received a
certificate, dated the Closing Date and signed by the President, by the
Financial Vice President and Treasurer or by any other Vice President of HECO,
as to (i) the accuracy of the representations and warranties of HECO contained
herein on behalf of each of the Obligors, (ii) the performance and compliance by
HECO with all agreements and conditions in this Underwriting Agreement to be
performed or complied with by HECO at or prior to the Closing Date and (iii) the
matters set forth in Sections 7(a), 7(b) and 7(m) hereof.
(h) At the Closing Date, the Representatives shall have received a
certificate, dated the Closing Date and signed by an authorized representative
of the Trust, as to (i) the accuracy of the representations and warranties of
the Trust contained herein and (ii) the performance and compliance by the Trust
with all agreements and conditions in this Underwriting Agreement to be
performed or complied with by the Trust at or prior to the Closing Date.
(i) At the Closing Date, the Representatives shall have received (i)
duly executed counterparts of the Trust Agreement, the Trust Guarantee
Agreement, the Expense Agreement and the Indentures, (ii) specimens of the
Debentures and of certificates for the Trust Common Securities and (iii) a duly
executed letter from the Subsidiaries and in a form reasonably satisfactory to
the Representatives, dated the Closing Date, to the effect that they agree
to be bound to the timely performance of certain of the obligations of the
Offerors under this Underwriting Agreement.
(j) At the Closing Date, the Representatives shall have received from
the Accountants a letter, dated the Closing Date, confirming, as of a date not
more than three business days prior to the Closing Date, the statements
contained in the letter delivered pursuant to Section 7(f) hereof.
(k) At the Closing Date, no Special Event (as defined in the Trust
Agreement) shall have occurred and be continuing.
(l) On or after the date hereof, there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the NYSE; (ii) a suspension or material limitation in trading of
the Trust Preferred Securities or of any securities of HECO on the NYSE; (iii) a
general moratorium on commercial banking activities declared by either Federal
authorities or authorities in the State of Hawaii or New York; (iv) the outbreak
or escalation of hostilities involving the United States or the declaration by
the United States of a national emergency or war, if the effect of any such
event in this clause (iv) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Trust Preferred Securities on the terms and in the manner contemplated in
the Prospectus; or (v) the occurrence of any material adverse change in the
existing financial, political or economic conditions in the United States or
elsewhere that, in the judgment of the
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<PAGE>
Representatives, would materially and adversely affect the financial markets or
the market for the Trust Preferred Securities and other securities similar to
the Trust Preferred Securities or the Debentures.
(m) (i) Neither HECO nor either of the Subsidiaries shall have
sustained since the date of the latest audited financial statements included or
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, otherwise than as set forth or contemplated in the Prospectus and
(ii) since the respective dates as of which information is given in the
Prospectus, there shall not have been any change in the capital stock or long-
term debt of HECO or any of the Subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs, management,
financial position, stockholder's equity or results of operations of HECO and
the Subsidiaries, otherwise than as set forth or contemplated in the Prospectus,
the effect of which, in any such case described in clause (i) or (ii) above, is
in the judgment of the Representatives so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the delivery
of the Trust Preferred Securities on the terms and in the manner contemplated in
the Prospectus.
(n) On or after the date hereof, (i) no downgrading shall have
occurred in the rating accorded any of HECO'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) under the Securities Act and (ii) no
such organization shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating of any of HECO's debt
securities.
(o) On or prior to the Closing Date, the Representatives shall have
received from the Offerors evidence reasonably satisfactory to Goldman, Sachs &
Co. that Moody's Investors Service, Inc. and Standard & Poor's Ratings Service
have publicly assigned to the Trust Preferred Securities ratings of ___ and ___,
respectively, which ratings shall be in full force and effect on the Closing
Date.
(p) On or prior to the Closing Date, (i) the Trust Preferred
Securities shall have been duly listed, subject to notice of issuance, on the
NYSE and (ii) HECO's registration statement on Form 8-A relating to the Trust
Preferred Securities shall have become effective under the Exchange Act.
(q) All legal matters in connection with the issuance and sale of the
Trust Preferred Securities shall be satisfactory in form and substance to
Counsel for the Underwriters.
(r) The Offerors will furnish the Underwriters with additional
conformed copies of such opinions, certificates, letters and documents as may be
reasonably requested.
If any of the conditions specified in this Section 7 shall not have
been fulfilled, this Underwriting Agreement may be terminated by the
Underwriters upon notice thereof to the Offerors. Any such termination shall be
without liability of any party to any other party, except as otherwise provided
in Sections 6(g) and Section 10 hereof.
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<PAGE>
SECTION 8. Condition to the Obligations of the Offerors. The
--------------------------------------------
obligations of the Offerors hereunder shall be subject to the condition that no
stop order suspending the effectiveness of the Registration Statement shall be
in effect at or prior to the Closing Date, and no proceedings for that purpose
shall be pending before, or threatened by, the Commission on the Closing Date.
In case such condition shall not have been fulfilled, this Underwriting
Agreement may be terminated by the Offerors upon notice thereof to the
Representatives. Any such termination shall be without liability of any party
to any other party, except as otherwise provided in Sections 6(g) and 10 hereof.
SECTION 9. Indemnification and Contribution.
--------------------------------
(a) The Offerors jointly and severally will indemnify and hold
harmless each Underwriter, and each person, if any, who controls each
Underwriter within the meaning of Section 15 of the Securities Act, from and
against any and all losses, claims, damages or liabilities, joint or several, to
which such Underwriter may become subject, under the Securities 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 the Registration Statement, as
amended, or 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, or arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus or
in the Prospectus, as each may be amended or supplemented, or any omission or
alleged omission to state therein a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, and will reimburse such Underwriter for any legal or other
expenses reasonably incurred by each Underwriter in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that HECO 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 any such untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with the Underwriter
Information; provided further, however, that the Offerors shall not be required
to reimburse any Underwriter or such person for fees and expenses of counsel
other than one counsel for all Underwriters and one counsel for all Underwriters
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
Underwriters or defenses available to one or more Underwriters that are not
available to other Underwriters; provided further, however, that the
indemnification contained in this Section 9(a) with respect to any Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or to the benefit
of any person controlling such Underwriter) on account of any such loss, claim,
damage, liability or expense arising from the sale of the Trust Preferred
Securities by such Underwriter to any person if the Offerors have established
that a copy of the Prospectus shall not have been delivered or sent to such
person within the time required by the Securities Act and the rules and
regulations thereunder, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus, provided that the Offerors have
delivered the
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<PAGE>
Prospectus to the several Underwriters in requisite quantity on a timely basis
to permit such delivery or sending.
(b) Each Underwriter will indemnify and hold harmless the Offerors,
their respective directors and officers who signed the Registration Statement
and each person, if any, who controls the Offerors within the meaning of Section
15 of the Securities Act from and against any and all losses, claims, damages or
liabilities to which HECO may become subject, under the Securities 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 the Registration Statement, as
amended, or 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, or arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus or
in the Prospectus, as each may be amended or supplemented, or any omission or
alleged omission to state therein a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
any such loss, claim, damage or liability arises out of or is based upon any
such untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with the Underwriter Information, and will
reimburse HECO for any legal or other expenses reasonably incurred by 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 9(a)
or 9(b) above 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 9(a) or 9(b), notify such indemnifying party in
writing of the commencement thereof; but the failure to so notify such
indemnifying party shall neither relieve such indemnifying party from any
liability that it may have to the indemnified party that failed to give such
notice unless and only to the extent that such indemnifying party has been
prejudiced by such failure nor relieve it from any liability that it may have to
such indemnified party otherwise than under this Section 9. In case any such
action shall be brought against any such indemnified party and it shall notify
such indemnifying party of the commencement thereof, such indemnifying party
shall be entitled to participate therein and, to the extent that it shall wish,
jointly with any other indemnifying parties similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified party (who shall
not, except with the consent of such indemnified party, be counsel to such
indemnifying party), and, after notice from such indemnifying party to such
indemnified party of its election to so assume the defense thereof, such
indemnifying party shall not be liable to such indemnified party under Section
9(a) or 9(b) 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 such
indemnifying party shall, without the written consent of such indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not such
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of such indemnified party from all liability arising out of such action
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.
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<PAGE>
(d) If the indemnification provided for in Section 9(a) or 9(b) hereof
is unavailable to or insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof) described 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 HECO
on the one hand and the Underwriters on the other from the offering of the Trust
Preferred Securities. If, however, the allocation provided by the immediately
preceding sentence is not permitted by applicable law or if such indemnified
party failed to give the notice required under Section 9(c) hereof and such
indemnifying party was prejudiced by such failure, then each such indemnified
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 HECO on the one hand and the Underwriters 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 HECO on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Trust bear to the total underwriting
commission received by the Underwriters, in each case as set forth in the table
on the cover page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by HECO on the one hand or the Underwriters on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. HECO and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9(d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or any other
method of allocation that does not take account of the equitable considerations
referred to above in this Section 9(d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) refereed to above in this Section 9(d) 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 9(d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Trust Preferred Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or allege untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
paragraph 9(d), each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Securities Act shall have the same rights to
contribution as such Underwriter, and each person, if any, who controls either
Offerors within the meaning of Section 15 of the Securities Act and each officer
or director of such Offeror shall have the same rights to contribution as such
Offeror, as the case may be, subject in each case to Sections 9(a) and 9(b)
hereof.
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<PAGE>
SECTION 10. Survival of Certain Representations and Obligations.
---------------------------------------------------
Any other provision of this Underwriting Agreement to the contrary
notwithstanding, (a) the indemnity and contribution agreements contained in
Section 9 hereof, and the representations and warranties and other agreements of
the Offerors contained herein, shall remain operative and in full force and
effect regardless of (i) any investigation made by or on behalf of any
Underwriter or by or on behalf of the Offerors or its directors or officers, or
any of the other persons referred to in Section 9 hereof and (ii) acceptance of
and payment for the Trust Preferred Securities and (b) the indemnity and
contribution agreements contained in Section 9 hereof shall remain operative and
in full force and effect regardless of any termination of this Underwriting
Agreement.
SECTION 11. Default of Underwriters.
-----------------------
(a) If any Underwriter shall default in its obligation to purchase the
number of Trust Preferred Securities that it has agreed to purchase hereunder,
the non-defaulting Underwriters may in their discretion arrange for such non-
defaulting Underwriters or another party or other parties to purchase such
number of Trust Preferred Securities on the terms contained herein. If within
twenty-four hours after such default by any Underwriter such non-defaulting
Underwriters do not arrange for the purchase of such number of Trust Preferred
Securities, then the Offerors shall be entitled to a further period of twenty-
four hours within which to, but shall not be required to, procure another party
or other parties satisfactory to such non-defaulting Underwriters to purchase
such Securities on such terms. In the event that, within the respective periods
prescribed above, such non-defaulting Underwriters notify the Offerors that they
have so arranged for the purchase of such number of Trust Preferred Securities,
or the Offerors notify the Underwriters that it has so arranged for the purchase
of such number of Trust Preferred Securities, then such non-defaulting
Underwriters or the Offerors shall have the right to postpone the Closing Date,
for a period of not more than five business days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Offerors agree to
file promptly any amendments to the Registration Statement or the Prospectus
that in the opinion of such non-defaulting Underwriters may thereby be made
necessary.
(b) If, after giving effect to any arrangements for the purchase of
Trust Preferred Securities of a defaulting Underwriter or Underwriters by the
non-defaulting Underwriter or Underwriters and the Offerors as provided in
Section 11(a) hereof, the aggregate number of Trust Preferred Securities that
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Trust Preferred Securities to be purchased hereunder, then the Offerors
shall have the right to require each non-defaulting Underwriter to purchase the
number of Trust Preferred Securities that such Underwriter agreed to purchase
hereunder and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Trust Preferred Securities
that such Underwriter agreed to purchase hereunder) of the Trust Preferred
Securities of such defaulting Underwriter or Underwriters for which such
arrangements have not been made, but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
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<PAGE>
(c) If, after giving effect to any arrangements for the purchase of
the Trust Preferred Securities of a defaulting Underwriter or Underwriters by
the non-defaulting Underwriter or Underwriters and the Offerors as provided in
Section 11(a) hereof, the aggregate number of Trust Preferred Securities that
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Trust Preferred Securities to be purchased hereunder, or if the Offerors shall
not exercise the right provided in Section 11(b) hereof to require such non-
defaulting Underwriters to purchase Trust Preferred Securities of a defaulting
Underwriter or Underwriters, then this Underwriting Agreement shall thereupon
terminate, without liability on the part of any such non-defaulting Underwriter
or either of the Offerors, except for the indemnity agreements in Section 9
hereof, but nothing herein shall relieve a defaulting Underwriter from liability
for its default.
SECTION 12. Miscellaneous. THE RIGHTS AND DUTIES OF THE PARTIES TO
-------------
THIS UNDERWRITING AGREEMENT SHALL, PURSUANT TO NEW YORK GENERAL OBLIGATIONS LAW
SECTION 5-1401, BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK. This
Underwriting Agreement shall become effective when a fully executed copy thereof
is delivered to the Offerors and to the Representatives. This Underwriting
Agreement may be executed in any number of separate counterparts, each of which,
when so executed and delivered, shall be deemed to be an original and all of
which, taken together, shall constitute but one and the same agreement. This
Underwriting Agreement shall inure to the benefit of each of the Offerors, the
Underwriters and, with respect to the provisions of Section 9 hereof, each
director, officer and other person referred to in Section 9 hereof, and their
respective successors. Should any part of this Underwriting Agreement for any
reason be declared invalid, such declaration shall not affect the validity of
any remaining portion, which remaining portion shall remain in full force and
effect as if this Underwriting Agreement had been executed with the invalid
portion thereof eliminated. Nothing herein is intended or shall be construed to
give to any other person, firm or corporation any legal or equitable right,
remedy or claim under or in respect of any provision in this Underwriting
Agreement. The term "successor" as used in this Underwriting Agreement shall
not include any purchaser, as such purchaser, of any Trust Preferred Securities
from the Underwriters.
SECTION 13. Notices. All communications hereunder shall be in
-------
writing and, if to the Underwriters, shall be mailed or delivered to Goldman,
Sachs & Co. at the address set forth at the beginning of this Underwriting
Agreement (to the attention of its General Counsel) or, if to the Offerors,
shall be mailed or delivered to it at P.O. Box 2750, Honolulu, Hawaii 96840-
0001, Attention: Financial Vice President and Treasurer.
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<PAGE>
If the foregoing is in accordance with your understanding, please sign
and return to us counterparts of this Underwriting Agreement, and upon
acceptance hereof by you, on behalf of each of the Underwriters, this
Underwriting Agreement and such acceptance hereof shall constitute a binding
agreement among each of the Underwriters, HECO and the Trust. It is understood
that your acceptance of this Underwriting Agreement on behalf of each of the
Underwriters is or will be pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to HECO and
the Trust for examination upon request, but without warranty on the part of the
Representatives as to the authority of the signers thereof.
Very truly yours,
Hawaiian Electric Company, Inc.
By: _________________________________________
Name:
Title:
By: _________________________________________
Name:
Title:
HECO Capital Trust I
By: Hawaiian Electric Company, Inc.,
as Depositor
By: _________________________________________
Name:
Title:
By: _________________________________________
Name:
Title:
Accepted as of the date first above written:
Goldman, Sachs & Co.
Dean Witter Reynolds Inc.
As representatives of the other several
Underwriters named in Schedule I hereto
By: ____________________________________________
(Goldman, Sachs & Co.)
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<PAGE>
SCHEDULE I
----------
HECO Capital Trust I
__% Cumulative Quarterly Income Preferred Securities, Series 1997
<TABLE>
<CAPTION>
Number of
Underwriter Trust Preferred Securities
- ----------- --------------------------
<S> <C>
Goldman, Sachs & Co.
Dean Witter Reynolds Inc.
_________
Total 2,000,000
=========
</TABLE>
<PAGE>
EXHIBIT 4(c)
Amended and Restated
Trust Agreement for HECO Capital Trust I
among
HAWAIIAN ELECTRIC COMPANY, INC.
(as Depositor)
THE BANK OF NEW YORK
(as Property Trustee)
THE BANK OF NEW YORK (DELAWARE)
(as Delaware Trustee)
and
THE ADMINISTRATIVE TRUSTEES NAMED HEREIN
and
THE SEVERAL HOLDERS AS DEFINED HEREIN
Dated as of
March 1, 1997
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 1. DEFINED TERMS..................................... 2
SECTION 1.01. Definitions............................... 2
ARTICLE 2. CONTINUATION OF THE TRUST......................... 14
SECTION 2.01. Name...................................... 14
SECTION 2.02. Office of the Delaware Trustee;
Principal Place of Business............... 14
SECTION 2.03. Initial Contribution of Trust Property;
Expenses of the Trust..................... 14
SECTION 2.04. Issuance of the Trust Securities.......... 15
SECTION 2.05. Purchase and Exchange of Debentures....... 16
SECTION 2.06. Declaration of Trust...................... 17
SECTION 2.07. Authorization to Enter into Certain
Transactions.............................. 17
SECTION 2.08. Assets of Trust........................... 23
SECTION 2.09. Title to Trust Property................... 23
ARTICLE 3. PAYMENT ACCOUNT................................... 23
SECTION 3.01. Payment Account........................... 23
ARTICLE 4. DISTRIBUTIONS; REDEMPTION......................... 24
SECTION 4.01. Distributions............................. 24
SECTION 4.02. Redemption................................ 25
SECTION 4.03. Subordination of Trust Common
Securities................................ 28
SECTION 4.04. Payment Procedures........................ 29
SECTION 4.05. Tax Returns and Reports................... 29
SECTION 4.06. Payments under Indentures................. 30
ARTICLE 5. TRUST SECURITIES CERTIFICATES..................... 30
SECTION 5.01. Initial Ownership......................... 30
SECTION 5.02. The Trust Securities Certificates......... 30
SECTION 5.03. Execution and Delivery of Trust
Securities................................ 31
SECTION 5.04. Registration of Transfer and Exchange
of Trust Preferred Securities
Certificates.............................. 31
SECTION 5.05. Mutilated, Destroyed, Lost or Stolen
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Trust Securities Certificates............. 32
SECTION 5.06. Persons Deemed Securityholders............ 33
SECTION 5.07. Access to List of Securityholders'
Names and Addresses....................... 33
SECTION 5.08. Maintenance of Office or Agency........... 33
SECTION 5.09. Appointment of Paying Agent............... 34
SECTION 5.10. No Transfer of Trust Common Securities
by Depositor.............................. 35
SECTION 5.11. Book-Entry Trust Preferred Securities
Certificates; Trust Common Securities
Certificate............................... 35
SECTION 5.12. Definitive Trust Preferred Securities
Certificates.............................. 36
SECTION 5.13. Rights of Securityholders................. 37
ARTICLE 6. ACTS OF SECURITYHOLDERS; MEETINGS; VOTING......... 37
SECTION 6.01. Limitations on Voting Rights.............. 37
SECTION 6.02. Notice of Meetings........................ 38
SECTION 6.03. Meetings of Preferred Securityholders..... 38
SECTION 6.04. Voting Rights............................. 39
SECTION 6.05. Proxies, etc.............................. 39
SECTION 6.06. Securityholder Action by Written
Consent................................... 40
SECTION 6.07. Record Date for Voting and Other
Purposes.................................. 40
SECTION 6.08. Acts of Securityholders................... 40
SECTION 6.09. Inspection of Records..................... 41
ARTICLE 7. THE TRUSTEES...................................... 41
SECTION 7.01. Certain Duties and Responsibilities....... 41
SECTION 7.02. Notice of Defaults; Direct Action by
Securityholders........................... 43
SECTION 7.03. Certain Rights of Property Trustee........ 44
SECTION 7.04. Not Responsible for Recitals or
Issuance of Securities.................... 45
SECTION 7.05. May Hold Securities....................... 45
SECTION 7.06. Compensation; Indemnity; Fees............. 45
SECTION 7.07. Certain Trustees Required; Eligibility
of Trustees............................... 47
SECTION 7.08. Conflicting Interests..................... 47
SECTION 7.09. Co-Trustees and Separate Trustee.......... 47
SECTION 7.10. Resignation and Removal; Appointment of
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Successor................................. 49
SECTION 7.11. Acceptance of Appointment by Successor.... 51
SECTION 7.12. Merger, Conversion, Consolidation or
Succession to Business.................... 52
SECTION 7.13. Preferential Collection of Claims
Against Depositor or Trust................ 52
SECTION 7.14. Reports by Property Trustee............... 52
SECTION 7.15. Reports to the Property Trustee........... 52
SECTION 7.16. Evidence of Compliance with Conditions
Precedent................................. 53
SECTION 7.17. Statements Required in Officer's
Certificate and Opinion of Counsel........ 53
SECTION 7.18. Number of Administrative Trustees......... 54
SECTION 7.19. Delegation of Power....................... 54
SECTION 7.20. Voting.................................... 54
ARTICLE 8. DISSOLUTION AND LIQUIDATION....................... 55
SECTION 8.01. Dissolution Upon Expiration Date.......... 55
SECTION 8.02. Early Dissolution......................... 55
SECTION 8.03. Termination of Obligations................ 55
SECTION 8.04. Dissolution and Liquidation............... 56
ARTICLE 9. MERGERS, ETC...................................... 58
SECTION 9.01. Mergers, Consolidations, Conversions,
Amalgamations or Replacements of the
Trust..................................... 58
ARTICLE 10. MISCELLANEOUS PROVISIONS......................... 59
SECTION 10.01. Limitation of Rights of
Securityholders.......................... 59
SECTION 10.02. Amendment................................ 59
SECTION 10.03. Severability............................. 61
SECTION 10.04. Governing Law............................ 61
SECTION 10.05. Successors and Assigns................... 61
SECTION 10.06. Headings................................. 61
SECTION 10.07. Reports, Notices and Demands............. 62
SECTION 10.08. Agreement Not to Petition................ 62
SECTION 10.09. Trust Indenture Act; Conflict with
Trust Indenture Act...................... 63
SECTION 10.10. Acceptance of Terms of Trust
Agreement, Guarantees and Indentures..... 63
</TABLE>
<PAGE>
HECO Capital Trust I
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939
<TABLE>
<CAPTION>
Trust Indenture Trust Agreement
Act Section Section
- --------------- ----------------
<S> <C>
(S) 310(a)(1) 7.07
(a)(2) 7.07
(a)(3) 7.09
(a)(4) 2.07(a)(ii)
(b) 7.08
(S) 311(a) 7.13
(b) 7.13
(S) 312(a) 5.07
(b) 5.07
(c) 5.07
(S) 313(a) 7.14
(b) 7.14
(c) 7.14
(d) 7.14
(S) 314(a) 7.15
(b) Not Applicable
(c)(1) 7.16, 7.17
(c)(2) 7.16, 7.17
(c)(3) Not Applicable
(d) Not Applicable
(e) 7.17
(S) 315(a) 7.01(a), 7.03(a)
(b) 7.02, 10.08
(c) 7.01(a)
(d) 7.01, 7.03
(e) Not Applicable
(S) 316(a) Not Applicable
(a)(1)(A) Not Applicable
(a)(1)(B) Not Applicable
(a)(2) Not Applicable
(b) Not Applicable
(c) Not Applicable
(S) 317(a)(1) Not Applicable
(a)(2) Not Applicable
(b) 5.09
(S) 318(a) 10.10
</TABLE>
__________________
Note: This reconciliation and tie sheet shall not, for any purpose, be
deemed to be a part of the Trust Agreement.
i
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT of HECO Capital Trust I (the "Trust"),
dated as of March 1, 1997, among (i) Hawaiian Electric Company, Inc., a Hawaii
corporation (the "Depositor" or "HECO"), (ii) The Bank of New York, a New York
banking corporation, as trustee (the "Property Trustee"), (iii) The Bank of New
York (Delaware), a Delaware banking corporation, as Delaware trustee (the
"Delaware Trustee"), (iv) T. Michael May, Paul A. Oyer and Marvin A. Hawthorne,
individuals whose address is c/o Hawaiian Electric Company, Inc., 900 Richards
Street, Honolulu, Hawaii 96813 (the "Administrative Trustees") (the Property
Trustee, the Delaware Trustee and the Administrative Trustee are referred to
collectively as the "Trustees"), and (v) the several Holders (as defined
herein).
WITNESSETH:
WHEREAS, the Depositor and the Trustees have heretofore duly declared and
established a business trust pursuant to the Delaware Business Trust Act by
entering into a Trust Agreement, dated as of December 31, 1996 (the "Original
Trust Agreement"), and by executing and filing with the Secretary of State of
the State of Delaware a Certificate of Trust on December 31, 1996, a copy of
which is attached hereto as Exhibit A; and
WHEREAS, the Depositor and the Trustees desire to amend and restate the
Original Trust Agreement in its entirety as set forth herein to provide for,
among other things, (i) the issuance and sale by the Trust of the Trust Common
Securities (as defined herein) by the Trust to the Depositor, (ii) the issuance
and sale by the Trust of the Trust Preferred Securities (as defined herein) by
the Trust pursuant to the Underwriting Agreement (as defined herein) and (iii)
the acquisition by the Trust from the Depositor and the Subsidiaries of the
Debentures (as defined herein).
NOW, THEREFORE, in consideration of the agreements and obligations set
forth herein and for other good and valuable consideration, the sufficiency of
which is hereby acknowledged, each party, for the benefit of the other parties
and for the benefit of the Securityholders (as defined herein) hereby amends and
restates the Original Trust Agreement in its entirety and agrees as follows:
<PAGE>
ARTICLE 1. DEFINED TERMS
SECTION 1.01. Definitions.
(a) For all purposes of this Trust Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(1) each capitalized term or phrase defined in this Article 1 has the
meaning assigned to it in this Article 1 and includes the plural as well as
the singular;
(2) each of the other terms used herein that is defined in the Trust
Indenture Act, either directly or by reference therein, has the meaning
assigned to it therein;
(3) unless the context otherwise requires, any reference to an
"Article" or a "Section" refers to an Article or a Section, as the case may
be, of this Trust Agreement; and
(4) the words "herein", "hereof" and "hereunder" and other words of
similar import refer to this Trust Agreement as a whole and not to any
particular Article, Section or other subdivision.
(b) As used herein:
"Act" has the meaning specified in Section 6.08.
---
"Administrative Trustees" means the individuals identified as the
-----------------------
"Administrative Trustees" in the preamble to this Trust Agreement, solely
in their respective capacities as Administrative Trustees of the Trust
created and continued hereunder and not their individual capacities, or
such Administrative Trustees' successors in interest in such capacity, or
any successor administrative trustee appointed as herein provided.
"Affiliate" of any specified Person means any other Person directly or
---------
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Bankruptcy Event" means, with respect to any Person, the occurrence
----------------
of any of the following events:
2
<PAGE>
(A) Such Person, pursuant to or within the meaning of any
Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for relief against
it in an involuntary case or proceeding;
(iii) consents to the appointment of a Custodian (as
defined herein) of it or for all or substantially all of its
property, and such Custodian is not discharged within 60 days;
(iv) makes a general assignment for the benefit of its
creditors; or
(v) admits in writing its inability to pay its debts
generally as they become due; or
(B) A court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against such Person in an involuntary
case or proceeding;
(ii) appoints a Custodian of such Person for all or
substantially all of its properties; or
(iii) orders the liquidation of such Person;
and in each case the order or decree remains unstayed and in effect for 60 days.
"Bankruptcy Laws" means Title 11 of the United States Code, or similar
---------------
federal or state law for the relief of debtors. "Custodian" means any
receiver, trustee, assignee, liquidator, sequestrator, custodian or similar
official under any Bankruptcy Law.
"Board Resolution" means (i) a copy of a resolution certified by the
----------------
Secretary or an Assistant Secretary of the Depositor to have been duly
adopted by the Depositor's Board of Directors or a committee established
thereby and to be in full force and effect on the date of such
certification or (ii) a certificate signed by the authorized officer or
officers of the Depositor to whom the Depositor's Board of Directors or a
committee established thereby has delegated its authority, and in each
case, delivered to the Trustees.
3
<PAGE>
"Book-Entry Trust Preferred Securities Certificates" means
--------------------------------------------------
certificates representing Trust Preferred Securities issued in global,
fully registered form with a Depository as described in Section 5.11.
"Business Day" means a day other than (a) a Saturday or Sunday, or (b)
------------
a day on which banking institutions in the City of New York are authorized
or required by law or executive order to remain closed or (c) a day on
which the principal corporate trust office of the Property Trustee or
Debenture Trustee is closed for business.
"Certificate Depository Agreement" means the agreement among the
--------------------------------
Trust, the Property Trustee and The Depository Trust Company, as the
initial Depository, dated as of the Closing Date, relating to the Book-
Entry Trust Preferred Securities Certificates, substantially in the form
attached hereto as Exhibit B, as the same may be amended and supplemented
from time to time.
"Closing Date" means the time and date of delivery of Book-Entry
------------
Trust Preferred Securities Certificates and payment therefor pursuant to
the Underwriting Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Commission" means the Securities and Exchange Commission, as from
----------
time to time constituted, created under the Securities Exchange Act of
1934, as amended, or, if at any time after the execution of this Trust
Agreement such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing such
duties at such time.
"Companies" means HECO, MECO and HELCO collectively.
---------
"Corporate Trust Office" means the principal corporate trust office of
----------------------
the Property Trustee located in the State of New York which at the date
hereof is 101
4
<PAGE>
Barclay Street, 21st Floor, New York, New York 10286, Attention: Corporate
Trust Trustee Administration.
"Creditor" has the meaning specified in Section 2.03.
--------
"Debenture Event of Default" means an "Event of Default" as defined in
--------------------------
the applicable Indenture.
"Debenture Exchange" means the issuance of HECO Debentures by the
------------------
Company in exchange for Subsidiary Debentures held by the
Trust pursuant to Section 2.05(b).
"Debenture Redemption Date" means "Redemption Date" as defined in the
-------------------------
applicable Indenture or the Debentures.
"Debenture Trustee" means The Bank of New York, a New York banking
-----------------
corporation, in its capacity as trustee under the Indentures, or any
successor thereto appointed in accordance with the terms and provisions of
the applicable Indenture.
"Debentures" means, collectively, the HECO Debentures, the MECO
----------
Debentures and the HELCO Debentures.
"Definitive Trust Preferred Securities Certificates" means
--------------------------------------------------
certificates representing Trust Preferred Securities issued in
certificated, fully registered form as described in Section 5.12.
"Delaware Business Trust Act" means Chapter 38 of Title 12 of the
---------------------------
Delaware Code, 12 Del. C. (S) 3801, et seq., as it may be amended from time
to time.
"Delaware Trustee" means the entity identified as the "Delaware
----------------
Trustee" in the preamble to this Trust Agreement solely in its capacity as
Delaware Trustee of the Trust created and continued hereunder and not in
its individual capacity, or its successor in interest in such capacity, or
any successor trustee appointed as herein provided.
"Depositor" has the meaning specified in the preamble to this Trust
---------
Agreement.
"Depository" means an organization registered as a "clearing agency"
----------
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder. The Depository Trust
Company, New York, New York, will be the initial Depository.
5
<PAGE>
"Depository Participant" means a broker, lender, bank or other
----------------------
financial institution or other Person for whom from time to time the
Depository effects book-entry transfers and pledges of interests in
securities deposited with the Depository.
"Distributable Debentures" means, collectively, HECO Debentures and,
------------------------
on and after the Debenture Exchange, Substituted HECO Debentures
to be distributed to Holders of the Trust Securities pursuant to Section
8.04(a).
"Distribution Date" has the meaning specified in Section 4.01(a).
-----------------
"Distributions" means amounts payable in respect of the Trust
-------------
Securities as provided in Section 4.01.
"Event of Default" means with respect to the Trust Preferred
----------------
Securities (whatever the reason for such Debenture Event of Default and
whether it shall be voluntary or involuntary or be effected by operation of
law or pursuant to any judgment, decree or order of any court or any order,
rule or regulation of any administrative or governmental body) (i) the
occurrence of a Debenture Event of Default, (ii) default by the Property
Trustee in the payment of any Distribution when it becomes due and payable,
and continuation of such default for a period of 30 days, (iii) default by
the Property Trustee in the payment of any Redemption Price of any Trust
Preferred Security or Common Security when it becomes due and payable, (iv)
default in the performance, or breach, in any material respect, of any
covenant or warranty of the Trustees herein (other than a covenant or
warranty a default in the performance of which or the breach of which is
dealt with in clause (ii) or (iii) above), and continuation of such default
or breach for a period of 60 days after there has been given, by registered
or certified mail, to the defaulting Trustee or Trustees by the Holders of
at least 25% in Liquidation Preference of the outstanding Trust Preferred
Securities, a written notice specifying such default or breach and
requiring it to be remedied and stating that such notice is a "Notice of
Default" under this Trust Agreement, or (v) the occurrence of a Bankruptcy
Event with respect to the Property Trustee and the failure by HECO to
appoint a successor Property Trustee within 60 days thereof.
"Expiration Date" has the meaning specified in Section 8.01.
---------------
"Extension Period" means the period or periods in which pursuant to
----------------
the applicable Indenture payments of
6
<PAGE>
interest on the related Debentures are deferred by any of the Companies
electing to extend the interest payment periods thereof for a period
(including any extensions thereof) not exceeding 20 consecutive quarters
with respect to each such deferral period.
"HECO Debentures" mean the ____% Junior Subordinated Deferrable
---------------
Interest Debentures, Series 1997 of the Depositor issued pursuant to the
HECO Junior Indenture.
"HECO Junior Indenture" means the Junior Indenture, dated as of March
---------------------
1, 1997, between the Depositor and the Debenture Trustee, as trustee
thereunder, as amended or supplemented from time to time.
"HELCO" means Hawaii Electric Light Company, Inc.
-----
"HELCO Debentures" means the ____% Junior Subordinated Deferrable
----------------
Interest Debentures, Series 1997 of HELCO issued pursuant to the HELCO
Junior Indenture.
"HELCO Junior Indenture" means the Junior Indenture, dated as of March
----------------------
1, 1997, between HELCO and the Debenture Trustee, as trustee thereunder, as
amended or supplemented from time to time.
"Holder" or "Securityholder" means a Person in whose name a Trust
------ --------------
Security or Securities is registered in the Securities Register; any such
Person is a beneficial owner within the meaning of the Delaware Business
Trust Act.
"Indemnified Person" means any of the Trustees, Affiliates of any
------------------
Trustee, or any officers, directors, shareholders, members, partners,
employees, representatives or agents of any Trustee, or any employee or
agent of the Trust or its Affiliates.
"Indentures" means, collectively, the HECO Junior Indenture, the MECO
----------
Junior Indenture and the HELCO Junior Indenture and "Indenture" means any
one of the Indentures.
"Investment Company Event" means the receipt by the Trust or HECO of
------------------------
an Opinion of Counsel, rendered by a law firm having a recognized federal
securities practice, to the effect that, as a result of the occurrence of a
change in law or regulation or a change (including a prospective change) in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act
Law"), there is more than an insubstantial risk that the Trust is or will
be considered an "investment company" that is required to be registered
under the 1940 Act, which Change in 1940 Act law becomes effective on or
after the date of original issuance of the Trust Preferred Securities.
7
<PAGE>
"Lien" means any lien, pledge, charge, encumbrance, mortgage,
----
deed of trust, adverse ownership interest, hypothecation, assignment,
security interest or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever.
"Like Amount" means (i) with respect to a redemption of Trust
-----------
Securities, Trust Securities having an aggregate Liquidation Preference
equal to the aggregate principal amount of Debentures to be
contemporaneously redeemed in accordance with the Indentures and the
proceeds of which will be used to pay the Redemption Price of such Trust
Securities and (ii) with respect to a distribution of Distributable
Debentures to Holders of Trust Securities in connection with the
dissolution and liquidation of the Trust, Distributable Debentures having
an aggregate principal amount equal to the aggregate Liquidation Preference
of the Trust Securities of the Holder to whom such Distributable Debentures
are distributed.
"Liquidation Date" means the date on which Distributable Debentures
----------------
are to be distributed to Holders of Trust Securities in connection with a
dissolution and liquidation of the Trust pursuant to Section 8.04(a).
"Liquidation Distribution" has the meaning specified in Section
------------------------
8.04(d).
"Liquidation Preference" means the stated liquidation preference of
----------------------
$25 per Trust Security.
"Majority in Liquidation Preference" means, with respect to the Trust
----------------------------------
Securities, or either class thereof, as the context may require, except as
provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holders of Outstanding Trust Securities voting together as a
single class or Holders of Outstanding Trust Preferred Securities voting
separately as a class, who are the record owners of more than 50% of the
aggregate Liquidation Preference (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined)
of all outstanding Trust Securities or all outstanding Trust Preferred
Securities, as the case may be.
"MECO" means Maui Electric Company, Limited.
----
"MECO Debentures" means the ____% Junior Subordinated Deferrable
---------------
Interest Debentures, Series 1997 of MECO issued pursuant to the MECO Junior
Indenture.
8
<PAGE>
"MECO Junior Indenture" means the Junior Indenture, dated as of
---------------------
March 1, 1997, between MECO and the Debenture Trustee, as trustee
thereunder, as amended or supplemented from time to time.
"Maturity Date of the Debentures" means March __, 2027, as such date
-------------------------------
may be shortened or extended in accordance with the provisions of the
Indentures.
"1940 Act" means the Investment Company Act of 1940, as amended.
--------
"Officer's Certificate" means a certificate signed by any one of the
---------------------
Chairman, the President, any Vice President, the Treasurer, any Assistant
Treasurer or the Secretary of the Depositor.
"Opinion of Counsel" means a written opinion of counsel, who may be
------------------
counsel for the Trust, the Property Trustee or the Depositor or an
Affiliate of the Depositor, but not an employee of any thereof, and who
shall be acceptable to the Property Trustee.
"Original Trust Agreement" has the meaning specified in the recitals
------------------------
to this Trust Agreement.
"Outstanding", when used with respect to Trust Securities, means, as
-----------
of the date of determination, all Trust Securities theretofore issued under
this Trust Agreement, except:
(C) Trust Securities theretofore cancelled by the Administrative
Trustees or delivered to the Administrative Trustees for cancellation;
(D) Trust Securities for whose redemption money in the necessary
amount has been theretofore deposited with the Property Trustee or any
Paying Agent for the Holders of such Trust Securities; provided that,
--------
if such Trust Securities are to be redeemed, notice of such redemption
has been duly given pursuant to this Trust Agreement;
(E) Trust Securities which have been paid or in exchange for or
in lieu of which other Trust Securities have been executed and
delivered pursuant to Section 5.05, other than any such Trust
Securities in respect of which there shall have been presented to the
Property Trustee proof satisfactory to it that such Trust Securities
are held by a bona fide purchaser; and
9
<PAGE>
(F) as provided in Section 8.04(c);
provided, however, that in determining whether the Holders of the requisite
-------- -------
Liquidation Preference of the Outstanding Trust Preferred Securities have
given any request, demand, authorization, direction, notice, consent or
waiver hereunder, Trust Preferred Securities owned by the Depositor, any
Trustee or any Affiliate of the Depositor or any Trustee shall be
disregarded and deemed not to be Outstanding, except that (a) in
determining whether any Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Trust Preferred Securities that such Trustee actually knows to be so owned
shall be so disregarded and (b) the foregoing shall not apply at any time
when all of the Outstanding Trust Preferred Securities are owned by the
Depositor, one or more of the Trustees and/or any such Affiliate. Trust
Preferred Securities so owned which have been pledged in good faith may be
regarded as Outstanding if the pledgee establishes to the satisfaction of
the Property Trustee and the Administrative Trustees the pledgee's right so
to act with respect to such Trust Preferred Securities and that the pledgee
is not the Depositor or any Affiliate of the Depositor.
"Paying Agent" means initially the Property Trustee and any co-paying
------------
agent appointed pursuant to Section 5.09.
"Payment Account" means a segregated non-interest-bearing corporate
---------------
trust account maintained by the Property Trustee in its trust department
for the benefit of the Securityholders in which all amounts paid to the
Property Trustee in respect of the Debentures or the Trust Guarantee will
be held and from which the Property Trustee or such other Paying Agent
shall make payments to the Securityholders in accordance with Article 4.
"Person" means any individual, corporation, partnership, limited
------
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Property Trustee" means the commercial bank or trust company
----------------
identified as the "Property Trustee" in the preamble to this Trust
Agreement solely in its capacity as Property Trustee of the Trust
heretofore created and continued hereunder and not in its individual
capacity, or its successor in interest in such capacity, or any successor
property trustee appointed as herein provided.
"PUC" means the Public Utilities Commission of the State of Hawaii.
---
10
<PAGE>
"Redemption Date" means, with respect to any Trust Security to be
---------------
redeemed, the date fixed for such redemption by or pursuant to this Trust
Agreement; provided that each Debenture Redemption Date and the Maturity
--------
Date of the Debentures shall be a Redemption Date for a Like Amount of
Trust Securities.
"Redemption Price" means, with respect to any Trust Security, the
----------------
Liquidation Preference of such Trust Security, plus accumulated and unpaid
Distributions thereon to the Redemption Date.
"Securities Register" and "Securities Registrar" have the respective
------------------- --------------------
meanings specified in Section 5.04.
"Securityholder" or "Holder" means a Person in whose name a Trust
-------------- ------
Security or Securities is registered in the Securities Register; any such
Person is a beneficial owner within the meaning of the Delaware Business
Trust Act.
"Special Event" means a Tax Event or an Investment Company Event.
-------------
"Subsidiaries" means, collectively, MECO and HELCO.
------------
"Subsidiary Debentures" means, collectively, the MECO Debentures and
---------------------
the HELCO Debentures.
"Subsidiary Guarantees" means the Depositor's full and unconditional
---------------------
guarantees of the obligations of MECO and HELCO as set forth in Article 11
of the MECO Junior Indenture and the HELCO Junior Indenture, respectively.
"Substituted HECO Debentures" means ____% Junior Subordinated
---------------------------
Deferrable Interest Debentures, Series 1997 of the Depositor issuable
pursuant to the HECO Junior Indenture in any Debenture Exchange, in an
aggregate principal amount of up to $20,000,000, and being in all respects
identical to the HECO Debentures issued on the Closing Date, except that
such Substituted HECO Debentures will bear interest from the date of
original issuance thereof pursuant to the HECO Junior Indenture.
"Successor Securities" has the meaning specified in Section 9.01.
--------------------
"Tax Action" means (a) any amendment to or change (including any
----------
announced prospective change) in the laws (or any regulations thereunder)
of the United States, or of any State or the District of Columbia, or of
any political subdivision or taxing authority thereof or therein, (b) any
judicial decision interpreting, applying
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or clarifying such laws or regulations or (c) any administrative
pronouncement or action that represents an official position (including a
clarification of an official position) of the governmental authority or
regulatory body making such administrative pronouncement or taking such
action, in each such case that occurs on or after the date of original
issuance of the Trust Preferred Securities.
"Tax Event" means the receipt by HECO or the Trust of an opinion of
---------
counsel, rendered by a law firm having a recognized federal and state tax
and securities practice, to the effect that, as a result of a Tax Action,
there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date thereof, subject to United States federal income
tax with respect to income received or accrued on the Debentures, (ii)
interest payable by any of the Companies on its respective Debentures is
not, or within 90 days of the date thereof will not be, deductible by such
Company, in whole or in part, for United States federal income tax
purposes, or (iii) the Trust is, or will be within 90 days of the date
thereof, subject to more than a de minimis amount of other taxes, duties or
other governmental charges.
"Trust" means the Delaware business trust created and continued hereby
-----
and identified in the preamble to this Trust Agreement.
"Trust Agreement" means this Amended and Restated Trust Agreement, as
---------------
the same may be modified, amended or supplemented in accordance with the
applicable provisions hereof, including all exhibits hereto, including, for
all purposes of this Trust Agreement and any such modification, amendment
or supplement, the provisions of the Trust Indenture Act that are deemed to
be a part of and govern this Trust Agreement and any such modification,
amendment or supplement, respectively.
"Trust Common Security" means a ___% Trust Common Security
---------------------
(Liquidation Preference $25 per Trust Common Security) issued by the Trust
representing an undivided beneficial interest in the assets of the Trust
having a Liquidation Preference of $25 and having the rights provided
therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Trust Common Securities Certificate" means a certificate evidencing
-----------------------------------
ownership of Trust Common Securities, substantially in the form attached
hereto as Exhibit C.
"Trust Guarantee" means the Trust Guarantee Agreement executed and
---------------
delivered by the Depositor to The Bank of New
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York, a New York banking corporation, as trustee thereunder,
contemporaneously with the execution and delivery of this Trust Agreement,
for the benefit of the Holders of the Trust Preferred Securities, as
amended from time to time.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
-------------------
force at the date as of which this Trust Agreement was executed; provided,
--------
however, that in the event the Trust Indenture Act of 1939 is amended after
-------
such date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939 as so amended.
"Trust Preferred Security" means a ____% Cumulative Quarterly Income
------------------------
Preferred Security, Series 1997 (Liquidation Preference $25 per Trust
Preferred Security) issued by the Trust representing an undivided preferred
beneficial interest in the assets of the Trust and having rights provided
therefor in this Trust Agreement, including the right to receive
Distributions and a Liquidation Distribution as provided herein.
"Trust Preferred Securities Beneficial Owner" means a Person who is
-------------------------------------------
the beneficial owner of a book-entry interest, as reflected in the books of
the Depository or on the books of a Person maintaining an account with the
Depository (directly as a Depository Participant or as an indirect
participant or otherwise, in each case in accordance with the rules of the
Depository).
"Trust Preferred Securities Certificate" means a certificate
--------------------------------------
evidencing ownership of Trust Preferred Securities, substantially in the
form attached hereto as Exhibit D.
"Trust Property" means (i) the Debentures, (ii) any cash on deposit
--------------
in, or owing to, the Payment Account and (iii) all proceeds and rights in
respect of the foregoing and any other property and assets for the time
being held or deemed to be held by the Property Trustee pursuant to the
trusts of this Trust Agreement.
"Trust Security" means any one of the Trust Common Securities or the
--------------
Trust Preferred Securities.
"Trust Securities Certificate" means any one of the Trust Common
----------------------------
Securities Certificates or the Trust Preferred Securities Certificates.
"25% in Liquidation Preference" means with respect to the Trust
-----------------------------
Securities, or either class thereof, as the context may require, except as
provided in the terms of the Trust Preferred Securities or by the Trust
Indenture Act, Holders of Outstanding Trust Securities voting together as a
single class or Holders of Outstanding Trust Preferred Securities voting
separately as a class, who are the record owners of 25% of the aggregate
Liquidation Preference (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accumulated and unpaid
Distributions to the date upon which the voting percentages are determined)
of all outstanding Trust Securities or all outstanding Trust Preferred
Securities, as the case may be.
"Underwriting Agreement" means the Underwriting Agreement, dated March
----------------------
__, 1997, among the Trust, the Depositor and the Underwriters named
therein.
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ARTICLE 2. CONTINUATION OF THE TRUST
SECTION 2.01. Name.
The Trust created and continued hereby shall be known as "HECO Capital
Trust I" as such name may be modified from time to time by the Administrative
Trustees following written notice to the Holders of Trust Securities and the
other Trustees, in which name the Trustees may conduct the business of the
Trust, make and execute contracts and other instruments on behalf of the Trust
and sue and be sued.
SECTION 2.02. Office of the Delaware Trustee; Principal Place of Business.
The address of the Delaware Trustee in the State of Delaware is White Clay
Center, Route 273, Newark, Delaware 19711, Attention: Corporate Trust
Department, or such other address in the State of Delaware as the Delaware
Trustee may designate by written notice to the Property Trustee, Securityholders
and the Depositor. The principal place of business of the Trust is c/o The Bank
of New York, 101 Barclay Street, 21st Floor, New York, New York 10286,
Attention: Corporate Trust Trustee Administration.
SECTION 2.03. Initial Contribution of Trust Property; Expenses of the Trust.
(a) The Property Trustee acknowledges receipt in trust from the Depositor
in connection with the Original Trust Agreement of the sum of $10, which
constituted the initial Trust Property.
(b) The Depositor shall be responsible for and shall pay for all
obligations (other than with respect to the Trust Securities) and all costs and
expenses of the Trust (including, but not limited to, costs and expenses
relating to the organization of the Trust, the issuance and sale of the Trust
Preferred Securities, the fees and expenses (including reasonable counsel fees
and expenses) of the Trustees as provided in Section 7.06, the costs and
expenses of accountants, attorneys, statistical or bookkeeping services,
expenses for printing and engraving and computing or accounting equipment,
Paying Agent(s), Securities Registrar, duplication, travel and telephone and
other telecommunications expenses and costs and expenses incurred in connection
with the disposition of Trust assets).
(c) The Depositor will pay any and all taxes (other than United States
withholding taxes attributable to the Trust or its assets) and all liabilities,
costs and expenses with respect to such taxes of the Trust.
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(d) The Depositor's obligations under this Section 2.03 shall be for the
benefit of, and shall be enforceable by, the Property Trustee and any Person to
whom any such obligations, costs, expenses and taxes are owed (a "Creditor")
whether or not such Creditor has received notice hereof. The Property Trustee
and any such Creditor may enforce the Depositor's obligations under this Section
2.03 directly against the Depositor and the Depositor irrevocably waives any
right or remedy to require that the Property Trustee or any such Creditor take
any action against the Trust or any other Person before proceeding against the
Depositor. The Depositor agrees to execute such additional agreements as may be
necessary or desirable in order to give full effect to the provisions of this
Section 2.03.
(e) The Depositor shall make no claim upon the Trust Property for the
payment of such expenses.
SECTION 2.04. Issuance of the Trust Securities.
The Depositor, on behalf of the Trust, executed and delivered the
Underwriting Agreement. Contemporaneously with the execution and delivery of
this Trust Agreement, not less than two Administrative Trustees, on behalf of
the Trust, shall execute in accordance with Section 5.02 and cause the Property
Trustee to authenticate and deliver to the Underwriters named in the
Underwriting Agreement a Book-Entry Trust Preferred Securities Certificate,
registered in the name of the nominee of the Depository, representing 2,000,000
Trust Preferred Securities having an aggregate Liquidation Preference of
$50,000,000, against payment by the Underwriters and receipt by the Property
Trustee of the aggregate purchase price of such Trust Preferred Securities of
$50,000,000. Contemporaneously therewith, not less than two Administrative
Trustees, on behalf of the Trust, shall execute in accordance with Section 5.02
and deliver to the Depositor a Trust Common Securities Certificate, registered
in the name of the Depositor, representing 61,856 Trust Common Securities having
an aggregate Liquidation Preference of $1,546,400, against payment by the
Depositor and receipt by the Property Trustee of the purchase price of such
Trust Common Securities of $1,546,400.
SECTION 2.05. Purchase and Exchange of Debentures.
(a) Contemporaneously with the execution and delivery of this Trust
Agreement, the Administrative Trustees, on behalf of the Trust, shall purchase
$31,546,400 aggregate principal amount of HECO Debentures from HECO, $10,000,000
aggregate principal amount of MECO Debentures from MECO and $10,000,000
aggregate principal amount of HELCO Debentures from HELCO, all
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<PAGE>
of which Debentures shall be registered in the name of the Property Trustee on
behalf of the Trust, and in satisfaction of the purchase price for such
Debentures, shall cause the Property Trustee, on behalf of the Trust, to deliver
the sums of $31,546,400, $10,000,000 and $10,000,000 to the Depositor, MECO and
HELCO, respectively, or an aggregate of $51,546,400, representing the proceeds
of the Trust Securities.
(b) Upon the occurrence of an Early Dissolution Event specified in Section
8.02(a), 8.02(b) or 8.02(d), provided that any necessary federal or state
regulatory authorizations or approvals have been obtained (including any
necessary approval of the PUC), and prior to the distribution to each
Securityholder of a Like Amount of Distributable Debentures and to the
liquidation of the Trust, the Depositor shall, no later than five Business Days
after the later of the date of such occurrence and the satisfaction of such
conditions, issue Substituted HECO Debentures pursuant to the HECO Junior
Indenture in an aggregate principal amount equal to the aggregate principal
amount of the Subsidiary Debentures then held by the Trust and registered in
such names and denominations as the Property Trustee shall request in writing no
later than the close of business on the second Business Day prior to the date of
such issuance. Contemporaneously with the issuance of such Substituted HECO
Debentures, the Trust shall deliver, or cause to be delivered, the certificates
for such Subsidiary Debentures, accompanied by such instruments of transfer as
may be requested by the Depositor, to the Depositor in exchange for such
Substituted HECO Debentures and the Depositor shall deliver, or cause to be
delivered, such Substituted HECO Debentures in exchange for such Subsidiary
Debentures, accompanied by (x) an Officer's Certificate to the effect that all
conditions precedent to such Exchange and the issuance of the Substituted HECO
QUIDS in this Trust Agreement have been satisfied (and attaching any approvals
referred to in the prior sentence) and (y) an Opinion of Counsel to the effect
that the Substituted HECO QUIDS have been duly authorized by the Depositor and,
upon execution and authentication in accordance with the provisions of the HECO
Indenture and delivery to and payment for by the Trust on the date of such
opinion, will be entitled to the benefits of the HECO Indenture and will be
valid and binding obligations of the Depositor, enforceable against the
Depositor in accordance with their respective terms, subject to bankruptcy,
insolvency, reorganization, receivership, moratorium and other similar laws
affecting creditors' rights generally, and general principles of equity.
SECTION 2.06. Declaration of Trust.
The exclusive purposes and functions of the Trust are (i) to issue and sell
Trust Securities and use the proceeds from such sale to acquire the Debentures,
(ii) to maintain the status of the Trust as a grantor trust for United States
Federal income tax purposes, and (iii) except as otherwise limited herein, to
engage in only those other activities necessary, convenient or incidental
thereto. The Depositor hereby appoints the Trustees as trustees of the Trust,
to have all the rights, powers and duties to the extent set forth herein, and
the Trustees hereby accept such appointment. The Property Trustee hereby
declares that it will hold the Trust Property in trust upon and subject to the
conditions set forth herein for the benefit of the Securityholders. The
Administrative Trustees shall have all rights, powers and duties set forth
herein. The Delaware Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and responsibilities of the
Property Trustee or the Administrative Trustees set forth herein. The
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Delaware Trustee shall be one of the Trustees of the Trust for the sole and
limited purpose of fulfilling the requirements of Section 3807 of the Delaware
Business Trust Act.
SECTION 2.07. Authorization to Enter into Certain Transactions.
(a) The Trustees shall conduct the affairs of the Trust in accordance with
the terms of this Trust Agreement. Subject to the limitations set forth in
paragraph (b) of this Section 2.07 and Article VII, and in accordance with the
following provisions (1) and (2), the Trustees shall have the authority to enter
into all transactions and agreements determined by the Trustees to be
appropriate in exercising the authority, express or implied, otherwise granted
to the Trustees under this Trust Agreement, and to perform all acts in
furtherance thereof, including without limitation, the following:
(1) As among the Trustees, the Administrative Trustees shall have the
power and authority to act on behalf of the Trust with respect to the
following matters:
(A) issuing and selling the Trust Securities in accordance with
this Trust Agreement, and executing and delivering (after
countersignature of the Trust Preferred Securities by the Property
Trustee) Trust Securities Certificates representing the Trust
Securities; provided, however, that the Trust may issue no more than
one series of Trust Preferred Securities and no more than one series
of Trust Common Securities, and, provided further, that there shall be
no interests in the Trust other than the Trust Securities, and the
issuance of Trust Securities shall be limited to a one-time,
simultaneous issuance of both Trust Preferred Securities and Trust
Common Securities on the Closing Date;
(B) causing the Trust to enter into, and executing, delivering
and performing on behalf of the Trust, the Expense Agreement, the
Certificate Depository Agreement and such other agreements as may be
necessary or desirable in connection with the purposes and function of
the Trust, including the appointment of a successor Depository;
(C) assisting in registering the Trust Preferred Securities under
the Securities Act of 1933, as amended, and under state securities or
blue sky laws, and qualifying this Trust Agreement as a trust
indenture under the Trust Indenture Act;
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<PAGE>
(D) assisting in the listing of the Trust Preferred Securities
upon such securities exchange or exchanges as the Depositor shall
determine and the registration of the Trust Preferred Securities under
the Securities Exchange Act of 1934, as amended, and the preparation
and filing of all periodic and other reports and other documents
pursuant to the foregoing;
(E) acquiring the Debentures with the proceeds of the sale of the
Trust Securities and causing the Property Trustee to deliver payment
of the purchase price therefor; provided, however, that the
Administrative Trustees shall cause legal title to the Debentures to
be held of record in the name of the Property Trustee for the benefit
of the Holders of the Trust Securities;
(F) bringing or defending, paying, collecting, compromising,
arbitrating, resorting to legal action, or otherwise adjusting claims
or demands of or against the Trust unless the Property Trustee has the
exclusive power to so act;
(G) employing or otherwise engaging employees and agents (who may
be designated as officers with titles) and managers, contractors,
advisors, and consultants and paying reasonable compensation for such
services;
(H) causing the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(I) giving the certificate required by Section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Administrative Trustee;
(J) incurring expenses that are necessary or incidental to carry
out any of the purposes of the Trust;
(K) appointing a Person to act as Securities Registrar in
accordance with this Trust Agreement for the Trust Securities;
(L) taking all actions that may be necessary or appropriate for
the preservation and the continuation of the Trust's valid existence,
rights, franchises and privileges as a statutory business trust under
the laws of the State of Delaware and of each other jurisdiction in
which such existence is necessary to
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<PAGE>
protect the limited liability of the Holders of the Trust Preferred
Securities or to enable the Trust to effect the purposes for which the
Trust was created;
(M) to the extent provided in this Trust Agreement, winding up
the affairs of the Trust and dissolving the Trust and preparing,
executing and filing the certificate of cancellation with the
Secretary of State of the State of Delaware;
(N) establishing a record date with respect to all actions to be
taken hereunder that require a record date be established, including
and with respect to, for the purposes of Section 316(c) of the Trust
Indenture Act, Distributions, voting rights, redemptions and
exchanges;
(O) sending notices (other than notices of default) or assisting
the Property Trustee in sending notices and other information
regarding the Trust Securities and the Debentures to Securityholders
in accordance with this Trust Agreement;
(P) qualifying the Trust to do business in any jurisdiction as
may be necessary or desirable; provided, that no such qualification
may be made in any jurisdiction if the effect of such qualification
may be to diminish the limited liability of the Holders of Trust
Preferred Securities as provided by this Trust Agreement and the
Delaware Business Trust Act;
(Q) registering transfers of the Trust Securities in accordance
with this Trust Agreement if the Property Trustee is not the
Securities Registrar; and
(R) executing all documents or instruments, performing all duties
and powers and taking any actions incidental to the foregoing as the
Administrative Trustees may from time to time determine is necessary
or advisable pursuant to the terms of the Trust Securities or to give
effect to the terms of this Trust Agreement for the benefit of the
Securityholders (without consideration of the effect of any such
action on any particular Securityholder).
(2) As among the Trustees, the Property Trustee shall have the power,
duty and authority to act on behalf of the Trust with respect to the
following matters:
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(A) establishing and maintaining the Payment Account and
appointing Paying Agents (subject to Section 5.09);
(B) receiving payment of the purchase price of the Trust
Securities;
(C) delivering payment of the purchase price of the Debentures to
HECO, MECO and HELCO, as applicable, and receiving and holding the
Debentures in its name for the benefit of the Trust;
(D) collecting interest, principal and any other payments on the
Debentures and depositing them in the Payment Account;
(E) making Distributions and other payments to the
Securityholders in respect of the Trust Securities;
(F) exercising all of the rights, powers and privileges of a
holder under each Indenture and, if any Event of Default has occurred
and is continuing, for the benefit of the Holders of the Trust
Securities, in its discretion protecting and enforcing its rights as
holder of the Debentures subject to the rights of the Holders pursuant
to the terms of this Trust Agreement;
(G) sending notices of defaults, redemptions, Extension Periods,
dissolutions, liquidations and other information regarding the Trust
Securities and the Debentures to the Securityholders in accordance
with this Trust Agreement;
(H) distributing the Trust Property in accordance with the terms
of this Trust Agreement;
(I) taking any ministerial action incidental to the foregoing as
the Property Trustee may from time to time determine is necessary or
advisable to give effect to the terms of this Trust Agreement and
protect and conserve the Trust Property for the benefit of the
Securityholders (without consideration of the effect of any such
action on any particular Securityholder); and
(J) registering transfers and exchanges of the Trust Preferred
Securities in accordance with this Trust Agreement (but only if at
such time the Property Trustee shall be the Securities Registrar).
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(b) So long as this Trust Agreement remains in effect, the Trust (or the
Trustees acting on behalf of the Trust) shall not undertake any business,
activities or transaction except as expressly provided herein or contemplated
hereby. In particular, the Trustees acting on behalf of the Trust shall not (i)
acquire any assets or investments (other than the Debentures), reinvest the
proceeds derived from investments, possess any power or otherwise act in such a
way as to vary the Trust Property or engage in any activities not authorized by
this Trust Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge,
set-off or otherwise dispose of any of the Trust Property or interests therein,
including to Securityholders, except as expressly provided herein, (iii) take
any action that would cause the Trust to fail or cease to qualify as a grantor
trust for United States Federal income tax purposes, (iv) incur any indebtedness
for borrowed money or issue any other debt, (v) issue any securities or other
evidences of beneficial ownership of, or beneficial interests in, the Trust
other than the Trust Securities, or (vi) take or consent to any action that
would result in the placement of a Lien on any of the Trust Property. The
Administrative Trustees shall defend all claims and demands of all Persons at
any time claiming any Lien on any of the Trust Property adverse to the interest
of the Trust or the Securityholders in their capacity as Securityholders.
(c) In connection with the issue and sale of the Trust Preferred
Securities, the Depositor shall have the right and responsibility to assist the
Trust with respect to, or effect on behalf of the Trust, the following (and any
actions taken by the Depositor in furtherance of the following prior to the date
of this Trust Agreement are hereby ratified and confirmed in all respects):
(1) preparing for filing with the Commission and executing on behalf
of the Trust a registration statement on Form S-3 in relation to the Trust
Preferred Securities, the Trust Guarantee and certain related obligations,
including any amendments thereto;
(2) determining the States in which to take appropriate action to
qualify or register for sale all or part of the Trust Preferred Securities
and doing any and all such acts, other than actions which must be taken by
or on behalf of the Trust, and advising the Trustees of actions they must
take on behalf of the Trust, and preparing for execution and filing any
documents to be executed and filed by the Trust or on behalf of the Trust,
as the Depositor deems necessary or advisable in order to comply with the
applicable laws of any such States;
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(3) preparing for filing and executing on behalf of the Trust an
application to the New York Stock Exchange or any other national stock
exchange or The Nasdaq National Market for listing upon notice of issuance
of any Trust Preferred Securities;
(4) preparing for filing with the Commission and executing on behalf
of the Trust a registration statement on Form 8-A relating to the
registration of the Trust Preferred Securities and the Trust Guarantee
under Section 12(b) of the Securities Exchange Act of 1934, as amended,
including any amendments thereto;
(5) negotiating the terms of, and executing and delivering on behalf
of the Trust, the Underwriting Agreement providing for the sale of the
Trust Preferred Securities and such other agreements as may be necessary or
desirable in connection with the consummation thereof;
(6) using reasonable efforts to obtain any necessary federal or state
authorizations or approvals, including any approval of the PUC, in
connection with a Debenture Exchange; and
(7) executing all documents or instruments, or performing all duties
and powers, and doing all things for or on behalf of the Trust in all
matters necessary or incidental to the foregoing.
(d) Notwithstanding anything herein to the contrary, the Administrative
Trustees and the Depositor are authorized and directed to conduct the affairs of
the Trust and to operate the Trust so that (i) the Trust will not be deemed to
be an "investment company" required to be registered under the 1940 Act, or
classified as an association taxable as a corporation, a partnership or other
than as a grantor trust for United States federal income tax purposes and (ii)
the Debentures will be treated as indebtedness of the respective Companies for
United States Federal income tax purposes. In this connection, the
Administrative Trustees and each of the Companies are authorized to take any
action, not inconsistent with applicable law, the certificate of trust filed
with the Secretary of State of the State of Delaware with respect to the Trust
(as amended or restated from time to time, the "Certificate of Trust"), or this
Trust Agreement, that the Administrative Trustees and the Companies determine in
their discretion to be necessary or desirable for such purposes.
SECTION 2.08. Assets of Trust.
The assets of the Trust shall consist of the Trust Property.
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SECTION 2.09. Title to Trust Property.
Legal title to all Trust Property shall be vested at all times in the
Property Trustee (in its capacity as such) and shall be held and administered by
the Property Trustee for the benefit of the Securityholders in accordance with
this Trust Agreement.
ARTICLE 3. PAYMENT ACCOUNT
SECTION 3.01. Payment Account.
(a) On or prior to the Closing Date, the Property Trustee shall establish
the Payment Account. All monies and other property deposited or held from time
to time in the Payment Account shall be held by the Property Trustee for the
exclusive benefit of the Securityholders and for distributions as provided
herein, including (and subject to) any priority of payments provided for herein.
The Property Trustee shall have exclusive control of the Payment Account for the
purpose of making deposits in and withdrawals from the Payment Account in
accordance with this Trust Agreement; provided that any Paying Agent shall have
the right of withdrawal with respect to the Payment Account solely for the
purpose of making the payments contemplated under Article 4.
(b) The Property Trustee shall deposit in the Payment Account, promptly
upon receipt, all payments of principal of or interest on, and any other
payments or proceeds with respect to, the Debentures and any amounts paid to the
Property Trustee pursuant to the Trust Guarantee. Amounts held in the Payment
Account shall not be invested by the Property Trustee pending distribution
thereof.
ARTICLE 4. DISTRIBUTIONS; REDEMPTION
SECTION 4.01. Distributions.
(a) Distributions on the Trust Securities shall be cumulative, and will
accumulate whether or not there are funds of the Trust available for the payment
of Distributions. Distributions shall accumulate from March __, 1997 and,
except during an Extension Period for the Debentures pursuant to the applicable
Indenture, shall be payable quarterly in arrears on March 31, June 30, September
30 and December 31 of each year, commencing on March 31, 1997. In the event
that any date on which Distributions are otherwise payable on the Trust
Securities is not a Business Day, then payment of such Distributions shall be
made on the next succeeding day that is a Business Day (and without any
additional Distributions or
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other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, payment of such Distributions shall be
made on the immediately preceding Business Day (without any reduction in
Distributions in respect of such early payment), in each case with the same
force and effect as if made on the date such payment was originally payable
(each date on which Distributions are payable in accordance with this Section
4.01(a) is referred to as a "Distribution Date").
(b) Within two Business Days after receipt by the Property Trustee of
notice of an Extension Period pursuant to Section 4.01 of any Indenture, the
Property Trustee shall give notice thereof to the Securityholders in the manner
and to the extent provided in Section 10.07.
(c) The Trust Securities represent undivided beneficial interests in the
Trust Property, and, subject to Sections 4.03 and 4.06 hereof, all Distributions
will be made pro rata on each of the Trust Securities. Distributions on the
Trust Securities shall be payable at a rate of _____% per annum of the
Liquidation Preference of the Trust Securities. The amount of Distributions
payable for any full quarterly period shall be computed on the basis of a 360-
day year of twelve 30-day months, except for any period shorter than a full
calendar month, in which case the amount shall be computed on the basis of the
actual number of days elapsed in such period. During an Extension Period for
the Debentures, the rate per annum at which Distributions on the Trust
Securities accumulate shall be increased by an amount such that the aggregate
amount of Distributions that accumulate on all Trust Securities during any such
Extension Period is equal to the aggregate amount of interest (including
interest payable on unpaid interest at the rate per annum set forth above,
compounded quarterly) that accrues during any such Extension Period on the
Debentures.
(d) Distributions on the Trust Securities shall be made from the Payment
Account by the Property Trustee or any Paying Agent and shall be payable on each
Distribution Date only to the extent that the Trust has funds then available in
the Payment Account for the payment of such Distributions.
(e) Distributions on the Trust Securities on each Distribution Date shall
be payable to the Holders thereof as they appear on the Securities Register for
the Trust Securities on the relevant record date, which, as long as the Trust
Preferred Securities are in book-entry-only form, shall be one Business Day
prior to such Distribution Date; provided, however, that in the event that the
-------- -------
Trust Preferred Securities are not in book-entry-only form, the relevant record
date shall be the 15th day of the last month of each calendar quarter, whether
or not a Business Day.
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(f) If Distributions are not paid when scheduled, such accumulated
Distributions shall be paid to the Holders of record of Trust Securities as they
appear on the books and records of the Trust on the record date as determined
under Section 4.01(e) above with respect to the actual payment date for such
accumulated Distributions.
SECTION 4.02. Redemption.
(a) On each Debenture Redemption Date and the Maturity Date of the
Debentures, the Property Trustee will be required to redeem a Like Amount of
Trust Securities at the Redemption Price.
(b) Notice of redemption shall be given by the Property Trustee by first-
class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior
to the Redemption Date to each Holder of Trust Securities to be redeemed, at
such Holder's address appearing in the Securities Register. All notices of
redemption shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the CUSIP number;
(4) the place or places where Trust Securities Certificates are to be
surrendered for payment of the Redemption Price;
(5) that on the Redemption Date the Redemption Price will become
payable upon each such Trust Security to be redeemed and that Distributions
thereon will cease to accumulate on and after such date; and
(6) if less than all of the Outstanding Trust Securities are to be
redeemed, the identification and total Liquidation Preference of the
particular Trust Securities to be redeemed.
(c) The Trust Securities redeemed on each Redemption Date shall be redeemed
at the Redemption Price with the proceeds from the contemporaneous redemption or
repayment on the Maturity Date of the Debentures. Redemptions of the Trust
Securities shall be made and the Redemption Price shall be payable on each
Redemption Date only to the extent that the Trust has funds then available in
the Payment Account for the payment of such Redemption Price.
(d) If the Trust, by action of the Property Trustee, gives a notice of
redemption in respect of any Trust Preferred
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Securities, then, by 12:00 noon, New York time, on the Redemption Date, subject
to Section 4.02(c), the Property Trustee will, so long as the Trust Preferred
Securities are in book-entry-only form, deposit irrevocably with the Depository
funds sufficient to pay the applicable Redemption Price and will give the
Depository irrevocable instructions and authority to pay the applicable
Redemption Price to the Holders thereof. If the Trust Preferred Securities are
not in book-entry-only form, then, on the Redemption Date, subject to
Section 4.02(c), the Property Trustee will irrevocably deposit with the Paying
Agent funds sufficient to pay the Redemption Price for the Trust Preferred
Securities being redeemed on such date and will give the Paying Agent
irrevocable instructions and authority to pay the Redemption Price to the
Holders of such Trust Preferred Securities upon surrender of their Trust
Preferred Securities Certificates. Notwithstanding the foregoing, Distributions
payable on or prior to the Redemption Date for any Trust Securities called for
redemption shall be payable to the Holders of such Trust Securities as they
appear on the Securities Register for the Trust Securities on the relevant
record dates for the related Distribution Dates. If notice of redemption shall
have been given and funds irrevocably deposited as required, then upon the date
of such deposit, all rights of Securityholders holding Trust Securities so
called for redemption will cease, except the right of such Securityholders to
receive the Redemption Price, but without interest on such Redemption Price, and
such Trust Securities will cease to be Outstanding. In the event that any
Redemption Date is not a Business Day, then payment of the Redemption Price
payable on such Redemption Date will be made on the next succeeding day which is
a Business Day (and without any additional Distributions or other payment in
respect of any such delay), except that, if such Business Day is in the next
succeeding calendar year, such payment will be made on the immediately preceding
Business Day (without any reduction in Distributions in respect of such early
payment), in each case with the same force and effect as if made on such
Redemption Date. In the event that payment of the Redemption Price in respect of
any Trust Securities called for redemption is improperly withheld or refused,
and not paid either by the Trust or by the Depositor pursuant to the Trust
Guarantee, Distributions on such Trust Securities will continue to accumulate,
at the then applicable rate, from the Redemption Date originally established by
the Trust for such Trust Securities to the date such Redemption Price is
actually paid, in which case the actual payment date will be the date fixed for
redemption for purposes of calculating the Redemption Price.
(e) Payment of the Redemption Price on the Trust Securities shall be made
to the Holders thereof as they appear on the Securities Register for the Trust
Securities on the relevant record date, which as long as the Trust Preferred
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Securities are in book-entry-only form, shall be one Business Day prior to the
Redemption Date; provided, however, that in the event that the Trust Securities
are not in book-entry-only form, the relevant record date shall be the date that
is 15 days prior to the Redemption Date.
(f) If less than all the Outstanding Trust Securities are to be redeemed on
a Redemption Date, then the aggregate Liquidation Preference of Trust Securities
to be redeemed shall be allocated on a pro rata basis (based on Liquidation
Preference) among the Trust Common Securities and the Trust Preferred
Securities. The particular Trust Preferred Securities to be redeemed shall be
selected not more than 60 days prior to the Redemption Date by the Property
Trustee from the Outstanding Trust Preferred Securities not previously called
for redemption, by lot or by such method as the Property Trustee shall deem fair
and appropriate and which may provide for the selection for redemption of
portions (equal to $25 or an integral multiple of $25 in excess thereof) of the
Liquidation Preference of Trust Preferred Securities of a denomination larger
than $25; provided that, in respect of Trust Preferred Securities registered in
the name of and held of record by the Depository or its nominee (or any
successor Depository or its nominee), the distribution of the proceeds of such
redemption will be made in accordance with the procedures applied by such
Depository or nominee. The Trust may not redeem fewer than all of the
outstanding Trust Preferred Securities unless all accumulated and unpaid
Distributions have been paid on all Trust Preferred Securities for all quarterly
distribution periods terminating on or prior to the Redemption Date. The
Property Trustee shall promptly notify the Securities Registrar in writing of
the Trust Preferred Securities selected for redemption and, in the case of any
Trust Preferred Securities selected for partial redemption, the Liquidation
Preference thereof to be redeemed. If fewer than all of the Trust Securities
represented by a Trust Securities Certificate are redeemed, not less than two
Administrative Trustees shall execute for the Holder a new Trust Securities
Certificate representing the unredeemed Trust Securities. For all purposes of
this Trust Agreement, unless the context otherwise requires, all provisions
relating to the redemption of Trust Preferred Securities shall relate, in the
case of any Trust Preferred Securities redeemed or to be redeemed only in part,
to the portion of the Liquidation Preference of Trust Preferred Securities which
has been or is to be redeemed.
SECTION 4.03. Subordination of Trust Common Securities.
(a) Payment of Distributions on, and the Redemption Price of, the Trust
Securities, as applicable, shall be made pro rata based on the Liquidation
Preference of the Trust Securities; provided, however, that if on any
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Distribution Date or
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Redemption Date, a Debenture Event of Default shall have occurred and be
continuing, no payment of any Distribution on, or Redemption Price of, any
Common Security, and no other payment on account of the redemption, liquidation
or other acquisition of Trust Common Securities, shall be made unless payment in
full in cash of all accumulated and unpaid Distributions on all Outstanding
Trust Preferred Securities for all distribution periods terminating on or prior
thereto, or in the case of payment of the Redemption Price, the full amount of
such Redemption Price on all Outstanding Trust Preferred Securities then being
redeemed, shall have been made or provided for, and all funds immediately
available to the Property Trustee shall first be applied to the payment in full
in cash of all Distributions on, the Redemption Price of, Trust Preferred
Securities then due and payable.
(b) In the case of any Event of Default under this Trust Agreement
resulting from a Debenture Event of Default, the Holder of Trust Common
Securities will be deemed to have waived any right to act with respect to any
such Event of Default until the effect of such Event of Default has been cured,
waived or otherwise eliminated. Until any such Event of Default has been so
cured, waived or otherwise eliminated, the Property Trustee shall act solely on
behalf of the Holders of the Trust Preferred Securities and not the Holder of
the Trust Common Securities, and only the Holders of the Trust Preferred
Securities will have the right to direct the Property Trustee to act on their
behalf.
SECTION 4.04. Payment Procedures.
Payments of Distributions pursuant to Section 4.01 in respect of the Trust
Preferred Securities shall be made by check mailed by the Paying Agent to the
address of the Holder thereof as such address shall appear on the Securities
Register or, if the Trust Preferred Securities are held by a Depository or its
nominee, such Distributions shall be made to the Depository by wire transfer in
immediately available funds. Payment of the Redemption Price of or Liquidation
Distribution on the Trust Preferred Securities shall be made in immediately
available funds upon surrender of the Trust Preferred Securities Certificates
representing such Trust Preferred Securities at the Corporate Trust Office of
the Property Trustee or, if the Trust Preferred Securities are held by a
Depository or its nominee, such Redemption Price or Liquidation Distribution
shall be made to the Depository by wire transfer in immediately available funds.
Payments of Distributions pursuant to Section 4.01 in respect of the Trust
Common Securities, and payment of the Redemption Price of or Liquidation Payment
on the Trust Common Securities, shall be made in such manner as shall be
mutually agreed between the Property Trustee and the Holder of the Trust Common
Securities.
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SECTION 4.05. Tax Returns and Reports.
The Administrative Trustees shall prepare (or cause to be prepared), at the
Depositor's expense, and file all Federal, State and local tax and information
returns and reports required to be filed by or in respect of the Trust. In this
regard, the Administrative Trustees shall (i) prepare and file (or cause to be
prepared or filed) the appropriate Internal Revenue Service Form required to be
filed in respect of the Trust in each taxable year of the Trust and (ii) prepare
and furnish (or cause to be prepared and furnished) to each Securityholder the
related Internal Revenue Service Form 1099 OID, or any successor form or the
information required to be provided on such form. The Administrative Trustees
shall provide the Depositor and the Property Trustee with a copy of all such
returns, reports and schedules promptly after such filing or furnishing. The
Trustees shall comply with United States Federal withholding and backup
withholding tax laws and information reporting requirements with respect to any
payments to Securityholders under the Trust Securities.
SECTION 4.06. Payments under Indentures.
Any amount payable hereunder to any Holder of Trust Preferred Securities
shall be reduced by the amount of any corresponding payment such Holder has
directly received pursuant to Section 6.07 of the Indentures or pursuant to the
Trust Guarantee or the Subsidiary Guarantees. Notwithstanding the provisions
hereunder to the contrary, Securityholders acknowledge that any Holder of Trust
Preferred Securities that receives payment under Section 6.07 of the Indentures
may receive amounts greater than the amount such Holder may be entitled to
receive pursuant to the other provisions of this Trust Agreement.
SECTION 4.07. Payments of Taxes, Duties, Etc. of the Trust.
Upon receipt under the Debentures of Additional Sums (as defined in the
HECO Indenture), the Property Trustee at the direction of an Administrative
Trustee or the Depositor shall promptly pay any taxes, duties or governmental
charges of whatsoever nature (other than withholding taxes) imposed on the Trust
by the United States or any other taxing authority.
ARTICLE 5. TRUST SECURITIES CERTIFICATES
SECTION 5.01. Initial Ownership.
Upon the creation of the Trust and the contribution by the Depositor
pursuant to Section 2.03 and until the issuance of the Trust Securities, and at
any time during which no Trust
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Securities are outstanding, the Depositor shall be the sole beneficial owner of
the Trust.
SECTION 5.02. The Trust Securities Certificates.
The Trust Securities Certificates shall be issued in denominations of $25
Liquidation Preference and integral multiples thereof. Trust Preferred
Securities Certificates representing fractional interests shall not be issued.
Trust Common Securities Certificates shall be executed on behalf of the Trust by
manual signatures of not less than two Administrative Trustees. Trust Preferred
Securities Certificates shall be executed on behalf of the Trust by manual or
facsimile signatures of not less than two Administrative Trustees and shall be
authenticated by the countersignature of the Property Trustee. Trust Securities
Certificates bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures shall have been affixed, authorized to sign on
behalf of the Trust, shall be validly issued and entitled to the benefits of
this Trust Agreement, notwithstanding that such individuals or any of them shall
have ceased to be so authorized prior to the delivery of such Trust Securities
Certificates or did not hold such offices at the date of delivery of such Trust
Securities Certificates. A transferee of a Trust Securities Certificate shall
become a Securityholder, and shall be entitled to the rights and subject to the
obligations of a Securityholder hereunder, upon due registration of such Trust
Securities Certificate in such transferee's name pursuant to Section 5.04.
SECTION 5.03. Execution and Delivery of Trust Securities
Certificates.
On the Closing Date, the Administrative Trustees shall cause Trust
Securities Certificates, in an aggregate Liquidation Preference as provided in
Section 2.04, to be executed on behalf of the Trust as provided in Section 5.02
and delivered in accordance with the provisions of Section 2.04.
SECTION 5.04. Registration of Transfer and Exchange of Trust Preferred
Securities Certificates.
(a) A registrar appointed by the Administrative Trustees (the "Securities
Registrar") shall keep or cause to be kept, at the office or agency maintained
pursuant to Section 5.08, a register (the "Securities Register") in which,
subject to such reasonable regulations as it may prescribe, the Securities
Registrar shall provide for the registration of Trust Securities Certificates
(subject to Section 5.10 in the case of the Trust Common Securities
Certificates) and registration of transfers and exchanges of Trust Preferred
Securities Certificates as herein provided. The Property Trustee shall be
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the initial Securities Registrar; any successor Securities Registrar shall be
appointed by the Administrative Trustees.
(b) Upon surrender for registration of transfer of any Trust Preferred
Securities Certificate at the office or agency maintained pursuant to Section
5.08, not less than two Administrative Trustees shall execute and deliver, in
the name of the designated transferee or transferees, one or more new Trust
Preferred Securities Certificates representing the same number of Trust
Preferred Securities dated the date of execution by the Administrative Trustees.
At the option of a Holder, Trust Preferred Securities Certificates may be
exchanged for other Trust Preferred Securities Certificates upon surrender of
the Trust Preferred Securities Certificates to be exchanged at the office or
agency maintained pursuant to Section 5.08. The Securities Registrar shall not
be required to register or cause to be registered the transfer of any Trust
Preferred Securities after such Trust Preferred Securities have been called for
redemption, during the period from 15 days before mailing of notice of
redemption and ending on such notice date or after the Liquidation Date.
(c) Trust Preferred Securities presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Administrative Trustees and the Securities Registrar
duly executed by the Holder or such Holder's attorney duly authorized in
writing. Each Trust Preferred Securities Certificate surrendered for
registration of transfer or exchange shall be cancelled and subsequently
disposed of by the Property Trustee in accordance with its customary practice.
(d) No service charge shall be made for any registration of transfer or
exchange of Trust Preferred Securities, but the Securities Registrar may require
payment of a sum sufficient to cover any tax or governmental charge that may be
imposed in connection with any transfer or exchange of Trust Preferred
Securities.
SECTION 5.05. Mutilated, Destroyed, Lost or Stolen Trust Securities
Certificates.
If (i) any mutilated Trust Securities Certificate shall be surrendered to
the Securities Registrar, or if the Securities Registrar shall receive evidence
to its satisfaction of the destruction, loss or theft of any Trust Securities
Certificate, and (ii) there shall be delivered to the Securities Registrar and
the Administrative Trustees such security or indemnity as may be required by
them to hold the Securities Registrar, the Trustees and the Trust harmless, then
in the absence of notice that such Trust Securities Certificate shall have been
acquired by a bona fide purchaser, not less than two of the
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Administrative Trustees, on behalf of the Trust shall execute and make available
for delivery, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Trust Securities Certificate, a new Trust Securities Certificate of
like tenor. In connection with the issuance of any new Trust Securities
Certificate under this Section 5.05, the Administrative Trustees or the
Securities Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Trust Securities Certificate issued pursuant to this Section 5.05
shall constitute conclusive evidence of an undivided beneficial interest in the
assets of the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Trust Securities Certificate shall be found at any time.
SECTION 5.06. Persons Deemed Securityholders.
Prior to due presentation of a Trust Security Certificate for registration
of transfer, the Administrative Trustees or the Securities Registrar shall treat
the Person in whose name any Trust Securities Certificate shall be registered in
the Securities Register as the owner and Holder of such Trust Securities
Certificate for the purpose of receiving Distributions and for all other
purposes whatsoever, and neither the Trustees nor the Securities Registrar shall
be bound by any notice to the contrary.
SECTION 5.07. Access to List of Securityholders' Names and Addresses.
In the event that the Property Trustee is no longer the Securities
Registrar, the Administrative Trustees or the Depositor shall furnish or cause
to be furnished (i) to the Property Trustee, quarterly not later than 10 days
prior to a Distribution Date, and (ii) to the Property Trustee, promptly after
receipt by the Administrative Trustees or the Depositor of a request therefor
from the Property Trustee in order to enable the Paying Agent to pay
Distributions in accordance with Section 4.01 hereof, a list, in such form as
the Property Trustee may reasonably require, of the names and addresses of the
Securityholders as of the most recent record date, in each case to the extent
such information is in the possession or control of the Administrative Trustees
or the Depositor and is not identical to a previously supplied list or has not
otherwise been received by the Property Trustee. The rights of Securityholders
to communicate with other Securityholders with respect to their rights under
this Trust Agreement or under the Trust Securities, and the corresponding rights
of the Property Trustee shall be as provided in the Trust Indenture Act. Each
Holder, by receiving and holding a Trust Securities Certificate, shall be deemed
to have agreed not to hold the Depositor or the Trustees accountable by reason
of the
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disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 5.08. Maintenance of Office or Agency.
The Property Trustee shall maintain in New York, New York, an office or
offices or agency or agencies where Trust Preferred Securities may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Trustees in respect of the Trust Securities Certificates
may be served. The Property Trustee shall give prompt written notice to the
Depositor and to the Securityholders of any change in the location of the
Securities Register or any such office or agency, which shall initially be at
the Corporate Trust Office of the Property Trustee.
SECTION 5.09. Appointment of Paying Agent.
The Paying Agent shall make Distributions to Securityholders from the
Payment Account and shall report the amounts of such Distributions to the
Property Trustee and the Administrative Trustees. Any Paying Agent shall have
the revocable power to withdraw funds from the Payment Account for the purpose
of making Distributions. The Administrative Trustees may revoke such power and
remove the Paying Agent, provided that such revocation and removal with respect
to the sole Paying Agent shall not become effective until the appointment of a
successor. The Paying Agent shall initially be the Property Trustee, and any
co-paying agent chosen by the Property Trustee and acceptable to the
Administrative Trustees and the Depositor. Any Person acting as Paying Agent
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Administrative Trustees and the Depositor, and, if applicable, the Property
Trustee, provided that such resignation with respect to the sole Paying Agent
shall not become effective until the appointment of a successor. In the event
that the Property Trustee shall no longer be the Paying Agent or a successor
Paying Agent shall resign or its authority to act be revoked, the Administrative
Trustees shall appoint a successor that is acceptable to the Property Trustee
(in the case of any other Paying Agent) and the Depositor to act as Paying Agent
(which shall be a bank or trust company and have a combined capital and surplus
of at least $50,000,000). The Administrative Trustees shall cause such
successor Paying Agent or any additional Paying Agent appointed by the
Administrative Trustees to execute and deliver to the Trustees an instrument in
which such successor Paying Agent or additional Paying Agent shall agree with
the Trustees that as Paying Agent, such successor Paying Agent or additional
Paying Agent will hold all sums, if any, held by it for payment to the
Securityholders in trust for the benefit of the Securityholders entitled thereto
until such sums shall be paid to such Securityholders. The
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Paying Agent shall return all of such sums remaining unclaimed to the Property
Trustee and upon removal of a Paying Agent such Paying Agent shall also return
such sums in its possession to the Property Trustee. The provisions of Sections
7.01, 7.03 and 7.06 shall apply to the Property Trustee also in its role as
Paying Agent, for so long as the Property Trustee shall act as Paying Agent and,
to the extent applicable, to any other Paying Agent appointed hereunder. Any
reference in this Trust Agreement to the Paying Agent shall include any co-
paying agent unless the context requires otherwise.
SECTION 5.10. No Transfer of Trust Common Securities by Depositor.
To the fullest extent permitted by law, any attempted transfer of the Trust
Common Securities shall be void. The Administrative Trustees shall cause each
Trust Common Securities Certificate issued to the Depositor to contain a legend
stating "THIS CERTIFICATE IS NOT TRANSFERABLE". By execution of this Trust
Agreement, the Depositor agrees to the foregoing restrictions.
SECTION 5.11. Book-Entry Trust Preferred Securities Certificates; Trust Common
Securities Certificate.
(a) A single Trust Common Securities Certificate representing the Trust
Common Securities shall be issued to the Depositor in the form of a definitive
Trust Common Securities Certificate.
(b) The Trust Preferred Securities, upon original issuance on the Closing
Date, will not be engraved but will be issued in the form of one printed or
typewritten Book-Entry Trust Preferred Securities Certificate, to be delivered
to The Depository Trust Company, the initial Depository, by, or on behalf of,
the Trust. Such Book-Entry Trust Preferred Securities Certificate shall
initially be registered on the Securities Register in the name of Cede & Co.,
the nominee of the initial Depository. No Trust Preferred Security Beneficial
Owner will receive a Definitive Trust Preferred Security Certificate
representing such Trust Preferred Security Beneficial Owner's interest in such
Book-Entry Trust Preferred Securities Certificate, except as provided in Section
5.12. Unless and until Definitive Trust Preferred Security Certificates have
been issued to the Trust Preferred Security Beneficial Owners pursuant to
Section 5.12:
(1) the provisions of this Section 5.11(b) shall be in full force and
effect;
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(2) the Trust and the Trustees shall be entitled to deal with the
Depository for all purposes of this Trust Agreement (including the payment of
Distributions on the Trust Preferred Securities and receiving approvals, votes
or consents hereunder) as the sole Holder of the Trust Preferred Securities and
shall have no obligation to the Trust Preferred Security Beneficial Owners;
(3) to the extent that the provisions of this Section 5.11(b) conflict
with any other provisions of this Trust Agreement, the provisions of this
Section 5.11(b) shall control; and
(4) the rights of the Trust Preferred Security Beneficial Owners shall
be exercised only through the Depository and shall be limited to those
established by law and agreements between such Trust Preferred Security
Beneficial Owners and the Depository and/or the Depository Participants and
pursuant to the Certificate Depository Agreement the Depository shall receive
and transmit payments of Distributions to such Depository Participants. The
Depository will make book-entry transfers among the Depository Participants;
provided, that solely for the purposes of determining whether the Holders of the
requisite amount of Trust Preferred Securities have voted on any matter provided
for in this Trust Agreement, so long as Definitive Trust Preferred Security
Certificates have not been issued, the Trustees may conclusively rely on, and
shall be fully protected in relying on, any written instrument (including a
proxy) delivered to the Trustees by the Depository setting forth the Trust
Preferred Security Beneficial Owners' votes or assigning the right to vote on
any matter to any other Person either in whole or in part.
SECTION 5.12. Definitive Trust Preferred Securities Certificates.
If (i) the Depositor advises the Trustees in writing that the Depository is
no longer willing or able to properly discharge its responsibilities with
respect to the Trust Preferred Securities Certificates or the Depository is no
longer registered or in good standing under the Securities Exchange Act of 1934,
as amended, or other applicable statute or regulation, and the Depositor is
unable to locate a qualified successor within 90 days, (ii) the Depositor at its
option advises the Trustees in writing that it elects to dissolve the book-entry
system through the Depository or (iii) an Event of Default occurs and is
continuing and the Holders of a Majority in Liquidation Preference of Trust
Preferred Securities determine to discontinue the system of book-entry transfers
through the Depository by so notifying the Property Trustee, then the
Administrative Trustees shall issue
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Definitive Trust Preferred Securities Certificates. Upon surrender to the
Administrative Trustees of the Book-Entry Trust Preferred Securities
Certificates by the Depository, accompanied by registration instructions, the
Administrative Trustees shall execute and deliver the Definitive Trust Preferred
Securities Certificates pursuant to this Trust Agreement in accordance with the
instructions of the Depository. Neither the Securities Registrar nor the
Trustees shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
The Definitive Trust Preferred Securities Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Administrative Trustees, as evidenced by the execution thereof
by not less than two Administrative Trustees.
SECTION 5.13. Rights of Securityholders.
The Securityholders shall not have any right or title to the Trust Property
other than the undivided beneficial interest in the assets of the Trust
conferred by their Trust Securities and they shall have no right to call for any
partition or division of property, profits or rights of the Trust except as
described below. The Trust Securities shall be personal property giving only
the rights specifically set forth therein and in this Trust Agreement. The
Trust Securities shall have no preemptive or similar rights and when issued and
delivered to Securityholders against payment of the purchase price therefor will
be fully paid and nonassessable interests in the Trust. The Holders of the
Trust Securities, in their capacities as such, shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.
ARTICLE 6. ACTS OF SECURITYHOLDERS; MEETINGS; VOTING
SECTION 6.01. Limitations on Voting Rights.
(a) Except as provided herein, in the Trust Guarantee and in the Indentures
and as otherwise required by law, no Holder of Trust Securities shall have any
right to vote or in any manner otherwise control the administration, operation
and management of the Trust or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Trust Securities
Certificates, be construed so as to constitute the Securityholders from time to
time as partners or members of an association.
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(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee or executing any
trust or power conferred on the Property Trustee with respect to the Debentures,
(ii) waive any past default which may be waived under Section 6.04 of the
Indentures, (iii) exercise any right to rescind or annul a declaration that the
principal of the Debentures is due and payable or (iv) consent to any amendment,
modification or termination of any of the Indentures, where such consent shall
be required, without, in each case, obtaining the prior consent of the Holders
of at least a Majority in Liquidation Preference of the Outstanding Trust
Preferred Securities; provided, however, that where such consent under the
-------- -------
applicable Indenture would require the consent of each holder of Debentures
issued thereunder affected thereby, no such consent shall be given by the
Property Trustee without the prior written consent of each Holder of Outstanding
Trust Preferred Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of Trust Preferred Securities,
except by a subsequent vote of the Holders of Trust Preferred Securities. The
Property Trustee shall notify all Holders of the Trust Preferred Securities of
any notice received from the Debenture Trustee as a result of the Trust being
the holder of the Debentures. In addition to obtaining the consent of the
Holders of the Trust Preferred Securities, prior to taking any of the foregoing
actions, the Trustees shall, at the expense of the Depositor, obtain an Opinion
of Counsel experienced in such matters to the effect that the Trust will not be
classified as an association taxable as a corporation or partnership for United
States Federal income tax purposes on account of such action and will continue
to be classified as a grantor trust for United States Federal income tax
purposes.
(c) Subject to Section 10.02(c) hereof, if any proposed amendment to the
Trust Agreement provides for, or the Trustees otherwise propose to effect, (i)
any action that would adversely affect in any material respect the powers,
preferences or special rights of the Trust Preferred Securities, whether by way
of amendment to this Trust Agreement or otherwise, or (ii) the dissolution or
liquidation of the Trust, other than pursuant to the terms of this Trust
Agreement, then the Holders of Outstanding Trust Preferred Securities will be
entitled to vote on such amendment or proposal and such amendment or proposal
shall not be effective except with the approval of the Holders of at least a
Majority in Liquidation Preference of the Outstanding Trust Preferred
Securities.
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SECTION 6.02. Notice of Meetings.
Notice of all meetings of the Preferred Securityholders, stating the time,
place and purpose of the meeting, shall be given by the Property Trustee
pursuant to Section 10.08 to each Preferred Securityholder of record, at his/her
registered address, at least 15 days and not more than 90 days before the
meeting. At any such meeting, any business properly before the meeting may be
so considered whether or not stated in the notice of the meeting. Any adjourned
meeting may be held as adjourned without further notice.
SECTION 6.03. Meetings of Preferred Securityholders.
(a) No annual meeting of Securityholders is required to be held. The
Administrative Trustees, however, shall call a meeting of Securityholders to
vote on any matter upon the written request of the Holders of at least 25% in
Liquidation Preference of the Outstanding Trust Preferred Securities and the
Administrative Trustees or the Property Trustee may, at any time in their
discretion, call a meeting of Preferred Securityholders to vote on any matters
as to which the Preferred Securityholders are entitled to vote.
(b) Holders of at least a Majority in Liquidation Preference of the
Outstanding Trust Preferred Securities, present in person or by proxy, shall
constitute a quorum at any meeting of Securityholders.
(c) If a quorum is present at a meeting, an affirmative vote of the Holders
of at least a Majority in Liquidation Preference of the Outstanding Trust
Preferred Securities present, either in person or by proxy, at such meeting
shall constitute the action of the Securityholders, unless this Trust Agreement
requires a greater number of affirmative votes.
SECTION 6.04. Voting Rights.
A Securityholder shall be entitled to one vote for each Trust Security in
respect of any matter as to which such Securityholder is entitled to vote.
SECTION 6.05. Proxies, etc.
At any meeting of Securityholders, any Securityholder entitled to vote
thereat may vote by proxy, provided that no proxy shall be voted at any meeting
unless it shall have been placed on file with the Administrative Trustees, or
with such other officer or agent of the Trust as the Administrative Trustees may
direct, for verification prior to the time at which such vote shall be taken.
Pursuant to a resolution of the Property Trustee, proxies may be solicited in
the name of
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the Property Trustee or one or more officers of the Property Trustee. Only
Securityholders of record shall be entitled to vote. When Trust Securities are
held jointly by several Persons, any one of them may vote at any meeting in
person or by proxy in respect of such Trust Securities, but if more than one of
them shall be present at such meeting in person or by proxy, and such joint
owners or their proxies so present disagree as to any vote to be cast, such vote
shall not be received in respect of such Trust Securities. A proxy purporting
to be executed by or on behalf of a Securityholder shall be deemed valid unless
challenged at or prior to its exercise, and the burden of proving invalidity
shall rest on the challenger. No proxy shall be valid more than three years
after its date of execution.
SECTION 6.06. Securityholder Action by Written Consent.
Any action which may be taken by Securityholders at a meeting may be taken
without a meeting if Holders of the proportion of the Outstanding Trust
Preferred Securities required to approve such action shall consent to the action
in writing.
SECTION 6.07. Record Date for Voting and Other Purposes.
For the purposes of determining the Securityholders who are entitled to
notice of and to vote at any meeting or by written consent, or for the purpose
of any other action, the Administrative Trustees may from time to time fix a
date, not more than 90 days prior to the date of any meeting of Securityholders,
as a record date for the determination of the identity of the Securityholders
for such purposes.
SECTION 6.08. Acts of Securityholders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided or permitted by this Trust Agreement to be given, made
or taken by Securityholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Securityholders in
person or by an agent duly appointed in writing; and, except as otherwise
expressly provided herein, such action shall become effective when such
instrument or instruments are delivered to the Administrative Trustees. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Securityholders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Trust Agreement and (subject to Section 7.02) conclusive, if
made in the manner provided in this Section 6.08.
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(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him/her the execution thereof. Where such execution
is by a signer acting in a capacity other than his/her individual capacity, such
certificate or affidavit shall also constitute sufficient proof of his/her
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, may also be proved
in any other manner which any Trustee receiving the same deems sufficient.
(c) The ownership of Trust Preferred Securities shall be proved by the
Securities Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other act of the Securityholder of any Trust Security shall bind every future
Securityholder of the same Trust Security and the Securityholder of every Trust
Security issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or suffered to
be done by the Trustees or the Trust in reliance thereon, whether or not
notation of such action is made upon such Trust Security.
(e) Without limiting the foregoing, a Securityholder entitled hereunder to
take any action hereunder with regard to any particular Trust Security may do so
with regard to all or any part of the Liquidation Preference of such Trust
Security or by one or more duly appointed agents, each of which may do so
pursuant to such appointment with regard to all or any part of such Liquidation
Preference.
(f) If any dispute shall arise between the Securityholders and the
Administrative Trustees or among such Securityholders or Trustees with respect
to the authenticity, validity or binding nature of any request, demand,
authorization, direction, consent, waiver or other Act of such Securityholder or
Trustee under this Article 6, then the determination of such matter by the
Property Trustee shall be conclusive with respect to such matter.
SECTION 6.09. Inspection of Records.
Upon reasonable notice to the Administrative Trustees and the Property
Trustee, the records of the Trust shall be open to inspection by Securityholders
during normal business hours for any purpose reasonably related to such
Securityholder's interest as a Securityholder.
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ARTICLE 7. THE TRUSTEES
SECTION 7.01. Certain Duties and Responsibilities.
(a) The duties and responsibilities of the Trustees shall be as provided by
this Trust Agreement and, in the case of the Property Trustee, also by the Trust
Indenture Act. The Property Trustee, other than during the occurrence and
continuance of an Event of Default, undertakes to perform only such duties as
are specifically set forth in this Trust Agreement and, upon an Event of
Default, must exercise the same degree of care and skill as a prudent person
would exercise or use in the conduct of his/her own affairs. The Trustees shall
have all the privileges, rights and immunities provided by the Delaware Business
Trust Act. Notwithstanding the foregoing, no provision of this Trust Agreement
shall require the Trustees to expend or risk their own funds or otherwise incur
any financial liability in the performance of any of their duties hereunder, or
in the exercise of any of their rights or powers, if they shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured to it. Whether or not therein
expressly so provided, every provision of this Trust Agreement relating to the
conduct or affecting the liability of or affording protection to the Trustees
shall be subject to the provisions of this Section 7.01. No Indemnified Person
shall be liable, responsible or accountable in damages or otherwise to the Trust
or any employee or agent of the Trust or its Affiliates for any loss, damage or
claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Trust Agreement or by law, except
that an Indemnified Person shall be liable for any such loss, damage or claim
incurred by reason of such Indemnified Person's gross negligence (but, in the
case of the Property Trustee, nothing in this Trust Agreement shall be construed
to release the Property Trustee from liability for its own negligent action or
its own negligent failure to act) or willful misconduct with respect to such
acts or omissions. To the extent that, at law or in equity, the Administrative
Trustees have duties (including fiduciary duties) and liabilities relating
thereto to the Trust or to the Securityholders, the Administrative Trustees
shall not be liable to the Trust or to any Securityholder for the Administrative
Trustees's good faith reliance on the provisions of this Trust Agreement. The
provisions of this Trust Agreement, to the extent that they restrict the duties
and liabilities of the Administrative Trustees otherwise existing at law or in
equity, are agreed by the Depositor and the Securityholders to replace such
other duties and liabilities of the Administrative Trustees.
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(b) All payments made by the Property Trustee or any other Paying Agent in
respect of the Trust Securities shall be made only from the income and proceeds
from the Trust Property. Each Securityholder, by its acceptance of a Trust
Security, agrees that (i) it will look solely to the income and proceeds from
the Trust Property to the extent available for distribution to it as herein
provided and (ii) the Trustees are not personally liable to it for any amount
distributable in respect of any Trust Security or for any other liability in
respect of any Trust Security. This Section 7.01(b) does not limit the
liability of the Trustees expressly set forth elsewhere in this Trust Agreement
or, in the case of the Property Trustee, in the Trust Indenture Act.
SECTION 7.02. Notice of Defaults; Direct Action by Securityholders.
Within 90 days after the occurrence of any Event of Default actually known
to the Property Trustee, the Property Trustee shall transmit, in the manner and
to the extent provided in Section 10.08, notice of such Event of Default to the
Securityholders, the Administrative Trustees and the Depositor, unless such
Event of Default shall have been cured or waived. If the Property Trustee has
failed to enforce its rights under this Trust Agreement or the Indentures, any
Securityholder may to the fullest extent permitted by law and subject to the
terms of this Trust Agreement and the Indentures institute a legal proceeding
directly against any Person to enforce the Property Trustee's rights under this
Trust Agreement or the applicable Indenture with respect to Debentures having a
principal amount equal to the aggregate Liquidation Preference of the Trust
Preferred Securities of such Securityholder without first instituting a legal
proceeding against the Property Trustee or any other Person. To the extent that
any action under the applicable Indenture is entitled to be taken by the holders
of at least a specified percentage of the principal amount of the outstanding
Debentures, Holders of at least the same percentage of the Liquidation
Preference of the Outstanding Trust Preferred Securities may also take such
action in the name of the Trust if such action has not been taken by the
Property Trustee. Notwithstanding the foregoing, if a Debenture Event of
Default (i) relating to the Depositor's failure to pay the principal of or
interest on the HECO Debentures has occurred and is continuing thereby resulting
in an Event of Default hereunder, then each Holder of Trust Preferred Securities
may institute a legal proceeding directly against the Depositor for enforcement
of payment to such Holder, as provided in Section 6.07 of the HECO Junior
Indenture and (ii) relating to the failure by MECO or HELCO, as the case may be,
to pay the principal of or interest on the MECO Debentures or HELCO Debentures,
as the case may be (and the related failure of HECO to perform its
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obligations as guarantor under the MECO Indenture or the HELCO Indenture, as the
case may be), has occurred and is continuing thereby resulting in an Event of
Default hereunder, then each Holder of the Trust Preferred Securities may
institute a legal proceeding directly against MECO or HELCO, as the case may be,
and against HECO as guarantor, for enforcement of payment as provided in Section
6.07 and Article 11 of each of the MECO Indenture or the HELCO Indenture, as
the case may be.
SECTION 7.03. Certain Rights of Property Trustee.
Subject to the provisions of Section 7.01:
(a) the Property Trustee may rely and shall be protected in acting or
refraining from acting in good faith upon any resolution, Opinion of Counsel,
certificate, written representation of a Holder or transferee, certificate of
auditors or any other certificate, statement, instrument, opinion, report,
notice, request, consent, order, appraisal, bond, debenture, note, other
evidence of indebtedness or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties;
(b) if, other than during the occurrence and continuance of an Event of
Default, (i) in performing its duties under this Trust Agreement, the Property
Trustee is required to decide between alternative courses of action or (ii) in
construing any of the provisions in this Trust Agreement, the Property Trustee
finds the same ambiguous or inconsistent with any other provisions contained
herein or (iii) the Property Trustee is unsure of the application of any
provision of this Trust Agreement, then, except as to any matter as to which the
Preferred Securityholders are entitled to vote under the terms of this Trust
Agreement, the Property Trustee shall deliver a notice to the Depositor
requesting written instructions of the Depositor as to the course of action to
be taken. The Property Trustee shall take such action, or refrain from taking
such action, as the Property Trustee shall be instructed in writing to take, or
to refrain from taking, by the Depositor; provided, however, that if the
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Property Trustee does not receive such instructions of the Depositor within ten
Business Days after it has delivered such notice, or such reasonably shorter
period of time set forth in such notice (which to the extent practicable shall
not be less than five Business Days), it may, but shall be under no duty to,
take or refrain from taking such action not inconsistent with this Trust
Agreement as it shall deem advisable and in the best interests of the
Securityholders, in which event the Property Trustee shall have no liability
except for its own negligent action, its own negligent failure to act or its own
willful misconduct;
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(c) the Property Trustee may consult with counsel or other experts of its
selection and the advice or opinion of such counsel or other experts with
respect to legal matters or advice within the scope of such experts' area of
expertise shall be full and complete authorization and protection in respect of
any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon;
(d) the Property Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Trust Agreement at the request or
direction of any of the Securityholders pursuant to this Trust Agreement, unless
such Securityholders shall have offered to the Property Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction;
(e) the Property Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
approval, bond, debenture, note or other evidence of indebtedness or other paper
or document, but the Property Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit; and
(f) the Property Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through its agents or
attorneys and the Property Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due care by it
hereunder.
SECTION 7.04. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Trust Securities Certificates
shall be taken as the statements of the Trust, and the Trustees do not assume
any responsibility for their correctness. The Trustees shall not be accountable
for the use or application by the Company or the Subsidiaries of the proceeds of
the Debentures.
SECTION 7.05. May Hold Securities.
Any Trustee or any other agent of any Trustee or the Trust, in its
individual or any other capacity, may become the owner or pledgee of Trust
Securities and, subject to Sections 7.08 and 7.13 and, except as provided in the
definition of the term "Outstanding" in Article 1, may otherwise deal with the
Trust with the same rights it would have if it were not a Trustee or such other
agent.
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SECTION 7.06. Compensation; Indemnity; Fees.
The Depositor agrees:
(a) to pay to the Trustees from time to time such compensation as shall
have been agreed in writing with the Depositor for all services rendered by them
hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse the
Trustees upon request for all reasonable expenses, disbursements and advances
incurred or made by the Trustees in accordance with any provision of this Trust
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its own negligent action, its own negligent
failure to act or its own wilful misconduct (or, in the case of the
Administrative Trustees, any such expense, disbursement or advance as may be
attributable to his/her gross negligence); and
(c) to the fullest extent permitted by applicable law, to indemnify and
hold harmless each Indemnified Person from and against any loss, damage or claim
incurred by such Indemnified Person by reason of any act or omission performed
or omitted by such Indemnified Person in good faith on behalf of the Trust and
in a manner such Indemnified Person reasonably believed to be within the scope
of authority conferred on such Indemnified Person by the Trust Agreement, except
that no Indemnified Person shall be entitled to be indemnified in respect of any
loss, damage or claim incurred by such Indemnified Person by reason of gross
negligence (or, in the case of the Property Trustee, negligence) or willful
misconduct with respect to such acts or omissions. To the fullest extent
permitted by applicable law, the Trust shall advance, from time to time,
expenses (including legal fees) incurred by an Indemnified Person in defending
any claim, demand, action, suit or proceeding prior to the final disposition of
such claim, demand, action, suit or proceeding upon receipt by the Trust of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled to be
indemnified for the underlying cause of action as authorized by this Trust
Agreement. No Trustee may claim any Lien or charge on any Trust Property as a
result of any amount due pursuant to this Section 7.06. The provisions of this
Section 7.06 shall survive the termination of this Trust Agreement.
(d) When the Property Trustee incurs expenses or renders services in
connection with a Debenture Event of Default relating to certain bankruptcy
events, the expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to constitute
expenses of administration under any applicable federal or state bankruptcy,
insolvency or other similar law.
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SECTION 7.07. Certain Trustees Required; Eligibility of Trustees.
(a) There shall at all times be a Property Trustee hereunder. The Property
Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act
to act as such and has a combined capital and surplus of at least $50,000,000.
If any such Person publishes reports of condition at least annually, pursuant to
law or to the requirements of its supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such Person
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Property Trustee
with respect to the Trust Securities shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
(b) There shall at all times be one or more Administrative Trustees
hereunder. Each Administrative Trustee shall be either a natural person who is
at least 21 years of age or a legal entity that shall act through one or more
persons authorized to bind that entity.
(c) There shall at all times be a Delaware Trustee. The Delaware Trustee
shall either be (i) a natural person who is at least 21 years of age and a
resident of the State of Delaware or (ii) a legal entity with its principal
place of business in the State of Delaware and that otherwise meets the
requirements of applicable Delaware law that shall act through one or more
persons authorized to bind such entity.
SECTION 7.08. Conflicting Interests.
If the Property Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Property Trustee shall either
eliminate such interest or resign, to the extent and in the manner provided by,
and subject to the provisions of, the Trust Indenture Act and this Trust
Agreement.
SECTION 7.09. Co-Trustees and Separate Trustee.
(a) Unless an Event of Default shall have occurred and be continuing, at
any time or times, for the purpose of meeting the legal requirements of the
Trust Indenture Act or of any jurisdiction in which any part of the Trust
Property may at the time be located, the Depositor and the Administrative
Trustees shall have power (i) to appoint, and upon the written request of the
Administrative Trustees the Depositor shall for such purpose join with the
Administrative Trustees in the execution,
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delivery, and performance of all instruments and agreements necessary or proper
to appoint, one or more Persons approved by the Property Trustee either to act
as co-trustee, jointly with the Property Trustee, of all or any part of such
Trust Property, or to the extent required by law to act as separate trustee of
any such Trust Property, in either case with such powers as may be provided in
the instrument of appointment, and (ii) to vest in such Person or Persons in the
capacity aforesaid, any property, title, right or power deemed necessary or
desirable, subject to the other provisions of this Section 7.09(a). If the
Depositor does not join in such appointment within 15 days after the receipt by
it of a request so to do, or in case a Debenture Event of Default has occurred
and is continuing, the Property Trustee alone shall have power to make such
appointment. Any co-trustee or separate trustee appointed pursuant to this
Section shall either be (i) a natural person who is at least 21 years of age and
a resident of the United States or (ii) a legal entity with its principal place
of business in the United States that shall act through one or more persons
authorized to bind such entity.
(b) Should any written instrument from the Depositor be required by any co-
trustee or separate trustee so appointed for more fully confirming to such co-
trustee or separate trustee such property, title, right, or power, any and all
such instruments shall, on request, be executed, acknowledged, and delivered by
the Depositor.
(c) Every co-trustee or separate trustee shall, to the extent permitted by
law, but to such extent only, be appointed subject to each of the following
terms:
(1) The Trust Securities shall be executed and delivered and all
rights, powers, duties, and obligations hereunder in respect of the custody
of securities, cash and other personal property held by, or required to be
deposited or pledged with, the Trustees specified hereunder, shall be
exercised, solely by such Trustees and not by such co-trustee or separate
trustee.
(2) The rights, powers, duties, and obligations hereby conferred or
imposed upon the Property Trustee in respect of any property covered by
such appointment shall be conferred or imposed upon and exercised or
performed by the Property Trustee or by the Property Trustee and such co-
trustee or separate trustee jointly, as shall be provided in the instrument
appointing such co-trustee or separate trustee, except to the extent that
under any law of any jurisdiction in which any particular act is to be
performed, the Property Trustee shall be incompetent or unqualified to
perform such act, in which event such
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rights, powers, duties and obligations shall be exercised and performed by
such co-trustee or separate trustee.
(3) The Property Trustee at any time, by an instrument in writing
executed by it, with the written concurrence of the Depositor, may accept
the resignation of or remove any co-trustee or separate trustee appointed
under this Section 7.09, and, in case a Debenture Event of Default has
occurred and is continuing, the Property Trustee shall have power to accept
the resignation of, or remove, any such co-trustee or separate trustee
without the concurrence of the Depositor. Upon the written request of the
Property Trustee, the Depositor shall join with the Property Trustee in the
execution, delivery, and performance of all instruments and agreements
necessary or proper to effectuate such resignation or removal. A successor
to any co-trustee or separate trustee so resigned or removed may be
appointed in the manner provided in this Section 7.09.
(4) No co-trustee or separate trustee hereunder shall be personally
liable by reason of any act or omission of the Property Trustee, or any
other trustee hereunder.
(5) The Property Trustee shall not be liable by reason of any act of a
co-trustee or separate trustee.
(6) Any Act of Holders delivered to the Property Trustee shall be
deemed to have been delivered to each such co-trustee and separate trustee.
SECTION 7.10. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of any Trustee and no appointment of a
successor Trustee pursuant to this Article 7 shall become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 7.11.
(b) Subject to the immediately preceding paragraph, any Trustee may resign
at any time with respect to the Trust Securities by giving written notice
thereof to the Securityholders.
(c) Unless an Event of Default shall have occurred and be continuing, any
Trustee may be removed at any time by Act of the Holder of the Trust Common
Securities. If an Event of Default shall have occurred and be continuing, the
Property Trustee or the Delaware Trustee, or both of them, may be removed at
such time only by Act of the Holders of at least a
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Majority in Liquidation Preference of the Outstanding Trust Preferred
Securities, delivered to such Trustee (in its individual capacity and on behalf
of the Trust). The Administrative Trustees may only be removed by the Holder of
Trust Common Securities at any time.
(d) If the instrument of acceptance by the successor Trustee required by
Section 7.11 shall not have been delivered to the Trustee within 30 days after
the giving of such notice of resignation or removal, the Trustee may petition,
at the expense of the Depositor, any court of competent jurisdiction for the
appointment of a successor Trustee.
(e) If any Trustee shall resign, be removed or become incapable of acting
as Trustee, or if a vacancy shall occur in the office of any Trustee for any
cause, at a time when no Event of Default shall have occurred and be continuing,
the Holder of Trust Common Securities, by Act of the Holder of Trust Common
Securities delivered to the retiring Trustee, shall promptly appoint a successor
Trustee or Trustees and the Trust and the retiring Trustee shall comply with the
applicable requirements of Section 7.11. If the Property Trustee or the
Delaware Trustee shall resign, be removed or become incapable of continuing to
act as the Property Trustee or the Delaware Trustee, as the case may be, at a
time when an Event of Default has occurred and is continuing, the Holders of
Trust Preferred Securities, by Act of the Securityholders of at least a Majority
in Liquidation Preference of the Outstanding Trust Preferred Securities
delivered to the retiring Trustee, shall promptly appoint a successor Trustee or
Trustees, and such successor Trustee shall comply with the applicable
requirements of Section 7.11. If any Administrative Trustee shall resign, be
removed or become incapable of acting as an Administrative Trustee at a time
when an Event of Default shall have occurred and be continuing, the Holder of
Trust Common Securities shall appoint a successor Administrative Trustee. If no
successor Trustee shall have been so appointed by the Holder of Trust Common
Securities or the Holders of Trust Preferred Securities and accepted appointment
in the manner required by Section 7.11, any Securityholder who has been a
Securityholder of Trust Securities for at least six months may, on behalf of
himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The Property Trustee shall give notice of each resignation and each
removal of a Trustee and each appointment of a successor Trustee to all
Securityholders in the manner provided in Section 10.08 and shall give notice to
the Depositor. Each notice shall include the name of the successor Trustee and
the address of its Corporate Trust Office if it is the Property Trustee.
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(g) Notwithstanding the foregoing or any other provision of this Trust
Agreement, in the event any Administrative Trustee or Delaware Trustee who is a
natural person dies or becomes, in the opinion of the Depositor, incompetent or
incapacitated, the vacancy created by such death, incompetence or incapacity may
be filled by (i) the unanimous act of the remaining Administrative Trustees if
there are at least two of them or (ii) otherwise by the Depositor (with the
successor in each case being a Person who satisfies the eligibility requirements
for an Administrative Trustee or for the Delaware Trustee, as the case may be,
set forth in Section 7.07).
SECTION 7.11. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Trustee, the
retiring Trustee and each successor Trustee shall execute and deliver to the
Trust and the retiring Trustee an amendment hereto wherein each successor
Trustee shall accept such appointment and which (i) shall contain such
provisions as shall be necessary or desirable to transfer and confirm to, and to
vest in, each successor Trustee all the rights, powers, trusts and duties of the
retiring Trustee and (ii) shall add to or change any of the provisions of this
Trust Agreement as shall be necessary to provide for or facilitate the
administration of the trusts hereunder by more than one Trustee, it being
understood that nothing herein or in such amendment shall constitute such
Trustees co-trustees of the same trust and that each such Trustee shall be
trustee of a trust or trusts hereunder separate and apart from any trust or
trusts hereunder administered by any other such Trustee and upon the execution
and delivery of such amendment the resignation or removal of the retiring
Trustee shall become effective to the extent provided therein and each such
successor Trustee, without any further act, deed or conveyance, shall become
vested with all the rights, powers, trusts and duties of the retiring Trustee
and the Trust; but, on request of the Trust or any successor Trustee, such
retiring Trustee shall, upon payment of its charges, duly assign, transfer and
deliver to such successor Trustee all Trust Property, all proceeds thereof and
money held by such retiring Trustee hereunder.
(b) Upon request of any such successor Trustee, the Trust shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Trustee all such rights, powers and trusts referred to in the
first or second preceding paragraph, as the case may be.
(c) No successor Trustee shall accept its appointment unless at the time of
such acceptance such successor Trustee shall be qualified and eligible under
this Article.
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SECTION 7.12. Merger, Conversion, Consolidation or Succession to Business.
Any Person into which any of the Trustees that is not a natural person may
be merged or converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which such Trustee
shall be a party, or any Person succeeding to all or substantially all the
corporate trust business of such Trustee, shall be the successor of such Trustee
hereunder, provided such Person shall be otherwise qualified and eligible under
this Article 7, without the execution or filing of any paper or any further act
on the part of any of the parties hereto.
SECTION 7.13. Preferential Collection of Claims Against Depositor or Trust.
If and when the Property Trustee or the Delaware Trustee shall be or become
a creditor (whether directly or indirectly, secured or unsecured) of the
Depositor or the Trust (or any other obligor upon the Debentures or the Trust
Securities), including under the terms of Section 7.05 hereof, the Property
Trustee or the Delaware Trustee, as the case may be, shall be subject to and
shall take all actions necessary in order to comply with the provisions of the
Trust Indenture Act regarding the collection of claims against the Depositor or
Trust (or any such other obligor).
SECTION 7.14. Reports by Property Trustee.
(a) The Property Trustee shall transmit to Holders such reports concerning
the Property Trustee and its actions under this Trust Agreement as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto. If required by Section 313(a) of the Trust Indenture
Act, the Property Trustee shall, within 60 days after each May 31 following the
date of this Trust Agreement deliver to Holders a brief report, dated as of such
May 31, which complies with the provisions of such Section 313(a).
(b) A copy of each such report shall, at the time of such transmission to
Holders, be filed by the Property Trustee with each stock exchange upon which
any Trust Preferred Securities are then listed, with the Commission and with the
Trust. The Trust will promptly notify the Property Trustee when any Trust
Preferred Securities are listed on any stock exchange.
SECTION 7.15. Reports to the Property Trustee.
The Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such documents, reports and information as
required by Section 314 of the Trust
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Indenture Act (if any) and the compliance certificate required by Section 314(a)
of the Trust Indenture Act in the form, in the manner and at the times required
by Section 314 of the Trust Indenture Act. Delivery of such reports, information
and documents to the Property Trustee is for informational purposes only and the
Property Trustee's receipt of such shall not constitute constructive notice of
any information contained therein, including the Depositor's or the Trust's
compliance with any of its covenants hereunder (as to which the Property Trustee
is entitled to rely exclusively on Officer's Certificates).
SECTION 7.16. Evidence of Compliance with Conditions Precedent.
The Depositor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee evidence of compliance with the conditions
precedent, if any, provided for in this Trust Agreement that relate to any of
the matters set forth in Section 314(c) of the Trust Indenture Act.
SECTION 7.17. Statements Required in Officer's Certificate and Opinion of
Counsel.
Each Officer's Certificate and Opinion of Counsel with respect to
compliance with a covenant or condition provided for in this Trust Agreement
shall include:
(a) a statement that each Person making such Officer's Certificate
or Opinion of Counsel has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
Officer's Certificate or Opinion of Counsel are based;
(c) a statement that, in the opinion of each such Person, such
Person has made such examination or investigation as is necessary to enable
such Person to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement that, in the opinion of such Person, such covenant
or condition has been complied with; provided, however, that with respect
to matters of fact not involving any legal conclusion, an Opinion of
Counsel may rely on an Officer's Certificate or certificates of public
officials.
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SECTION 7.18. Number of Administrative Trustees.
(a) The number of Administrative Trustees shall be three, provided that the
Holder of all of the Trust Common Securities by written instrument may increase
and, if increased, may decrease the number of Administrative Trustees.
(b) If an Administrative Trustee ceases to hold office for any reason and
the number of Administrative Trustees is not reduced pursuant to Section
7.18(a), or if the number of Administrative Trustees is increased pursuant to
Section 7.18(a), a vacancy shall occur. The vacancy shall be filled with an
Administrative Trustee appointed in accordance with Section 7.10.
(c) The death, resignation, retirement, removal, bankruptcy, incompetence
or incapacity to perform the duties of an Administrative Trustee shall not
operate to annul, dissolve or terminate the Trust. Whenever a vacancy shall
occur, until such vacancy is filled by the appointment of an Administrative
Trustee in accordance with Section 7.10, the Administrative Trustee in office,
regardless of their number (and notwithstanding any other provision of this
Trust Agreement), shall have all the powers granted to the Administrative
Trustees and shall discharge all the duties imposed upon the Administrative
Trustees by this Trust Agreement.
SECTION 7.19. Delegation of Power.
(a) Any Administrative Trustee may, by power of attorney consistent with
applicable law, delegate to any natural person over the age of 21 his/her power
for the purpose of executing any documents contemplated in Section 2.07(a),
including any registration statement or amendment thereto filed with the
Commission, or making any other governmental filing.
(b) The Administrative Trustees shall have power to delegate from time to
time to such of their number, if there is more than one Administrative Trustee,
or to the Depositor the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Administrative
Trustees or otherwise as the Administrative Trustees may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of the Trust, as set forth herein.
SECTION 7.20. Voting.
Except as otherwise provided in this Trust Agreement, the consent or vote
of the Administrative Trustees shall be approved by not less than a majority of
the Administrative Trustees.
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ARTICLE 8. DISSOLUTION AND LIQUIDATION
SECTION 8.01. Dissolution Upon Expiration Date.
Unless earlier dissolved, the Trust shall automatically dissolve on
December 31, 2050 (the "Expiration Date"), following the distribution of the
Trust Property in accordance with Section 8.04.
SECTION 8.02. Early Dissolution.
The earliest to occur of any of the following events is an "Early
Dissolution Event":
(a) the occurrence of a Bankruptcy Event in respect of, or the
dissolution or liquidation of, the Depositor;
(b) upon the occurrence and during the continuation of a Special
Event, the delivery or written direction to the Property Trustee by the
Depositor (which direction is wholly optional and within the discretion of
the Depositor) to dissolve the Trust and cause the distribution of a Like
Amount of Distributable Debentures to the Securityholders in exchange for
the Trust Preferred Securities in accordance with Section 8.04;
(c) the redemption of all of the Trust Securities; and
(d) an order for dissolution or liquidation of the Trust shall have
been entered by a court of competent jurisdiction.
SECTION 8.03. Termination of Obligations.
The respective obligations and responsibilities of the Trustees and the
Trust created and continued hereby shall terminate upon the latest to occur of
the following: (i) the distribution by the Property Trustee to Securityholders
upon the liquidation of the Trust pursuant to Section 8.04, or upon the
redemption of all of the Trust Securities pursuant to Section 4.02, of all
amounts required to be distributed hereunder upon the final payment of the Trust
Securities; (ii) the payment of any expenses owed by the Trust; and (iii) the
discharge of all administrative duties of the Administrative Trustees, including
the performance of any tax reporting obligations with respect to the Trust or
the Securityholders.
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SECTION 8.04. Dissolution and Liquidation.
(a) If an Early Dissolution Event specified in clause (a), (b) or (d) of
Section 8.02 occurs or upon the Expiration Date, the Trust shall be liquidated
by the Trustees as expeditiously as the Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to each Securityholder a Like Amount of
Distributable Debentures, subject to Sections 2.05(b) and 8.04(d). Notice of
liquidation shall be given by the Property Trustee by first-class mail, postage
prepaid, mailed not later than 30 nor more than 60 days prior to the Liquidation
Date to each Holder of Trust Securities at such Holder's address appearing in
the Securities Register. All notices of liquidation shall:
(1) state the Liquidation Date;
(2) state that from and after the Liquidation Date, the Trust
Securities will no longer be deemed to be Outstanding and any Trust
Securities Certificates not surrendered for exchange will be deemed to
represent the right to receive a Like Amount of Distributable Debentures,
as the case may be; and
(3) provide such information with respect to the mechanics by which
Holders may exchange Trust Securities Certificates for certificates
evidencing Distributable Debentures, or, if Section 8.04(d) applies,
receive a Liquidation Distribution, as the Administrative Trustees or the
Property Trustee shall deem appropriate.
(b) In order to effect the liquidation of the Trust and distribution of the
Distributable Debentures to Securityholders, the Property Trustee shall
establish a record date for such distribution (which shall be one Business Day
prior to the Liquidation Date; provided, however, that in the event that the
Trust Preferred Securities are not in book-entry-only form, such record date
shall be the date that is 15 days prior to the Liquidation Date) and either
itself acting as exchange agent or through the appointment of a separate
exchange agent, shall establish such procedures as it shall deem appropriate to
effect the distribution of such Debentures in exchange for the Outstanding Trust
Securities Certificates.
(c) Except where Section 8.02(c) or 8.02(d) applies, on or after the
Liquidation Date (i) the Trust Securities will no longer be deemed to be
Outstanding, (ii) certificates representing a Like Amount of the Distributable
Debentures will be issued to Holders of Trust Securities Certificates, upon
surrender of such certificates to the Administrative Trustees or their agent
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for exchange, (iii) the Depositor shall use its best efforts to have the
Distributable Debentures listed on the New York Stock Exchange or such other
exchange as the Trust Preferred Securities are then listed and shall take any
reasonable action necessary to effect the distribution of such Distributable
Debentures, (iv) any Trust Securities Certificates not so surrendered for
exchange will be deemed to represent a Like Amount of Distributable Debentures,
accruing interest at the rate provided for in the Distributable Debentures from
the last Distribution Date on which a Distribution was made on such Trust
Certificates until such certificates are so surrendered (and until such
certificates are so surrendered, no payments or interest or principal will be
made to Holders of Trust Securities Certificates with respect to such
Distributable Debentures) and (v) all rights of Securityholders holding Trust
Securities will cease, except the right of such Securityholders to receive
Distributable Debentures upon surrender of Trust Securities Certificates.
(d) In the event that, notwithstanding the other provisions of this Section
8.04, whether because of the occurrence of a Bankruptcy Event in respect of the
Depositor, an order for termination entered by a court of competent jurisdiction
or otherwise, distribution of the Distributable Debentures in the manner
provided herein is determined by the Property Trustee not to be practicable, the
Trust Property shall be liquidated, and the Trust shall be terminated, by the
Property Trustee in such manner as the Property Trustee determines. In such
event, on the date of the dissolution of the Trust, Securityholders will be
entitled to receive out of the assets of the Trust available for distribution to
Securityholders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, an amount equal to the Liquidation Preference per
Trust Security plus accumulated and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"). If, upon any such
termination, the Liquidation Distribution can be paid only in part because the
Trust has insufficient assets available to pay in full the aggregate Liquidation
Distribution, then, subject to the next succeeding sentence, the amounts payable
by the Trust on the Trust Securities shall be paid on a pro rata basis (based
upon Liquidation Preferences). The Holder of the Trust Common Securities will
be entitled to receive Liquidation Distributions upon any such termination pro
rata (determined as aforesaid) with Holders of Trust Preferred Securities,
except that, if a Debenture Event of Default has occurred and is continuing, the
Trust Preferred Securities shall have a priority over the Trust Common
Securities, and no Liquidation Distribution will be paid to the Holders of the
Trust Common Securities unless and until receipt by all Holders of the Trust
Preferred Securities of the entire Liquidation Distribution payable in respect
thereof.
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ARTICLE 9. MERGERS, ETC.
SECTION 9.01. Mergers, Consolidations, Conversions, Amalgamations or
Replacements of the Trust.
The Trust may not merge with or into, consolidate, convert, amalgamate, or
be replaced by, or convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety to any Person, except as described
below or as described in this Article 9. The Trust may, at the request of the
Depositor, with the consent of the Administrative Trustees and without the
consent of the Holders of the Trust Preferred Securities, merge with or into,
consolidate, convert, amalgamate, be replaced by or convey, transfer or lease
its properties and assets as an entirety or substantially as an entirety to a
trust organized as such under the laws of any State; provided, that (i) such
successor entity either (a) expressly assumes all of the obligations of the
Trust with respect to the Trust Preferred Securities or (b) substitutes for the
Trust Preferred Securities other securities having substantially the same terms
as the Trust Preferred Securities (the "Successor Securities") so long as the
Successor Securities rank the same as the Trust Preferred Securities rank with
respect to the payment of Distributions and payments upon liquidation,
redemption and otherwise, (ii) the Depositor expressly appoints a trustee of
such successor entity possessing the same powers and duties as the Property
Trustee as the holder of the Debentures, (iii) the Successor Securities are
listed, or any Successor Securities will be listed upon notification of
issuance, on any national securities exchange or other organization on which the
Trust Preferred Securities are then listed, if any, (iv) such merger,
consolidation, conversion, amalgamation, replacement, conveyance, transfer or
lease does not cause the Trust Preferred Securities (including any Successor
Securities) to be downgraded by any nationally recognized statistical rating
organization, (v) such merger, consolidation, conversion, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders of the Trust Preferred Securities
(including any Successor Securities) in any material respect, (vi) such
successor entity has a purpose substantially similar to that of the Trust, (vii)
prior to such merger, consolidation, conversion, amalgamation, replacement,
conveyance, transfer or lease, the Depositor has received an Opinion of Counsel
to the effect that (a) such merger, consolidation, conversion, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders of the Trust Preferred Securities
(including any Successor Securities) in any material respect, and (b) following
such merger, consolidation, conversion, amalgamation, replacement, conveyance
transfer or lease, neither the Trust nor such
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successor entity will be required to register as an investment company under the
1940 Act and (viii) the Depositor or any permitted successor or assignee owns
all of the common securities of such successor entity and guarantees the
obligations of such successor entity under the Successor Securities at least to
the extent provided by the Trust Guarantee and this Trust Agreement.
Notwithstanding the foregoing, the Trust shall not, except with the consent of
all Holders of the Trust Preferred Securities, merge with or into, consolidate,
convert, amalgamate, be replaced by or convey, transfer or lease its properties
and assets as an entirety or substantially as an entirety to, any other entity
or permit any other entity to consolidate, convert, amalgamate, merge with or
into, or replace it if such consolidation, conversion, amalgamation, merger,
replacement, conveyance, transfer or lease would cause the Trust or the
successor entity to be classified as other than a grantor trust for United
States Federal income tax purposes.
ARTICLE 10. MISCELLANEOUS PROVISIONS
SECTION 10.01. Limitation of Rights of Securityholders.
The death, incapacity, dissolution, termination, liquidation or bankruptcy
of any Person having an interest, beneficial or otherwise, in Trust Securities
shall not operate to annul, dissolve or terminate the Trust or this Trust
Agreement, nor entitle the legal representatives or heirs of such Person or any
Securityholder for such Person, to claim an accounting, take any action or bring
any proceeding in any court for a partition or winding-up of the arrangements
contemplated hereby, nor otherwise affect the rights, obligations and
liabilities of the parties hereto or any of them.
SECTION 10.02. Amendment.
(a) This Trust Agreement may be amended from time to time by the Trustees
and the Depositor, without the consent of any Securityholders, (i) to cure any
ambiguity, to correct or supplement any provisions in this Trust Agreement that
may be inconsistent with any other provision, or to include any other provisions
with respect to matters or questions arising under this Trust Agreement that
shall not be inconsistent with the other provisions of this Trust Agreement, or
(ii) to modify, eliminate or add to any provisions of this Trust Agreement to
such extent as shall be necessary to ensure that the Trust will be classified
for United States federal income tax purposes as a grantor trust at all times
that any Trust Preferred Securities and Trust Common Securities are outstanding
or to ensure that the Trust will not be required to register as an
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investment company under the 1940 Act; provided, however, that in the case of
clause (i) above, such action shall not adversely affect in any respect the
interests of any Holder of Trust Preferred Securities or Trust Common
Securities. Any amendments of this Trust Agreement pursuant to this Section
10.02(a) shall become effective when notice thereof is given to the
Securityholders.
(b) Except as provided in Section 10.02(a) and 10.02(c) hereof, any
provision of this Trust Agreement may be amended by the Trustees and the
Depositor with the consent of Holders of at least a Majority in Liquidation
Preference of the Outstanding Trust Preferred Securities.
(c) In addition to and notwithstanding any other provision in this Trust
Agreement, without the consent of each affected Securityholder, this Trust
Agreement may not be amended to (i) change the amount, timing or currency of any
Distribution or Liquidation Distribution on the Trust Securities or otherwise
adversely affect the method of payment of any Distribution or Liquidation
Distribution required to be made in respect of the Trust Securities as of a
specified date; (ii) change the redemption provisions of the Trust Securities;
(iii) restrict the right of a Securityholder to institute suit for the
enforcement of any such payment contemplated in (i) or (ii) above on or after
the related payment date; (iv) modify the first sentence of Section 2.06 hereof;
(v) authorize or issue any beneficial interest in the Trust other than as
contemplated by this Trust Agreement as of the date hereof; (vi) change the
conditions precedent for the Depositor to elect to dissolve the Trust and
distribute the Distributable Debentures to Holders of Trust Preferred Securities
as set forth in Section 8.02; or (vii) affect the limited liability of any
Holder of Trust Preferred Securities, and, notwithstanding any other provision
herein, without the unanimous consent of the Securityholders, paragraphs (b) and
(c) of this Section 10.02 may not be amended.
(d) Notwithstanding any other provisions of this Trust Agreement, no
amendment to this Trust Agreement shall be made without receipt by the Trust of
an Opinion of Counsel experienced in such matters to the effect that such
amendment or the exercise of any power granted to the Trustees in accordance
with such amendments will not affect the Trust's status as a grantor trust for
United States Federal income tax purposes or its exemption from regulation as an
"investment company" under the 1940 Act.
(e) Notwithstanding anything in this Trust Agreement to the contrary,
without the consent of the Depositor, this Trust Agreement may not be amended in
a manner which imposes any additional obligation on the Depositor.
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(f) In the event that any amendment to this Trust Agreement is made, the
Administrative Trustees shall promptly provide to the Depositor a copy of such
amendment.
(g) In executing any amendment to the Trust Agreement, the Property Trustee
shall be entitled to receive, and (subject to Section 8.01) shall be fully
protected in relying upon, an Officer's Certificate and Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Trust Agreement. Except as contemplated by Section 7.11, any Trustee may, but
shall not be obligated to, enter into any amendment to this Trust Agreement
which affects the Trustee's own rights, duties or immunities under this Trust
Agreement or otherwise.
SECTION 10.03. Severability.
In case any provision in this Trust Agreement or in the Trust Securities
Certificates shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 10.04. Governing Law.
THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE
SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT
AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES.
SECTION 10.05. Successors and Assigns.
This Trust Agreement shall be binding upon and shall inure to the benefit
of any successor to the Trust or successor Trustee or both, including any
successor by operation of law. Except in connection with a consolidation,
merger, conversion or sale involving the Depositor that is permitted under
Article 5 of the HECO Indenture and pursuant to which the assignee agrees in
writing to perform the Depositor's obligations hereunder, the Depositor shall
not assign its obligations hereunder.
SECTION 10.06. Headings.
The Article and Section headings are for convenience only and shall not
affect the construction of this Trust Agreement.
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SECTION 10.07. Reports, Notices and Demands.
(a) Any report, notice, demand or other communication which by any
provision of this Trust Agreement is required or permitted to be given or served
to or upon any Securityholder or the Depositor may be given or served in writing
by deposit thereof, first-class postage prepaid in the United States mail, hand
delivery or facsimile transmission, in each case, addressed, (i) in the case of
a Holder of a Trust Preferred Security, to such Holder of a Trust Preferred
Security as such Securityholder's name and address may appear on the Securities
Register; and (ii) in the case of the Holder of a Common Security or the
Depositor, to Hawaiian Electric Company, Inc., 900 Richards Street, Honolulu,
Hawaii 96813, Attention: Treasurer, facsimile no.: (808) 543-7966. Such
notice, demand or other communication to or upon a Securityholder shall be
deemed to have been sufficiently given or made, for all purposes, upon hand
delivery, mailing or transmission.
(b) Any notice, demand or other communication which by any provision of
this Trust Agreement is required or permitted to be given or served to or upon
the Trust, the Property Trustee or the Administrative Trustees shall be given in
writing addressed (until another address is published by the Trust) as follows:
(i) with respect to the Property Trustee to The Bank of New York, 101 Barclay
Street 21st Floor, New York, New York 10286, Attention: Corporate Trust Trustee
Administration; (ii) with respect to the Delaware Trustee, to The Bank of New
York (Delaware), White Clay Center, Route 273, Newark, Delaware 19711,
Attention: Corporate Trust Department; and (iii) with respect to the
Administrative Trustees, to the address above for notices to the Depositor,
marked "Attention: Administrative Trustees of HECO Capital Trust I c/o
Treasurer." Such notice, demand or other communication to or upon the Trust or
the Property Trustee shall be deemed to have been sufficiently given or made
only upon actual receipt of the writing by the Trust or the Property Trustee.
SECTION 10.08. Agreement Not to Petition.
Each of the Trustees and the Depositor agree for the benefit of the
Securityholders that, until at least one year and one day after the Trust has
been dissolved in accordance with Article 8, they shall not file, or join in the
filing of, a petition against the Trust under any Bankruptcy Laws or otherwise
join in the commencement of any proceeding against the Trust under any
Bankruptcy Law. In the event the Depositor or any of the Trustees takes action
in violation of this Section 10.09, the Property Trustee agrees, for the benefit
of Securityholders, that at the expense of the Depositor, it shall file an
answer with the bankruptcy court or otherwise properly contest the filing of
such petition by the Depositor or any of
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the Trustees, as applicable, against the Trust or the commencement of such
action and raise the defense that the Depositor has agreed in writing not to
take such action and should be stopped and precluded therefrom and such other
defenses, if any, as counsel for the Property Trustee or the Trust may assert.
The provisions of this Section 10.09 shall survive the dissolution of this Trust
Agreement.
SECTION 10.09. Trust Indenture Act; Conflict with Trust Indenture Act.
(a) This Trust Agreement is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Agreement and shall, to
the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a trustee for
the purposes of the Trust Indenture Act.
(c) If any provision hereof limits, qualifies or conflicts with another
provision hereof which is required to be included in this Trust Agreement by any
of the provisions of the Trust Indenture Act, such required provision shall
control. If any provision of this Trust Agreement modifies or excludes any
provision of the Trust Indenture Act which may be so modified or excluded, the
latter provision shall be deemed to apply to this Trust Agreement as so modified
or excluded, as the case may be.
(d) The application of the Trust Indenture Act to this Trust Agreement
shall not affect the nature of the Trust Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 10.10. Acceptance of Terms of Trust Agreement, Guarantees and
Indentures.
THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY
OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE
OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL
ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN
SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND
AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE TRUST
GUARANTEE, THE INDENTURES AND THE SUBSIDIARY GUARANTEES, AND SHALL CONSTITUTE
THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS
AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE
AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS.
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IN WITNESS WHEREOF, the parties have caused this Trust
Agreement to be duly executed, all as of the day and year first above written.
HAWAIIAN ELECTRIC COMPANY, INC.,
as Depositor
By: _____________________________
Name:
Title:
By: _____________________________
Name:
Title:
THE BANK OF NEW YORK, as Property
Trustee
By: _____________________________
Name:
Title:
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: _____________________________
Name:
Title:
T. MICHAEL MAY,
as Administrative Trustee
_________________________________
PAUL A. OYER,
as Administrative Trustee
_________________________________
MARVIN A. HAWTHORNE,
as Administrative Trustee
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EXHIBIT A
CERTIFICATE OF TRUST
OF
HECO CAPITAL TRUST I
THIS CERTIFICATE OF TRUST of HECO Capital Trust I (the "Trust"), dated
as of December 31, 1996, is being duly executed and filed by the undersigned, as
trustees, to form a business trust under the Delaware Business Trust Act (12
Del. C. (S) 3801 et seq.).
- ------- -------
1. Name. The name of the business trust formed hereby is HECO
----
Capital Trust I.
2. Delaware Trustee. The name and business address of the trustee
----------------
of the Trust with a principal place of business in the State of Delaware are The
Bank of New York (Delaware), White Clay Center, Route 273, Newark, Delaware
19711.
3. Effective Date. This Certificate of Trust shall be effective
--------------
upon filing.
IN WITNESS WHEREOF, the undersigned, being the trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
THE BANK OF NEW YORK, not in its individual capacity
but solely as trustee of the Trust
By: /s/ VIVIAN GEORGES
---------------------------------
Name: Vivian Georges
Title: Assistant Vice President
THE BANK OF NEW YORK (DELAWARE), not in its individual
capacity but solely as trustee of the Trust
By: /s/ JOSEPH ERNST
---------------------------------
Name: Joseph Ernst
Title: Assistant Vice President
T. MICHAEL MAY, not in his individual capacity, but
solely as trustee of the Trust
<PAGE>
/s/ MICHAEL MAY
-------------------------------------
Signature
PAUL A. OYER, not in his individual capacity, but
solely as trustee of the Trust
/s/ PAUL A. OYER
-------------------------------------
Signature
MARVIN A. HAWTHORNE, not in his individual capacity,
but solely as trustee of the Trust
/s/ MARVIN A. HAWTHORNE
-------------------------------------
Signature
2
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EXHIBIT B
March ___, 1997
The Depository Trust Company
55 Water Street, 49th Floor
New York, New York 10041-0099
Attention: General Counsel's Office
Re: HECO Capital Trust I
Trust Preferred Securities
CUSIP Number:
----------------------------
Ladies and Gentlemen:
The purpose of this letter is to set forth certain matters relating to
the issuance and deposit with The Depository Trust Company ("DTC") of HECO
Capital Trust I _____% Cumulative Quarterly Income Trust Preferred Securities,
Series 1997 (the "Trust Preferred Securities"), of HECO Capital Trust I, a
Delaware business trust (the "Issuer"), created pursuant to an Amended and
Restated Trust Agreement among Hawaiian Electric Company, Inc., a Hawaii
corporation ("HECO"), as Depositor, The Bank of New York, as Property Trustee,
The Bank of New York (Delaware), as Delaware Trustee, the Administrative
Trustees named therein and the holders, from time to time, of individual
beneficial interests in the assets of the Trust (the "Amended and Restated Trust
Agreement"). The payment of distributions on the Trust Preferred Securities and
payments due upon liquidation of the Issuer or redemption of the Trust Preferred
Securities, to the extent the Issuer has funds available for the payment
thereof, are guaranteed by HECO to the extent set forth in a Trust Guarantee
Agreement dated as of March 1, 1997 between HECO and The Bank of New York, as
trustee. HECO and the Issuer proposes to sell the Trust Preferred Securities to
certain Underwriters (the "Underwriters") pursuant to an Underwriting Agreement
dated March ____, 1997 by and among the Underwriters, the Issuer and HECO, and
the Underwriters wish to take delivery of the Trust Preferred Securities through
DTC. The Bank of New York is acting as transfer agent and registrar with
respect to the Trust Preferred Securities (the "Transfer Agent and Registrar").
To induce DTC to accept the Trust Preferred Securities as eligible for
deposit at DTC, and to act in accordance with DTC's Rules with respect to the
Trust Preferred
<PAGE>
Securities, the Issuer and the Transfer Agent and Registrar make the following
representations to DTC:
1. Prior to the closing of the sale of the Trust Preferred
Securities to the Underwriters, which is expected to occur on or about March
___, 1997, there shall be deposited with DTC one global certificate for the
Trust Preferred Securities (individually and collectively, the "Global
Certificate") registered in the name of DTC's nominee, Cede & Co., representing
an aggregate of 2,000,000 Trust Preferred Securities and bearing the following
legend:
Unless this certificate is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), 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 in such other name as is requested by an authorized
representative of DTC (and any payment hereon is made to Cede & Co. or
to such other entity as is requested by an authorized representative
of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
2. The Issuer: (a) understands that DTC has no obligation to, and
will not, communicate to its Participants or to any person having an interest in
the Trust Preferred Securities any information contained in the Trust Preferred
Securities certificate(s); and (b) acknowledges that neither DTC's Participants
nor any person having an interest in the Trust Preferred Securities shall be
deemed to have notice of the provisions of the Trust Preferred Securities
certificate(s) by virtue of submission of such certificate(s) to DTC.
3. The Amended and Restated Trust Agreement provides for the voting
by holders of the Trust Preferred Securities under certain limited
circumstances. The Issuer shall establish a record date for such purposes and
shall, to the extent possible, give DTC notice of such record date not less than
15 calendar days in advance of such record date.
4. In the event of a stock split, conversion, recapitalization,
reorganization or any other similar transaction resulting in the cancellation of
all or any part of the Trust Preferred Securities outstanding, the Issuer or the
Transfer Agent and Registrar shall send DTC a notice of such event at least 5
business days prior to the effective date of such event.
2
<PAGE>
5. In the event of distribution on, or an offering or issuance of
rights with respect to, the Trust Preferred Securities outstanding, the Issuer
or the Transfer Agent and Registrar shall send DTC a notice specifying: (a) the
amount of and conditions, if any, applicable to the payment of any such
distribution or any such offering or issuance of rights; (b) any applicable
expiration or deadline date or any date by which any action on the part of the
holders of Trust Preferred Securities is required; and (c) the date any required
notice is to be mailed by or on behalf of the Issuer to holders of Trust
Preferred Securities or published by or on behalf of the Issuer (whether by mail
or publication, the "Publication Date"). Such notice shall be sent to DTC by a
secure means (e.g., legible telecopy, registered or certified mail, overnight
----
delivery) in a timely manner designed to assure that such notice is in DTC's
possession no later than the close of business on the business day before the
Publication Date. The Issuer or the Transfer Agent and Registrar will forward
such notice either in a separate secure transmission for each CUSIP number or in
a secure transmission of multiple CUSIP numbers (if applicable) that includes a
manifest or list of each CUSIP number submitted in that transmission. (The
party sending such notice shall have a method to verify subsequently the use of
such means and the timeliness of such notice.) The Publication Date shall be
not less than 30 calendar days nor more than 60 calendar days prior to the
payment of any such distribution or any such offering or issuance of rights with
respect to the Trust Preferred Securities. After establishing the amount of
payment to be made on the Trust Preferred Securities, the Issuer or the Transfer
Agent and Registrar will notify DTC's Dividend Department of such payment 5
business days prior to the payment date. The notices provided for in this
paragraph shall be sent as described in paragraph 10.
6. In the event of a redemption by the Issuer of the Trust Preferred
Securities, notice to the holder of the Trust Preferred Securities specifying
the terms of the redemption and the Publication Date of such notice shall be
sent by the Issuer or the Transfer Agent and Registrar to DTC not less than 30
calendar days prior to such event by a secure means in the manner set forth in
paragraph 5. Such redemption notice shall be sent by telecopy to DTC's Call
Notification Department at (516) 227-4164 or (516) 227-4190, and receipt of such
notice shall be confirmed by telephoning (516) 227-4070. Notice by mail or by
any other means shall be sent to:
Call Notification Department
The Depository Trust Company
711 Stewart Avenue
Garden City, New York 11530-4719
3
<PAGE>
7. In the event of any invitation to tender the Trust Preferred
Securities, notice specifying the terms of the tender and the Publication Date
of such notice shall be sent by the Issuer or the Transfer Agent and Registrar
to DTC by a secure means and in a timely manner as described in paragraph 5.
Notices to DTC pursuant to this paragraph and notices of other corporate actions
(including mandatory tenders, exchanges and capital changes) shall be sent,
unless notification to another department is expressly provided for herein, by
telecopy to DTC's Reorganization Department at (212) 709-1093 or (212) 709-1094
and receipt of such notice shall be confirmed by telephoning (212) 709-6884, or
by mail or any other means to:
Manager, Reorganization Department
Reorganization Window
The Depository Trust Company
7 Hanover Square, 23rd Floor
New York, New York 10004-2695
8. All notices and payment advances sent to DTC shall contain the
CUSIP number or numbers of the Trust Preferred Securities and the accompanying
designation of the Trust Preferred Securities, which, as of the date of this
letter, is "HECO Capital Trust I _____% Cumulative Quarterly Income Trust
Preferred Securities, Series 1997".
9. The Issuer or the Transfer Agent and Registrar shall provide
automated notification of CUSIP-level detail for Distribution payments to DTC no
later than noon (Eastern Time) on the payment date.
10. Dividend payments shall be received by Cede & Co. as nominee of
DTC, or its registered assigns, in same-day funds or the equivalent no later
than 2:30 p.m. (Eastern Time) on each payment date. Absent any other
arrangements between the Issuer and DTC, such funds shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Dividend Deposit Account 066-026776
The Issuer or the Transfer Agent and Registrar shall provide Distribution
payment information to a standard announcement service subscribed to by DTC. In
the unlikely event that no such service exists, the Issuer agrees that it or the
Transfer Agent and Registrar shall provide this information directly to DTC in
advance of the Distribution payment date as soon as the information is
available. This information should be conveyed directly to DTC electronically.
If electronic transmission is not available, such information should be sent by
telecopy to
4
<PAGE>
DTC's Dividend Department at (212) 709-1723 or (212) 709-1886, and receipt of
such notices shall be confirmed by telephoning (212) 709-1270. Notices to DTC
pursuant to the above by mail or by any other means shall be sent to:
Manager: Announcements
Dividend Department
The Depository Trust Company
7 Hanover Square, 22nd Floor
New York, NY 10004-2695
11. DTC shall receive maturity and redemption payments and CUSIP-
level detail on the payable date in same-day funds by 2:30 p.m. (Eastern Time).
Absent any other arrangements between Agent and DTC, such payments shall be
wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Redemption Account 066-027306
in accordance with existing SDFS payment procedures in the manner set forth in
DTC's SDFS Paying Agent Operating Procedures, a copy of which has previously
been furnished to the Transfer Agent and Registrar.
12. DTC shall receive all reorganization payments and CUSIP-level
detail resulting from corporate actions (such as tender offers or mergers) on
the first payable date in same-day funds by 2:30 p.m. (Eastern Time). Absent
any other arrangements between the Transfer Agent and Registrar and DTC, such
payments shall be wired as follows:
The Chase Manhattan Bank
ABA 021000021
For credit to A/C The Depository Trust Company
Reorganization Account 066-027608
13. DTC may by prior written notice direct the Issuer and the
Transfer Agent and Registrar to use any other telecopy number or address of DTC
as the number or address to which notices or payments may be sent.
14. In the event of a conversion, redemption, or any other similar
transaction (e.g., tender made and accepted in response to the Issuer's or the
----
Transfer Agent and Registrar's invitation) necessitating a reduction in the
aggregate number of Trust Preferred Securities outstanding evidenced by a global
certificate, DTC, in its discretion: (a) may request the Issuer or the Transfer
Agent and Registrar to issue and countersign a new global certificate; or (b)
may make an
5
<PAGE>
appropriate notation on such global certificate indicating the date and amount
of such reduction.
15. DTC may discontinue its services as a securities depository with
respect to the Trust Preferred Securities at any time by giving reasonable prior
written notice to the Issuer and the Transfer Agent and Registrar (at which time
DTC will confirm with the Issuer or the Transfer Agent and Registrar the
aggregate number of Trust Preferred Securities deposited with it) and
discharging its responsibilities with respect thereto under applicable law.
Under such circumstances, the Issuer may determine to make alternative
arrangements for book-entry settlement for the Trust Preferred Securities, make
available one or more separate global certificates evidencing Trust Preferred
Securities to any Participant having Trust Preferred Securities credited to its
DTC account, or issue definitive Trust Preferred Securities to the beneficial
owners thereof, and in any such case, DTC agrees to cooperate fully with the
Issuer and the Transfer Agent and Registrar and to return the global
certificate, duly endorsed for transfer as directed by the Issuer or the
Transfer Agent and Registrar, together with any other documents of transfer
reasonably requested by the Issuer or the Transfer Agent and Registrar.
16. In the event that the Issuer determines that beneficial owners of
the global certificate(s) evidencing Trust Preferred Securities shall be able to
obtain definitive Trust Preferred Securities, the Issuer or the Transfer Agent
and Registrar shall notify DTC of the availability of such definitive Trust
Preferred Securities Certificates. In such event, the Issuer or the Transfer
Agent and Registrar shall issue, transfer and exchange definitive Trust
Preferred Securities in appropriate amounts, as required by DTC and others, and
DTC agrees to cooperate fully with the Issuer and the Transfer Agent and
Registrar and to return the global certificate(s), duly endorsed for transfer as
directed by the Issuer or the Transfer Agent and Registrar, together with any
other documents of transfer reasonably requested by the Issuer or the Transfer
Agent and Registrar.
17. The attached rider captioned "Representations for Pro Rata
Reduction of Principal" is an integral part of this letter and is incorporated
by reference, except that references to "principal" shall be references to
"stated liquidation preference" and references to "interest" shall be references
to "distribution."
Nothing herein shall be deemed to require the Transfer Agent and
Registrar to advance funds on behalf of the Issuer.
6
<PAGE>
Very truly yours,
HECO CAPITAL TRUST I
(As Issuer)
By: _____________________________
Name: T. Michael May
Administrative Trustee
By: _____________________________
Name: Paul A. Oyer
Administrative Trustee
By: _____________________________
Name: Marvin A. Hawthorne
Administrative Trustee
THE BANK OF NEW YORK
(As Property Trustee and Transfer Agent and Registrar)
By: _____________________________
Name:
Title:
RECEIVED AND ACCEPTED:
THE DEPOSITORY TRUST COMPANY
By: _____________________________
Authorized Officer
7
<PAGE>
EXHIBIT C
THIS CERTIFICATE IS NOT TRANSFERABLE
CERTIFICATE NO. NO. OF TRUST COMMON SECURITIES
- --------------- ------------------------------
TC-1 61,856
CERTIFICATE EVIDENCING TRUST COMMON SECURITIES
OF
HECO CAPITAL TRUST I
_____% TRUST COMMON SECURITIES
(LIQUIDATION PREFERENCE $25 PER COMMON SECURITY)
HECO Capital Trust I, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that Hawaiian
Electric Company, Inc. (the "Holder") is the registered owner of sixty-one
thousand eight hundred fifty-six (61,856) common securities of the Trust
representing undivided beneficial interests in the assets of the Trust and
designated as the _____% Trust Common Securities (Liquidation Preference $25 per
Common Security) (the "Trust Common Securities"). In accordance with Section
5.10 of the Trust Agreement (as defined below) the Trust Common Securities are
not transferable and any attempted transfer hereof shall be void. The
designations, rights, privileges, restrictions, preferences and other terms and
provisions of the Trust Common Securities are set forth in, and this certificate
and the Trust Common Securities represented hereby are issued and shall in all
respects be subject to the terms and provisions of, the Amended and Restated
Trust Agreement of the Trust dated as of March 1, 1997, as the same may be
amended from time to time (the "Trust Agreement"). The Trust will furnish a
copy of the Trust Agreement to the Holder without charge upon written request to
the Trust at its principal place of business or registered office.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
IN WITNESS WHEREOF, the Administrative Trustees of the Trust have
executed this certificate this __ day of March, 1997.
HECO CAPITAL TRUST I
<TABLE>
<S> <C> <C>
By: _____________________________ By: _____________________________ By: _____________________________
Name: T. Michael May Name: Paul A. Oyer Name: Marvin A. Hawthorne
Administrative Trustee Administrative Trustee Administrative Trustee
</TABLE>
<PAGE>
EXHIBIT D
This Trust Preferred Security is a Book-Entry Trust Preferred
Securities Certificate within the meaning of the Trust Agreement hereinafter
referred to and is registered in the name of The Depository Trust Company (the
"Depository") or a nominee of the Depository. This Trust Preferred Security is
exchangeable for Trust Preferred Securities registered in the name of a person
other than the Depository or its nominee only in the limited circumstances
described in the Trust Agreement and no transfer of this Preferred Security
(other than a transfer of this Preferred Security as a whole by the Depository
to a nominee of the Depository or by a nominee of the Depository to the
Depository or another nominee of the Depository) may be registered except in
limited circumstances.
Unless this Trust Preferred Security is presented by an authorized
representative of The Depository Trust Company, a New York corporation (55 Water
Street, New York) to HECO Capital Trust I or its agent for registration of
transfer, exchange or payment, and any Trust Preferred Security 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 hereon
is made to Cede & Co. or to such other entity as is requested by an authorized
representative of The Depository Trust Company, ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
<PAGE>
CERTIFICATE NO. NO. OF PREFERRED SECURITIES
- --------------- ---------------------------
TP- 2,000,000
CUSIP NO. AGGREGATE LIQUIDATION PREFERENCE
--------- --------------------------------
$50,000,000
CERTIFICATE EVIDENCING TRUST PREFERRED SECURITIES
OF
HECO CAPITAL TRUST I
_____% CUMULATIVE QUARTERLY INCOME TRUST PREFERRED SECURITIES,
SERIES 1997
(LIQUIDATION PREFERENCE $25 PER PREFERRED SECURITY)
HECO Capital Trust I, a statutory business trust created under the
laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co.
(the "Holder") is the registered owner of Two Million (2,000,000) securities of
the Trust representing undivided preferred beneficial interests in the assets of
the Trust and designated the HECO Capital Trust I _____% Cumulative Quarterly
Income Trust Preferred Securities, Series 1997 (Liquidation Preference $25 per
Preferred Security) (the "Trust Preferred Securities"). Subject to the terms of
Section 5.11 of the Trust Agreement (as defined herein) the Trust Preferred
Securities are freely transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer as provided in Section 5.04 of the
Trust Agreement. The designations, rights, privileges, restrictions, preferences
and other terms and provisions of the Trust Preferred Securities are set forth
in, and this certificate and the Trust Preferred Securities represented hereby
are issued under and shall in all respects be subject to the terms and
provisions of, the Amended and Restated Trust Agreement of the Trust dated as of
March 1, 1997, as the same may be amended from time to time (the "Trust
Agreement"). The Holder is entitled to the benefits of the Trust Guarantee
Agreement entered into by Hawaiian Electric Company, Inc., a Hawaii corporation,
and The Bank of New York, as trust guarantee trustee, dated as of March 1, 1997
(the "Trust Guarantee") to the extent provided therein, together with the
benefits resulting from the obligations of Hawaiian Electric Company, Inc. under
the Trust Agreement, its ____% Junior Subordinated Deferrable Interest
Debentures, Series 1997 (the "HECO Debentures") and the Junior Indenture related
thereto, and its full and unconditional guarantee, on a subordinated basis, of
the obligations of Maui Electric Company, Inc. and Hawaii Electric
<PAGE>
Light Company, Inc. under their respective ____% Junior Subordinated Deferrable
Interest Debentures, Series 1997 (the "MECO Debentures" and the "HELCO
Debentures," respectively) and related Junior Indentures. The Property Trustee
will furnish a copy of the aforementioned agreements and instruments to the
Holder without charge upon written request to the Trust at its principal place
of business.
Upon receipt of this certificate, the Holder is bound by the Trust
Agreement and is entitled to the benefits thereunder.
Holders of Trust Preferred Securities shall be entitled to receive
cumulative cash distributions at a rate per annum of % of the stated
liquidation preference of $25 per Trust Preferred Security. Distributions on the
Trust Preferred Securities shall, from the date of original issue, accumulate
and be cumulative and shall be payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year, commencing on March 31, 1997.
Amounts available to the Trust for distribution to the Holders of the Trust
Preferred Securities will be limited to payments received by the Trust on the
HECO Debentures, the MECO Debentures, and the HELCO Debentures. Distributions
not paid on the scheduled payment date will accumulate and compound quarterly
(to the extent permitted by applicable law) at the rate of % per annum.
The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, except for any period shorter than a full calendar month,
in which case the amount shall be computed on the basis of the actual number of
days elapsed in such period. If the Trust Preferred Securities are in book-entry
only form, Distributions will be payable to the holders of record of the Trust
Preferred Securities as they appear on the books and records of the Trust on the
Business Day prior to the relevant payment dates. If the Trust Preferred
Securities are not in book-entry only form, the relevant record dates shall be
the date which is 15 days prior to the relevant payment dates, whether or not a
Business Day. If Distributions are not paid when scheduled, the accumulated
Distributions shall be paid to the holders of record of the Trust Preferred
Securities as they appear on the books and records of the Trust on the relevant
record date as determined under the Trust Agreement with respect to the actual
payment date for such Distributions. In the event that any date on which a
Distribution is payable is not a Business Day, payment of such Distribution
shall be made on the next succeeding day which is a Business Day (without any
additional Distributions or other payment in respect of any such delay) except
that, if such Business Day falls in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day (without any
reduction of
2
<PAGE>
Distributions or other payments in respect of such early payment), in each case
with the same force and effect as if made on the date such payment was
originally payable.
The Trust Preferred Securities shall be redeemable as provided in the
Trust Agreement.
Unless otherwise expressly provided or unless the context otherwise
requires, capitalized terms or phrases used herein and not otherwise defined
herein shall have the meaning or meanings assigned to such terms or phrases in
the Trust Agreement.
IN WITNESS WHEREOF, the Administrative Trustees of the Trust have
executed this certificate this __th day of _________, 1997.
HECO CAPITAL TRUST I
By: _____________________________
Name: T. Michael May
Administrative Trustee
By: _____________________________
Name: Paul A. Oyer
Administrative Trustee
By: _____________________________
Name: Marvin A. Hawthorne
Administrative Trustee
CERTIFICATE OF AUTHENTICATION
This Certificate is one of the issue of Trust Preferred Securities
described in the Trust Agreement.
Date of Countersignature:_______________________.
THE BANK OF NEW YORK,
AS PROPERTY TRUSTEE
BY:______________________________
Authorized Signatory
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers to:
________________________________________________________________
________________________________________________________________
(Insert assignee's social security or tax identification number)
_______________________________________________________________
_______________________________________________________________
(Insert address and zip code of assignee)
__________ Trust Preferred Securities represented by this Trust Preferred
Securities Certificate and irrevocably appoints
_______________________________________________________________
_______________________________________________________________
agent to transfer said Trust Preferred Securities on the books of the Trust.
The agent may substitute another to act for him or her.
Date: ____________________________________
Signature: _______________________________
(Sign exactly as your name appears in this Trust Preferred Securities
Certificate)
<PAGE>
EXHIBIT 4(d)
HAWAIIAN ELECTRIC COMPANY, INC.
AND
THE BANK OF NEW YORK, AS TRUSTEE
JUNIOR INDENTURE
DATED AS OF MARCH 1, 1997
PROVIDING FOR THE ISSUANCE OF
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES IN SERIES
INCLUDING
_____% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES,
SERIES 1997
<PAGE>
Junior Indenture--Hawaiian Electric Company, Inc.
Certain Sections of this Junior Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939
<TABLE>
<CAPTION>
Trust Indenture Junior Indenture
Act Section Section
- ---------------------- ---------------------
<S> <C>
(S) 310 (a)(1) ............ 7.10
(a)(2) ............ 7.10
(a)(3) ............ Not Applicable
(a)(4) ............ Not Applicable
(a)(5) ............ Not Applicable
(b) ............ 7.08; 7.10; 11.01
(c) ............ Not Applicable
(S) 311 (a) ............ 7.11
(b) ............ 7.11
(c) ............ Not Applicable
(S) 312 (a) ............ 2.07
(b) ............ 11.03
(c) ............ 11.03
(S) 313 (a) ............ 7.06
(b)(1) ............ Not Applicable
(b)(2) ............ 7.06
(c) ............ 7.06; 11.02
(d) ............ 7.06
(S) 314 (a) ............ 4.03; 11.02
(b) ............ Not Applicable
(c)(1) ............ 2.02; 11.04; 11.05
(c)(2) ............ 2.02; 11.04; 11.05
(c)(3) ............ Not Applicable
(d) ............ Not Applicable
(e) ............ 11.05
(f) ............ Not Applicable
(S) 315 (a) ............ 7.01(b)
(b) ............ 7.05, 11.02
(c) ............ 7.01(a)
(d) ............ 7.01(c)
(e) ........... 6.11
(S) 316 (a)(1)(A) ........... 6.05
(a)(1)(B) ........... 6.04
(a)(2) ............ Not Applicable
(a) (last sentence) 2.10
(b) ............ 6.07
(c) ............ 1.05
(S) 317 (a)(1) ............ 6.08
(a)(2) ............ 6.09
(b) ............ 2.06
(S) 318 (a) ............ 11.01
</TABLE>
__________________
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed
to be a part of the Junior Indenture.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE........ 2
SECTION 1.01. Definitions............................... 2
SECTION 1.02. Other Definitions......................... 9
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act............................. 9
SECTION 1.04. Rules of Construction..................... 10
SECTION 1.05. Acts of Holders and Holders of Trust
Preferred Securities...................... 10
ARTICLE 2. THE DEBENTURES; THE SERIES 1997 DEBENTURES........ 11
SECTION 2.01. Issue of Debentures Generally............. 11
SECTION 2.02. Terms and Form of the Series 1997
Debentures................................ 13
SECTION 2.03. Payment of Principal and Interest......... 17
SECTION 2.04. Execution, Authentication and Delivery.... 19
SECTION 2.05. Registrar and Paying Agent................ 21
SECTION 2.06. Paying Agent to Hold Money in Trust....... 22
SECTION 2.07. Debentureholder Lists..................... 23
SECTION 2.08. Transfer and Exchange..................... 23
SECTION 2.09. Replacement Debentures.................... 24
SECTION 2.10. Outstanding Debentures; Determinations
of Holders' Action........................ 25
SECTION 2.11. Temporary Debentures...................... 26
SECTION 2.12. Book-Entry System......................... 26
SECTION 2.13. Cancellation.............................. 28
SECTION 2.14. CUSIP Numbers............................. 29
ARTICLE 3. REDEMPTION........................................ 29
SECTION 3.01. Redemption; Notice to Trustee............. 29
SECTION 3.02. Selection of Debentures to be Redeemed.... 30
SECTION 3.03. Notice of Redemption...................... 30
SECTION 3.04. Effect of Notice of Redemption............ 31
SECTION 3.05. Deposit of Redemption Price............... 31
SECTION 3.06. Debentures Redeemed in Part............... 31
ARTICLE 4. COVENANTS......................................... 31
SECTION 4.01. Payment of Debentures..................... 31
SECTION 4.02. Prohibition on Distributions, Etc......... 33
SECTION 4.03. SEC Reports............................... 33
SECTION 4.04. Compliance Certificates................... 34
SECTION 4.05. Further Instruments and Acts.............. 35
SECTION 4.06. Additional Sums........................... 35
SECTION 4.07. Payment of Expenses of Trust.............. 36
SECTION 4.08. Ownership of Trust Common Securities...... 36
ARTICLE 5. SUCCESSOR CORPORATION............................. 36
SECTION 5.01. When the Company May Merge, Etc........... 36
</TABLE>
i
<PAGE>
<TABLE>
<S> <C>
ARTICLE 6. DEFAULTS AND REMEDIES............................. 37
SECTION 6.01. Events of Default......................... 37
SECTION 6.02. Acceleration.............................. 39
SECTION 6.03. Other Remedies............................ 40
SECTION 6.04. Waiver of Past Defaults................... 41
SECTION 6.05. Control by Majority....................... 41
SECTION 6.06. Limitation on Suits....................... 42
SECTION 6.07. Rights of Holders to Receive Payment...... 43
SECTION 6.08. Collection Suit by the Trustee............ 43
SECTION 6.09. The Trustee May File Proofs of Claim...... 43
SECTION 6.10. Priorities................................ 44
SECTION 6.11. Undertaking for Costs..................... 44
SECTION 6.12. Waiver of Stay; Extension or Usury
Laws...................................... 45
SECTION 6.13. Suits by Holders of Trust Preferred
Securities................................ 45
ARTICLE 7. THE TRUSTEE....................................... 45
SECTION 7.01. Duties of the Trustee..................... 45
SECTION 7.02. Rights of the Trustee..................... 47
SECTION 7.03. Individual Rights of the Trustee.......... 47
SECTION 7.04. The Trustee's Disclaimer.................. 48
SECTION 7.05. Notice of Defaults........................ 48
SECTION 7.06. Reports by Trustee to Holders............. 48
SECTION 7.07. Compensation and Indemnity................ 49
SECTION 7.08. Replacement of Trustee.................... 50
SECTION 7.09. Successor Trustee by Merger............... 51
SECTION 7.10. Eligibility; Disqualification............. 51
SECTION 7.11. Preferential Collection of Claims
Against the Company....................... 51
ARTICLE 8. SATISFACTION AND DISCHARGE OF JUNIOR INDENTURE;
DEFEASANCE OF CERTAIN OBLIGATIONS; UNCLAIMED
MONEYS............................................ 51
SECTION 8.01. Satisfaction and Discharge of Junior
Indenture................................. 51
SECTION 8.02. Application by Trustee of Funds
Deposited for Payment of Debentures;
Miscellaneous............................. 55
SECTION 8.03. Repayment of Moneys Held by Paying
Agent..................................... 55
SECTION 8.04. Return of Moneys Held by the Trustee
and Paying Agent Unclaimed for Two
Years..................................... 55
ARTICLE 9. AMENDMENTS........................................ 56
SECTION 9.01. Without Consent of Holders................ 56
SECTION 9.02. With Consent of Holders................... 56
SECTION 9.03. Compliance with Trust Indenture Act....... 58
SECTION 9.04. Revocation and Effect of Consents;
Waivers and Actions....................... 58
SECTION 9.05. Notation on or Exchange of Debentures..... 58
</TABLE>
ii
<PAGE>
<TABLE>
<S> <C>
SECTION 9.06. Trustee to Execute Supplemental Junior
Indentures................................ 59
SECTION 9.07. Effect of Supplemental Junior
Indentures................................ 59
ARTICLE 10. SUBORDINATION.................................... 59
SECTION 10.01. Debentures Subordinated to Senior
Indebtedness............................. 59
SECTION 10.02. Priority and Payment of Proceeds in
Certain Events; Remedies Standstill...... 59
SECTION 10.03. Payments Which May Be Made Prior to
Notice................................... 61
SECTION 10.04. Rights of Holders of Senior
Indebtedness Not to Be Impaired.......... 61
SECTION 10.05. Trustee May Take Action to Effectuate
Subordination............................ 62
SECTION 10.06. Subrogation.............................. 62
SECTION 10.07. Obligations of Company Unconditional;
Reinstatement............................ 62
SECTION 10.08. Trustee Entitled to Assume Payments
Not Prohibited in Absence of Notice...... 63
SECTION 10.09. Right of Trustee to Hold Senior
Indebtedness............................. 64
SECTION 10.10. Reliance on Judicial Order or
Certificate of Liquidating Agent......... 64
SECTION 10.11. Trustee Not Fiduciary for Holders of
Senior Indebtedness...................... 65
ARTICLE 11. MISCELLANEOUS.................................... 65
SECTION 11.01. Trust Indenture Act Controls............. 65
SECTION 11.02. Notices.................................. 65
SECTION 11.03. Communication by Holders with Other
Holders.................................. 66
SECTION 11.04. Certificate and Opinion as to
Conditions Precedent..................... 67
SECTION 11.05. Statements Required in Certificate or
Opinion.................................. 67
SECTION 11.06. Severability Clause...................... 67
SECTION 11.07. Rules by Trustee, Paying Agent and
Registrar................................ 68
SECTION 11.08. Legal Holidays........................... 68
SECTION 11.09. Governing Law............................ 68
SECTION 11.10. No Recourse Against Others............... 68
SECTION 11.11. Successors............................... 68
SECTION 11.12. Multiple Original Copies of this
Junior Indenture......................... 68
SECTION 11.13. No Adverse Interpretation of Other
Agreements............................... 69
SECTION 11.14. Table of Contents; Headings, Etc......... 69
SECTION 11.15. Benefits of the Junior Indenture......... 69
</TABLE>
EXHIBIT A. Form of Hawaiian Electric Company, Inc., __% Junior Subordinated
Deferrable Interest Debenture, Series 1997.
iii
<PAGE>
JUNIOR INDENTURE (this "Indenture" or "Junior Indenture"), dated as of
March 1, 1997, by and between Hawaiian Electric Company, Inc., a corporation
duly organized and existing under the laws of the State of Hawaii (the
"Company"), and The Bank of New York, a New York banking corporation, as trustee
(the "Trustee").
WHEREAS, the Company may from time to time issue, authenticate and deliver
securities under this Indenture, in one or more series (the "Debentures").
WHEREAS, the Company may from time to time create or establish one or more
statutory business trusts for the purpose of issuing undivided beneficial
interests in the assets thereof (the "Trust Securities") and using the proceeds
thereof to acquire any of the Company's Debentures.
WHEREAS, the Company, as depositor, The Bank of New York, as Property
Trustee (the "Property Trustee I"), The Bank of New York, as Delaware Trustee
(the "Delaware Trustee I"), and the Administrative Trustees named therein have
heretofore duly declared and established HECO Capital Trust I, a Delaware
business trust ("Trust I"), by entering into a Trust Agreement dated as of
December 31, 1996 (the "Original Trust Agreement") and by executing and filing
with the Secretary of State of the State of Delaware a Certificate of Trust on
December 31, 1996.
WHEREAS, the Original Trust Agreement has been amended and restated
pursuant to an Amended and Restated Trust Agreement dated as of March 1, 1997
among the Company, as depositor, the Property Trustee I, the Delaware Trustee I,
the Administrative Trustees named therein and the holders, from time to time, of
undivided beneficial interests in the assets of Trust I (the "Trust I
Agreement").
WHEREAS, the Company has authorized the issuance of its _____% Junior
Subordinated Deferrable Interest Debentures, Series 1997 (the "Series 1997
Debentures") to be purchased by Trust I with a portion of the proceeds from the
issuance and sale of the Trust Securities of Trust I, and the Company has duly
authorized the execution and delivery of this Junior Indenture.
WHEREAS, all things necessary to make the securities issued hereunder, when
duly issued and executed by the Company
<PAGE>
and authenticated and delivered hereunder, the valid obligations of the Company,
and to make this Junior Indenture a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, have been done.
NOW THEREFORE, each of the Company and the Trustee, intending to be legally
bound hereby, agrees as follows for the benefit of the other party and for the
equal and ratable benefit of the Holders (as hereinafter defined) of the
securities issued hereunder, including the Series 1997 Debentures:
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Additional Series 1997 Debentures" means _____% Junior Subordinated
Deferrable Interest Debentures, Series 1997 of the Company issued under this
Indenture in connection with the Debenture Exchange and in an aggregate
principal amount equal to the aggregate principal amount of the Subsidiary
Debentures then held by Trust I and having the same terms as the Series 1997
Debentures then held by Trust I.
"Additional Sums" means the additional amounts, as provided in Section 4.06
hereof, as may be necessary in order that the amount of distributions then due
and payable by any Trust on its outstanding Trust Securities shall not be
reduced as a result of any additional taxes, duties or other governmental
charges to which such Trust has become subject.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. When used with respect to any Person,
"control" means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" and "controlled" have
meanings correlative to the foregoing.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" means (i) a copy of a resolution certified by the
Secretary or the Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee or (ii) a certificate signed by an
authorized officer or officers to whom
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<PAGE>
the Board of Directors has delegated its authority, and in each case, delivered
to the Trustee.
"Business Day" means any day that is not a Saturday, a Sunday or a day on
which banking institutions in the City of New York are authorized or required by
law or executive order to close.
"Capital Lease Obligations" of a Person means any obligation which is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such Person prepared in accordance with GAAP.
"Capital Stock" means any and all shares, interests, rights to purchase,
warrants, options, participation or other equivalents of or interests in
(however designated) corporate stock.
"Company" means Hawaiian Electric Company, Inc., a Hawaii corporation, or
any successor thereto.
"Company Order" means a written request or order signed in the name of the
Company by an Officer of the Company and delivered to the Trustee.
"Debenture Exchange" means the issuance of Debentures by the Company in
exchange for the Subsidiary Debentures held by Trust I pursuant to Section
2.05(b) of the Trust I Agreement.
"Debentureholder" or "Holder" means a Person in whose name a Debenture is
registered on the Registrar's books.
"Debentures" shall mean any of the securities of any series issued,
authenticated and delivered under this Junior Indenture.
"Default" means any event which is, or after notice or passage of time, or
both, would be, an Event of Default pursuant to Section 6.01 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Extension Period", with respect to any series of Debentures, means the
period during which the Company may elect to extend the interest payment period
on such series of the Debentures pursuant to Section 4.01(b) hereof; provided
that no Extension Period shall extend beyond the Stated Maturity Date or the
Redemption Date of any Debenture of such series.
3
<PAGE>
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board.
"HELCO" means Hawaii Electric Light Company, Inc., a corporation duly
organized under the laws of the State of Hawaii, or any successor thereto.
"HELCO Indenture" means the Junior Indenture, dated as of March 1, 1997, by
and between HELCO and The Bank of New York, a New York banking corporation, as
trustee thereunder, as amended or supplemented from time to time in accordance
with the terms thereof, including the provisions of the TIA that are deemed to
be a part thereof.
"Holder" or "Debentureholder" means a person in whose name a Debenture is
registered on the Registrar's books.
"Indebtedness" means, without duplication, with respect to the Company,
whether recourse is to all or a portion of the assets of the Company and whether
or not contingent, (i) every obligation of the Company for money borrowed; (ii)
every obligation of the Company evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (iii) every reimbursement
obligation of the Company with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of the Company; (iv)
every obligation of the Company issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business); (v) Capital Lease
Obligations of the Company; and (vi) every obligation of the type referred to in
clauses (i) through (v) above of another Person and all dividends of another
Person the payment of which, in either case, the Company has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise.
"Indenture" or "Junior Indenture" means this Junior Indenture, as amended
or supplemented from time to time in accordance with the terms hereof, including
the provisions of the TIA that are deemed to be a part hereof.
"Interest Payment Date", when used with respect to the Debentures of any
series, means the stated maturity of any installment of interest on the
Debentures of that series.
"Issue Date", with respect to a series of Debentures, means the date on
which the Debentures of such series are originally issued.
4
<PAGE>
"MECO" means Maui Electric Company, Limited, a corporation duly organized
under the laws of the State of Hawaii, or any successor thereto.
"MECO Indenture" means the Junior Indenture, dated as of March 1, 1997, by
and between MECO and The Bank of New York, a New York banking corporation, as
trustee thereunder, as amended or supplemented from time to time in accordance
with the terms thereof, including the provisions of the TIA that are deemed to
be a part thereof.
"Officer" means, with respect to any corporation, the Chairman of the
Board, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of such corporation.
"Officer's Certificate" means a written certificate containing the
applicable information specified in Sections 11.04 and 11.05 hereof, signed in
the name of the Company by any one or more of its Officers, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion containing the applicable
information specified in Sections 11.04 and 11.05 hereof, by legal counsel (who
may be counsel to the Company) and is reasonably acceptable to the Trustee.
"Paying Agent" means any Person authorized by the Company to pay the
principal of and premium, if any, and interest on the Debentures of any series
on behalf of the Company.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Predecessor Debentures" of any particular Debenture means every previous
Debenture evidencing all or a portion of the same debt as that evidenced by such
particular Debenture; and for purposes of this definition, any Debenture
authenticated and delivered under Section 2.09 hereof in exchange for or in lieu
of a mutilated, destroyed, lost or stolen Debenture shall be deemed to evidence
the same debt as the mutilated, destroyed, lost or stolen Debenture.
"Property Trustee I" means The Bank of New York and its successors and
assigns, as property trustee under the Trust I Agreement.
"Record Date", with respect to any series of the Debentures, means the
Regular Record Date, the Special Record Date or any date set to determine the
Holders of Debentures of
5
<PAGE>
such series entitled to vote, consent, make a request or exercise any other
right associated with such series of Debentures.
"Redemption Date", with respect to any Debentures of any series to be
redeemed, means the date specified for the redemption thereof in accordance with
the terms thereof and pursuant to Article 3 of this Junior Indenture.
"Redemption Price", with respect to any Debentures of any series to be
redeemed, means the price at which such Debenture is to be redeemed in
accordance with the terms thereof and pursuant to Article 3 of this Junior
Indenture.
"Regular Record Date", with respect to an interest payment on any
Debentures of any series, means the date specified for the determination of
Holders entitled to receive payment of interest on the next succeeding Interest
Payment Date in accordance with the terms thereof or this Indenture.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means, with respect to the Company, the principal of
(and premium, if any) and interest, if any (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating to
the Company whether or not such claim for post-petition interest is allowed in
such proceeding), on Indebtedness, whether incurred on or prior to the date of
this Indenture or thereafter incurred, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are not superior in right of payment to the Debentures or
to other Indebtedness which is pari passu with, or subordinated to, the
Debentures; provided, however, that Senior Indebtedness shall not be deemed to
include (i) any Indebtedness of the Company which, when incurred and without
respect to any election under Section 1111(b) of the Bankruptcy Code, was
without recourse to the Company, (ii) any Indebtedness of the Company to any of
its subsidiaries, (iii) Indebtedness to any employee of the Company, (iv) any
liability for taxes, and (v) indebtedness or monetary obligations to trade
creditors or assumed by the Company or any of its subsidiaries in the ordinary
course of business in connection with the obtaining of materials or services.
"Series 1997 Debentures" means any of the Company's _____% Junior
Subordinated Deferrable Interest Debentures, Series 1997
6
<PAGE>
issued under this Junior Indenture, including, on or after the date of the
Debenture Exchange, any Additional Series 1997 Debentures issued in such
Debenture Exchange.
"Special Record Date" for the payment of any Defaulted Interest on the
Debentures of any series means the date determined pursuant to Section 2.03(c)
hereof.
"Stated Maturity Date", with respect to any Debenture or any installment of
principal thereof, means the date specified for such Debenture as the fixed date
on which the principal of such Debenture or such installment is due and payable,
as such date may be shortened or extended pursuant to the terms thereof or this
Indenture.
"Subsidiary" means MECO, HELCO and any other corporation, association,
partnership, trust or other business entity of which more than 50% of the total
voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) the Company,
(ii) the Company and one or more Subsidiaries or (iii) one or more Subsidiaries.
"Subsidiary Debentures" means, collectively the _____% Junior Subordinated
Deferrable Interest Debentures, Series 1997 of HELCO issued pursuant to the
HELCO Indenture and the _____% Junior Subordinated Deferrable Interest
Debentures, Series 1997 of MECO issued pursuant to the MECO Indenture.
"Subsidiary Guarantees" mean the Company's full and unconditional
guarantees of the obligations of HELCO and MECO as set forth in Article 11 of
the HELCO Indenture and the MECO Indenture, respectively.
"TIA" means the Trust Indenture Act of 1939, as amended and as in effect on
the date of this Junior Indenture; provided, however, that if the TIA is amended
after such date, TIA means, to the extent required by any such amendment, the
TIA as so amended.
"Trust" means any statutory business trust created by the Company to issue
Trust Securities and to use the proceeds from the sale thereof to purchase
Debentures.
"Trust Common Securities" means common securities of a Trust, representing
undivided beneficial interests, excluding the interests represented by Trust
Preferred Securities, in the assets of such Trust.
"Trust Guarantee Agreement" means the Trust I Guarantee Agreement or any
other similar guarantee by the Company with respect to any securities of any of
its Subsidiaries, provided that the proceeds from the issuance of such
securities were used to purchase junior subordinated deferrable interest
debentures issued by the Company or any Subsidiary.
"Trust I" means HECO Capital Trust I, a Delaware statutory business trust
created under the Delaware Business Trust Act, Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. (S) 3801, et seq.
7
<PAGE>
"Trust I Agreement" means the Amended and Restated Trust Agreement, dated
as of March 1, 1997, among the Company, as depositor, the Property Trustee I,
the Delaware Trustee I, the Administrative Trustees named therein and the
holders, from time to time, of undivided beneficial interests in the assets of
Trust I, as the same may be amended and modified from time to time.
"Trust I Common Securities" means the Trust Common Securities of Trust I,
representing the undivided beneficial interests, excluding the interests
represented by Trust I Preferred Securities, in the assets of Trust I.
"Trust I Guarantee Agreement" means the Trust Guarantee Agreement dated as
of March 1, 1997 from the Company, as guarantor, to The Bank of New York, as
Trust Guarantee Trustee, with respect to the Trust I Preferred Securities.
"Trust I Preferred Securities" means the Trust Preferred Securities of
Trust I, representing the undivided preferred beneficial interests in the assets
of Trust I, having a liquidation preference of $25 per security and having
rights provided therefor in the Trust I Agreement.
"Trust Officer", when used with respect to the Trustee, means any Vice
President, any Assistant Vice President, any trust officer, or assistant trust
officer or any other officer of the corporate trust department of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Trust Preferred Securities" means preferred securities of a Trust,
representing undivided preferred beneficial interests in the assets of such
Trust with a preference under certain circumstances with respect to cash
distributions and amounts payable on liquidation, redemption or otherwise.
8
<PAGE>
"Trust Securities" means the undivided beneficial interests in the assets
of a Trust.
"Trustee" means The Bank of New York, unless and until a successor replaces
it pursuant to the applicable provisions of this Junior Indenture and,
thereafter, shall mean such successor.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
SECTION 1.02. Other Definitions.
<TABLE>
<CAPTION>
TERM DEFINED IN SECTION
---- ------------------
<S> <C>
"Act"............................................. 1.05(a)
"Bankruptcy Law".................................. 6.01(c)
"Custodian"....................................... 6.01(c)
"Defaulted Interest".............................. 2.03(c)
"Depository"...................................... 2.12(a)
"Event of Default"................................ 6.01(a)
"Global Debenture"................................ 2.12(a)
"Investment Company Event"........................ 3.01(a)
"Legal Holiday"................................... 11.08
"Notice of Default"............................... 6.01(a)
"Securities Register"............................. 2.05(a)
"Registrar"....................................... 2.05(a)
"Successor"....................................... 5.01(a)
"Special Event"................................... 3.01(a)
"Tax Action"...................................... 3.01(a)
"Tax Event"....................................... 3.01(a)
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Junior Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Junior
Indenture. The following TIA terms used in this Junior Indenture have the
following meanings:
"Junior Indenture securities" means the Debentures.
"Junior Indenture security holder" means a Debentureholder or Holder.
"Junior Indenture to be qualified" means this Junior Indenture.
"Junior Indenture trustee" or "institutional trustee" means the
Trustee.
9
<PAGE>
"Obligor" on the Junior Indenture securities means the Company and any
other obligor on the Debentures.
All other TIA terms used in this Junior Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rules have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) Each capitalized term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(c) "or" is not exclusive;
(d) "including" means including, without limitation;
(e) words in the singular include the plural, and words in the plural
include the singular; and
(f) "herein," "hereof" and other words of similar import refer to this
Junior Indenture as a whole and not to any particular Article,
Section or other subdivision.
SECTION 1.05. Acts of Holders and Holders of Trust Preferred Securities.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Junior Indenture to be given or taken by
Holders or by holders of Trust Preferred Securities may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders or holders of Trust Preferred Securities, as applicable, in person
or by an agent duly appointed in writing and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of Holders or holders of Trust Preferred Securities signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Junior Indenture and conclusive in favor of the Trustee and the Company, if made
in the manner provided in this Section.
10
<PAGE>
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved in any manner which the Trustee deems sufficient.
(c) The ownership of Debentures shall be proved by the Securities Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Debenture shall bind every future Holder of
the same Debenture and the Holder of every Debenture issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Debenture.
(e) If the Company solicits from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a resolution of its Board of Directors, fix in
advance a Record Date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. If such a Record Date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such Record Date, but only Holders of
record at the close of business on such Record Date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of outstanding Debentures have authorized or agreed or consented to
such request, demand, authorization, direction, notice, consent, waiver or other
Act, and for that purpose the outstanding Debentures shall be computed as of
such Record Date.
ARTICLE 2. THE DEBENTURES; THE SERIES 1997 DEBENTURES
SECTION 2.01. Issue of Debentures Generally.
(a) The aggregate principal amount of any series of Debentures which may be
authenticated and delivered under this Junior Indenture is unlimited.
(b) The Debentures may be issued in one or more series as from time to time
shall be authorized by the Board of Directors pursuant to one or more indentures
supplemental hereto or Officer's Certificates authorized pursuant to Board
Resolutions. The Debentures of each series shall be pari passu with any and all
other notes, debentures and other evidences of indebtedness of the Company that
shall contain or have applicable thereto subordination provisions substantially
identical in effect to the subordination provisions set forth in Section 10.01
hereof
11
<PAGE>
providing for such indebtedness being junior and subordinate in right of payment
to all Senior Indebtedness.
(c) The Debentures of each series and the Trustee's Certificate of
Authentication shall be substantially in the form attached to this Junior
Indenture as Exhibit A or, in the case of any series other than the Series 1997
Debentures, substantially in the forms to be attached as exhibits to an
indenture supplemental hereto or an Officer's Certificate authorized pursuant to
a Board Resolution creating such series with such inclusions, omissions and
variations as to letters, years, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with the
provisions of this Junior Indenture, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any securities exchange on which such Debentures may be listed, or
to conform to usage.
(d) Other series of Debentures may differ from the Series 1997 Debentures,
and as and between series, in respect of any or all of the following matters:
(1) designation;
(2) Stated Maturity Date or Dates, which may be serial, and the
Company's option, if any, to shorten or extend the Stated Maturity Date or
Dates;
(3) interest rate or method of determination of the interest rate;
(4) the basis upon which interest shall be computed if other than a
360-day year composed of twelve 30-day months;
(5) Interest Payment Dates and Regular Record Dates therefor;
(6) the maximum duration of the Extension Period;
(7) Issue Date or Dates and interest accrual provisions;
(8) authorized denominations;
(9) the place or places for the payment of principal (and premium,
if any) and interest;
(10) the aggregate principal amount of Debentures of such series
which may be issued;
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<PAGE>
(11) the optional and mandatory redemption provisions, if any;
(12) provisions, if any, for any sinking or analogous fund;
(13) the currency or currencies in which the principal of and
premium, if any, and interest on the Debentures may be paid by the Company;
(14) if the Debentures of any series will be issued as Global
Debentures pursuant to Section 2.12 hereof, the identity of the Depository
and any other terms relating thereto to the extent not set forth in Section
2.12 hereof; and
(15) any other provisions expressing or referring to the terms and
conditions upon which the Debentures of such series are to be issued under
this Junior Indenture which are not in conflict with the provisions of this
Junior Indenture;
in each case as determined by the Board of Directors and specified in an
indenture supplemental hereto or in an Officer's Certificate authorized pursuant
to a Board Resolution creating such series.
SECTION 2.02. Terms and Form of the Series 1997 Debentures.
(a) The Series 1997 Debentures shall be designated "Hawaiian Electric
Company, Inc., _____% Junior Subordinated Deferrable Interest Debentures, Series
1997." The Series 1997 Debentures and the Trustee's Certificate of
Authentication shall be substantially in the form of Exhibit A attached hereto.
The Series 1997 Debentures shall initially be represented by a single
certificate registered in the name of The Bank of New York as Property Trustee
for the benefit of Trust I. The terms and provisions contained in the Series
1997 Debentures shall constitute, and are hereby expressly made, a part of this
Junior Indenture. The Company and the Trustee, by their execution and delivery
of this Junior Indenture, expressly agree to such terms and provisions and to be
bound thereby.
(b) The Series 1997 Debentures shall be issued at 100% of their principal
amount.
(c) The aggregate principal amount of Series 1997 Debentures outstanding at
any time may not exceed $31,546,400, except if the Debenture Exchange has
occurred the aggregate principal amount of Series 1997 Debentures outstanding at
any time (including the Additional Series 1997 Debentures) may not exceed
$51,546,400, and except
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<PAGE>
as provided in Section 2.09 hereof. The Series 1997 Debentures shall be
authenticated and delivered upon receipt by Trustee of the items specified in
Section 2.04(d) hereof.
(d) The Stated Maturity Date of the Series 1997 Debentures is March __,
2027. The Stated Maturity Date for the Series 1997 Debentures may be shortened
or extended at any time at the election of the Company for one or more periods,
but in no event to a date earlier than March ___, 2002 or to a date later than
March ___, 2046; provided that at the time such election is made and at the time
of any such shortening or extension (i) an Event of Default described in Section
6.01(a)(1), 6.01(a)(3) or 6.01(a)(4) hereof has not occurred and is continuing
and, unless the Debenture Exchange has occurred, an "Event of Default" described
in Section 6.01(a)(1), 6.01(a)(3) or 6.01(a)(4) of either of the MECO Indenture
and the HELCO Debenture has not occurred and is continuing (ii) Trust I is not
delinquent in payment of distributions on the Trust I Preferred Securities for
more than one full quarterly distribution period, (iii) no deferred
distributions on the Trust I Preferred Securities are accumulated, and (iv) none
of the Series 1997 Debentures and, unless the Debenture Exchange has occurred,
the Subsidiary Debentures are rated less than BBB- by Standard & Poor's or Baa3
by Moody's Investors Services, Inc. or the equivalent by any other nationally
recognized statistical rating organization.
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(e) The interest rate for the Series 1997 Debentures is _____% per annum.
The Interest Payment Dates for the Series 1997 Debentures are March 31, June 30,
September 30 and December 31 of each year, commencing March 31, 1997. In the
event that any date on which interest is payable on the Series 1997 Debentures
is not a Business Day, then payment of the interest payable on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay), except that if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day (without any reduction in interest or other
payments in respect of such early payment), in each case with the same force and
effect as if made on the date such payment was originally payable. The Regular
Record Date for each Interest Payment Date for the Series 1997 Debentures shall
be the close of business on the Business Day immediately preceding such Interest
Payment Date, provided that in the event that the Series 1997 Debentures are
issued in definitive form while they are not held by Trust I, the Regular Record
Date for each Interest Payment Date for the Series 1997 Debentures shall be the
close of business on the date that is 15 days prior to such Interest Payment
Date, whether or not such date is a Business Day.
(f) Each Series 1997 Debenture shall bear interest from its Issue Date or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for with respect to such Series 1997 Debenture; except that, so
long as there is no existing Defaulted Interest or Extension Period on the
Series 1997 Debentures, any Series 1997 Debenture authenticated by the Trustee
between the Regular Record Date for any Interest Payment Date and such Interest
Payment Date shall bear interest from such Interest Payment Date.
(g) Defaulted Interest on any Series 1997 Debenture shall bear additional
interest at the rate per annum of 2% thereof compounded quarterly (to the
extent permitted by applicable law).
(h) Overdue principal of any Series 1997 Debenture shall bear interest at a
rate per annum equal to the interest rate per annum payable on such Series 1997
Debenture.
(i) Interest on any Series 1997 Debenture which has been deferred pursuant
to Section 4.01(b) hereof shall bear interest (to the extent that the payment of
such interest shall be legally enforceable) at a rate per annum equal to the
interest rate per annum payable on such Series 1997 Debenture compounded
quarterly from the most recent Interest Payment Date therefor.
(j) The Series 1997 Debentures shall be redeemable prior to maturity as
provided in Section 3.01(a) hereof.
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(k) The Series 1997 Debentures shall be issuable only in registered form
without coupons and only in denominations of $25 and any integral multiple
thereof.
(l) The maximum Extension Period for the Series 1997 Debentures shall be 20
consecutive quarters.
(m) If the Series 1997 Debentures are distributed to the holders of Trust I
Preferred Securities upon liquidation of Trust I, the Company shall use its best
efforts to list the Series 1997 Debentures on the New York Stock Exchange or on
such other stock exchange or other organization, if any, on which the Trust I
Preferred Securities are then listed. Upon any such distribution, if the Trust
I Preferred Securities are then in the book-entry system, the Series 1997
Debentures will be issued in the form of a Global Debenture, subject to Section
2.12 hereof.
SECTION 2.03. Payment of Principal and Interest.
(a) Unless otherwise specified pursuant to Section 2.01(d) hereof, interest
on the Debentures shall be computed on the basis of a 360-day year composed of
twelve 30-day months, except that for any period shorter than a full calendar
month, interest will be computed on the basis of the actual number of days
elapsed in such period.
(b) Unless otherwise provided with respect to a series of Debentures,
(1) the principal and Redemption Price of and interest on each
Debenture shall be payable in such coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public
and private debts;
(2) the principal and Redemption Price of any Debenture and interest
payable on the Stated Maturity Date (if other than an Interest Payment
Date) or Redemption Date shall be payable upon surrender of such Debenture
at the office or agency of any Paying Agent therefor; provided, however,
that payments of such principal, Redemption Price or interest in respect of
the Series 1997 Debentures to Trust I as the sole holder thereof or in
respect of Global Debentures shall be made in immediately available funds
to Property Trustee I on behalf of Trust I or to the Depository pursuant
to Section 2.12 hereof, as the case may be; and
(3) interest on any Debenture (other than on the Stated Maturity
Date or Redemption Date) shall be paid on each Interest Payment Date
therefor to the Holder thereof at the close of business on the Regular
Record Date therefor, such interest to be payable at the option of the
Company by (i) check mailed to the address of the Person entitled thereto
as such address appears on the Securities Register or (ii) by transfer to
an account maintained by
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the person entitled thereto as specified in the Securities Register,
provided that proper and timely transfer instructions have been
received ten Business Days prior to the Regular Record Date; provided
however, that (i) at the written request of the Holder of at least
$10,000,000 aggregate principal amount of Debentures received by the
Registrar not later than ten Business Days prior to the Regular Record
Date for such Interest Payment Date, such interest accrued on such
Debenture will be payable by wire transfer within the continental
United States in immediately available funds to the bank account
number of such Holder specified in such request and entered on the
Securities Register by the Registrar and (ii) payments of such
interest made in respect of the Series 1997 Debentures to Trust I as
the sole holder thereof or in respect of Global Debentures shall be
made in immediately available funds to Property Trustee I on behalf
of Trust I or the Depository pursuant to Section 2.12 hereof, as the
case may be.
(c) Except as specified pursuant to Section 2.01 or Section 4.01(b) hereof,
interest on any Debenture which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Debenture (or one or more Predecessor Debentures) is registered at the
close of business on the Regular Record Date for such interest. Any interest
(as used in this Indenture, the term "interest" shall include quarterly interest
payments, interest on quarterly interest payments not paid on the applicable
Interest Payment Date, and Additional Sums, as applicable) on any Debenture
which is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease
to be payable to the Holder on the relevant Regular Record Date by virtue of
having been such Holder, and such Defaulted Interest may be paid by the Company,
at its election in each case, as provided in Clause (1) and (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Debentures (or their respective
Predecessor Debentures) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall, not less than 15
Business Days prior to the date of the proposed payment, notify the Trustee
and the Paying Agent in writing of the amount of Defaulted Interest
proposed to be paid on each Debenture and the date of the proposed payment,
and at the same time the Company shall deposit with the Paying Agent an
amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements
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satisfactory to the Paying Agent for such deposit prior to the date of the
proposed payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such Defaulted Interest as in this
Clause provided. The Special Record Date for the payment of such Defaulted
Interest shall be the close of business on the tenth calendar day prior to
the date of the proposed payment. The Trustee shall, in the name and at the
expense of the Company, cause notice of the proposed payment of such
Defaulted Interest and the Special Record Date therefor to be given to the
Holders thereof, not less than 7 calendar days prior to such Special Record
Date. Notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor having been given, such Defaulted Interest
shall be paid to the Persons in whose names the Debentures (or their
respective Predecessor Debentures) are registered at the close of business
on such Special Record Date and shall no longer be payable pursuant to the
following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Debentures in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Debentures may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee and the Paying Agent of the
proposed payment pursuant to this Clause, such manner of payment shall be
deemed practicable by the Paying Agent.
(d) Subject to the foregoing provisions of this Section, each Debenture
delivered under this Junior Indenture upon registration of transfer of or in
exchange for or in lieu of any other Debenture shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Debenture.
SECTION 2.04. Execution, Authentication and Delivery.
(a) The Debentures shall be executed on behalf of the Company by any two of
its Chairman, its President, its Financial Vice President or any of its
Assistant Treasurers, under its corporate seal imprinted or reproduced thereon.
The signature of any such Officer on the Debentures may be manual or facsimile.
(b) Debentures bearing the manual or facsimile signatures of individuals
who were at any time the proper Officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Debentures or did not
hold such offices at the date of such Debentures.
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(c) No Debenture shall be entitled to any benefit under this Junior
Indenture or be valid or obligatory for any purpose unless there appears on such
Debenture a Certificate of Authentication duly executed by the Trustee by manual
signature of an authorized signatory, and such Certificate of Authentication
upon any Debenture shall be conclusive evidence, and the only evidence, that
such Debenture has been duly authenticated and made available for delivery
hereunder.
(d) The Trustee shall authenticate and deliver Debentures of a series, for
original issue, at one time or from time to time in accordance with the Company
Order referred to below, upon receipt by the Trustee of:
(1) a Board Resolution approving the form or forms and terms of such
Debentures;
(2) a Company Order requesting the authentication and delivery of such
Debentures;
(3) unless previously delivered, this Junior Indenture, and, with
respect to each series of Debentures other than the Series 1997
Debentures, an indenture supplemental hereto or an Officer's Certificate
authorized pursuant to a Board Resolution setting forth the form of such
Debentures and establishing the terms thereof;
(4) the Debentures of such series, executed on behalf of the Company
in accordance with Section 2.04(a) hereof;
(5) an Officer's Certificate certifying that no Default or Event of
Default has occurred and is continuing; and
(6) an Opinion of Counsel to the effect that:
(A) the form or forms and the terms of such Debentures have been
duly authorized by the Company and have been established in conformity
with the provisions of this Junior Indenture; and
(B) such Debentures, when authenticated and delivered by the
Trustee and issued and delivered by the Company in the manner and
subject to any conditions specified in such Opinion of Counsel, will
have been duly issued under this Junior Indenture and will constitute
valid and legally binding obligations of the Company, entitled to the
benefits provided by this Junior Indenture, and enforceable against
the Company in accordance with their terms, subject, as to enforcement
to laws relating to or affecting generally the enforcement of
creditors' rights,
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including, without limitation, bankruptcy and insolvency laws and to
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and
(C) that this Junior Indenture or any supplemental Junior
Indenture referred to in clause (3) above has been duly authorized,
executed and delivered by the Company and is a valid instrument
legally binding upon the Company, enforceable against the Company in
accordance with its terms, subject as to enforcement to laws relating
to or affecting creditors' rights, including, without limitation,
bankruptcy and insolvency laws and to general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law); and
(D) that all consents, approvals and orders of any commission,
governmental authority or agency required in connection with the
issuance and delivery of such Debentures have been obtained.
(e) The Trustee shall act as the initial authenticating agent. Thereafter,
the Trustee may appoint an authenticating agent. An authenticating agent may
authenticate Debentures whenever the Trustee may do so. Each reference in this
Junior Indenture to authentication by the Trustee includes authentication by
such agent. The Company shall pay any authenticating agent appointed by the
Trustee reasonable compensation for its services. The provisions set forth in
Section 7.02, Section 7.03, Section 7.04 and Section 7.07 hereof shall be
applicable to any authenticating agent.
(f) The Trustee shall have the right to decline to authenticate and deliver
any Debentures under this Section 2.04 if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in good
faith shall determine that such action would expose the Trustee to personal
liability to existing Holders.
SECTION 2.05. Registrar and Paying Agent.
(a) The Company shall maintain or cause to be maintained, within or outside
the State of New York, an office or agency where Debentures of any series may be
presented for registration of transfer or for exchange ("Registrar") for each
place of payment for such series of Debentures, a Paying Agent at whose office
such series of Debentures may be presented or surrendered for payment, and an
office or agency where notices and demands to or upon the Company in respect of
the Debentures and this Junior Indenture may be served. The Registrar shall
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keep a register (the "Securities Register") of such series of Debentures and of
their transfer and exchange. The Company may have one or more co-Registrars and
one or more additional Paying Agents. The term Registrar includes any
additional registrar and the term Paying Agent includes any additional paying
agent. The principal corporate trust office of the Trustee in New York, New
York, shall initially be the Registrar for the Series 1997 Debentures and agent
for service of notice or demands on the Company, and the Trustee shall initially
be the Paying Agent for the Series 1997 Debentures.
(b) The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-Registrar (if not the Company or the Trustee or an
affiliate of the Trustee). The agreement shall implement the provisions of this
Junior Indenture that relate to such agent. The Company shall give prompt
written notice to the Trustee and to the Holders of any change of location of
such office or agency. If at any time the Company shall fail to maintain or
cause to be maintained any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee set
forth in Section 11.02 hereof. The Company shall notify the Trustee of the name
and address of any such agent. If the Company fails to maintain a Registrar,
Paying Agent or agent for service of notices or demands, the Trustee shall act
as such and shall be entitled to appropriate compensation therefor pursuant to
Section 7.07 hereof. The Company or any Affiliate of the Company may act as
Paying Agent, Registrar or co-Registrar or agent for service of notices and
demands.
(c) The Company may also from time to time designate one or more other
offices or agencies where Debentures of any series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations. The Company will give prompt written notice to the Trustee and to
the Holders of any such designation or rescission and of any change in location
of any such other office or agency.
SECTION 2.06. Paying Agent to Hold Money in Trust.
(a) Except as otherwise provided herein, prior to or on each due date of
the principal of and premium (if any) and interest on any Debenture, the Company
shall deposit with the Paying Agent a sum of money sufficient to pay such
principal, premium (if any) and interest so becoming due. The Company shall
require each Paying Agent (other than the Trustee or the Company) to agree in
writing that such Paying Agent shall hold in trust for the benefit of Holders or
the Trustee all money held by the Paying Agent for the payment of principal of
and premium (if any) and interest on the Debentures and shall
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notify the Trustee of any Default by the Company in making any such payment. At
any time during the continuance of any such Default, the Paying Agent shall,
upon the request of the Trustee, forthwith pay to the Trustee all money so held
in trust and account for any money disbursed by it. The Company at any time may
require a Paying Agent to pay all money held by it to the Trustee and to account
for any money disbursed by it. Upon doing so, the Paying Agent shall have no
further liability for the money so paid over to the Trustee. If the Company, a
Subsidiary or an Affiliate of either of them acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate trust
fund.
(b) The Companies may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent; however, the Companies shall at all
times be required to maintain a Paying Agent in each Place of Payment for any
series of Debentures.
(c) Any moneys deposited with the Trustee or any Paying Agent, or then held
by the Company in trust, for the payment of the principal of and premium, if
any, or interest on any series of Debentures and remaining unclaimed for two
years after such principal, premium, if any, or interest has become due and
payable shall, at the written request of the Company, be repaid to the Company
and the Holder of such Debentures shall thereafter look, as a general unsecured
creditor, only to the Company for payment thereof.
SECTION 2.07. Debentureholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Debentureholders. If the Trustee is not the Registrar, the Company shall cause
to be furnished to the Trustee on or before the Record Date for each
Interest Payment Date and at such other times as the Trustee may request in
writing, within five Business Days of such request, a list, in such form as the
Trustee may reasonably require of the names and addresses of Debentureholders.
SECTION 2.08. Transfer and Exchange.
(a) When Debentures are presented to the Registrar or a co-Registrar with a
request to register the transfer or to exchange them for an equal aggregate
principal amount of Debentures of the same series of other authorized
denominations having the same date of original issuance and Stated Maturity Date
and bearing the same interest rate, the Registrar shall register the transfer or
make the exchange as requested if its reasonable requirements for such
transactions are met. To permit registrations of transfer and exchanges, the
Company
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shall execute and the Trustee shall authenticate Debentures, all at the
Registrar's request.
(b) Every Debenture presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Registrar duly executed by the Holder or his attorney duly
authorized in writing.
(c) The Company shall not require payment of a service charge for any
registration of transfer or exchange of Debentures, but the Company may require
payment of a sum sufficient to pay all taxes, assessments or other governmental
charges that may be imposed in connection with the registration of the transfer
or exchange of Debentures from the Debentureholder requesting such transfer or
exchange (other than any exchange of a temporary Debenture for a definitive
Debenture not involving any change in ownership).
(d) In the event of any redemption, (a) the Company shall not be required
to issue any Debenture or to make, and the Registrar need not register,
transfers or exchanges of any Debenture for a period beginning at the opening of
business 15 days before the mailing of a notice of redemption of Debentures and
ending at the close of business on the day of such mailing or (b) the Company
shall not be required to make, and the Registrar need not register, transfers or
exchanges of any Debenture selected, called or being called for redemption,
except, in the case of any Debenture to be redeemed in part, the portion thereof
not to be redeemed.
SECTION 2.09. Replacement Debentures.
(a) If (i) any mutilated Debenture is surrendered to the Company or the
Trustee, or (ii) the Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Debenture, and there is
delivered to the Company and the Trustee such Debenture or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Company or the Trustee that such Debenture has been acquired by a bona
fide purchaser, the Company shall execute in exchange for any such mutilated
Debenture or in lieu of any such destroyed, lost or stolen Debenture, a new
Debenture of the same series and of like tenor and principal amount, bearing a
number not contemporaneously outstanding, and the Trustee shall authenticate and
make such new Debenture available for delivery.
(b) In case any such mutilated, destroyed, lost or stolen Debenture has
become or is about to become due and payable, or is about to be redeemed by the
Company pursuant to Article 3
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hereof, the Company in its discretion may, instead of issuing a new Debenture,
pay or purchase such Debenture, as the case may be.
(c) Upon the issuance of any new Debentures under this Section 2.09, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
(d) Every new Debenture issued pursuant to this Section 2.09 in lieu of any
mutilated, destroyed, lost or stolen Debenture shall constitute an original
additional contractual obligation of the Company (whether or not the mutilated,
destroyed, lost or stolen Debenture shall be at any time enforceable) and shall
be entitled to all benefits of this Junior Indenture equally and ratably with
any and all other Debentures duly issued hereunder.
(e) The provisions of this Section 2.09 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Debentures.
SECTION 2.10. Outstanding Debentures; Determinations of Holders' Action.
(a) Debentures outstanding at any time are all the Debentures authenticated
by the Trustee except for those canceled by it, those delivered to it for
cancellation, those mutilated, destroyed, lost or stolen Debentures referred to
in Section 2.09 hereof, those redeemed by the Company pursuant to Article 3
hereof, and those described in this Section 2.10 as not outstanding. A
Debenture does not cease to be outstanding because the Company or a Subsidiary
or Affiliate thereof holds the Debenture; provided, however, that in determining
whether the Holders of the requisite principal amount of Debentures have given
or concurred in any request, demand, authorization, direction, notice, consent
or waiver hereunder, Debentures actually known by the Trustee to be owned by the
Company or a Subsidiary or Affiliate (other than any Trust so long as any of the
Trust Preferred Securities of such Trust are outstanding) shall be disregarded
and deemed not to be outstanding.
(b) Subject to the foregoing, only Debentures outstanding at the time of
such determination shall be considered in any such determination (including
determinations pursuant to Articles 3, 6 and 9).
(c) If a Debenture is replaced pursuant to Section 2.09 hereof, it ceases
to be outstanding unless the Trustee receives
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proof satisfactory to it that the replaced Debenture is held by a bona fide
purchaser.
(d) If the Paying Agent (other than the Company) holds, in accordance with
this Junior Indenture, at the Stated Maturity Date or on a Redemption Date,
money sufficient to pay the Debentures payable on that date, then immediately on
the Stated Maturity Date or such Redemption Date, as the case may be, such
Debentures shall cease to be outstanding, and interest, if any, on such
Debentures shall cease to accrue.
SECTION 2.11. Temporary Debentures.
(a) The Company may execute temporary Debentures, and upon the Company's
Order, the Trustee shall authenticate and make such temporary Debentures
available for delivery. Temporary Debentures shall be printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
in the same series and principal amount and of like tenor as the definitive
Debentures in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the Officers of the
Company executing such Debentures may determine, as conclusively evidenced by
their execution of such Debentures.
(b) After the preparation of definitive Debentures, the temporary
Debentures shall be exchangeable for definitive Debentures of the same series
upon surrender of the temporary Debentures at the office or agency of the
Company designated for such purpose pursuant to Section 2.05 hereof, without
charge to the Holders thereof. Upon surrender for cancellation of any one or
more temporary Debentures, the Company shall execute a like principal amount of
definitive Debentures of the same series of authorized denominations, and the
Trustee, upon receipt of a Company Order, shall authenticate and make such
Debentures available for delivery in exchange therefor. Until so exchanged, the
temporary Debentures shall in all respects be entitled to the same benefits
under this Junior Indenture as definitive Debentures.
SECTION 2.12. Book-Entry System.
(a) In order to utilize a book-entry-only system for all or any portion of
the Debentures of any series, all or a portion of the Debentures of any series
may be issued in the form of one or more fully registered Debentures of the same
series for the aggregate principal amount of such Debentures of each Issue Date,
interest rate and Stated Maturity Date (a "Global Debenture"), which Global
Debenture shall be registered in the name of a depository (the "Depository")
selected by the Company or in the name of such Depository's nominee. Each
Global Debenture shall be delivered by the Trustee to the
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Depository or pursuant to the Depository's instruction and shall bear a legend
substantially to the following effect: "Except as otherwise provided in Section
2.12 of the Junior Indenture, this Debenture may be transferred, in whole but
not in part, only to another nominee of the Depository or to a successor
Depository or to a nominee of such successor Depository."
(b) Notwithstanding any other provision of this Section 2.12 or of Section
2.08 hereof, a Global Debenture may be transferred in whole but not in part and
in the manner provided in Section 2.08 hereof only to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by the Depository or any nominee to a successor
Depository or any nominee of such successor.
(c) So long as the Depository for a Global Debenture, or its nominee, is
the registered owner of such Global Debenture, such Depository or such nominee,
as the case may be, shall be considered the sole owner or Holder of the
Debenture represented by such Global Debenture for all purposes under this
Indenture. Except as provided below, owners of beneficial interests in a Global
Debenture shall not be entitled to have any of the individual Debentures of the
series represented by such Global Debenture registered in their names, shall not
receive or be entitled to receive physical delivery of any such Debenture in
definitive form and shall not be considered the owners or Holders thereof under
this Indenture.
(d) Payments of principal of and premium, if any, and interest on
individual Debentures represented by a Global Debenture registered in the name
of a Depository or its nominee shall be made to the Depository or its nominee,
as the case may be, as the registered owner of the Global Debenture representing
such Debentures. None of the Company, the Trustee, any Paying Agent or the
Registrar for such Debenture shall have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of the Global Debenture representing such Debenture or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests.
(e) If (i) at any time the Depository for Global Debentures of any series
of Debentures notifies the Company that it is unwilling or unable to continue as
Depository for such Global Debentures and no successor depository shall have
been appointed within 90 days after the Company receives such notice, or if at
any time the Depository ceases to be a clearing agency registered under the
Exchange Act or other applicable statute or regulation at a time when the
Depository is required to be so registered to act as such depository,
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(ii) the Company determines in its sole discretion, that the Debentures of any
series shall no longer be represented by one or more Global Debentures and
delivers to the Trustee an Officer's Certificate evidencing such determination,
or (iii) an Event of Default with respect to such Global Debenture occurs and is
continuing, then the provisions of this Section 2.12 shall no longer apply to
the Debentures of such series. In such event, the Company will execute and the
Trustee, upon receipt of an Officer's Certificate evidencing such determination
by the Company, will authenticate and deliver Debentures of such series and of
like tenor in definitive registered form, in authorized denominations, and in
aggregate principal amount equal to the principal amount of the Global
Debentures of such series in exchange for such Global Debentures. Upon the
exchange of Global Debentures for such Debentures in definitive registered form
without coupons, in authorized denominations, the Global Debentures shall be
cancelled by the Trustee. Such Debentures in definitive registered form issued
in exchange for Global Debentures pursuant to this Section 2.12 shall be
registered in such names and in such authorized denominations as the Depository,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such Debentures to the
Persons in whose names such Debentures are so registered.
(f) Members of or participants in the Depository shall have no rights under
this Junior Indenture with respect to any Global Debenture held on their behalf
by the Depository, and such Depository or its nominee, as the case may be, may
be treated by the Company, the Trustee, and any agent of the Company or the
Trustee as the Holder of such Global Debentures for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee, or any agent of the Company or the Trustee, from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its members or participants, the
operation of customary practices governing exercise of the rights of a Holder of
any Debenture, including without limitation the granting of proxies or other
authorization of participants to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action which a Holder
is entitled to give or take under this Junior Indenture.
SECTION 2.13. Cancellation.
All Debentures surrendered for payment, redemption by the Company pursuant
to Article 3 hereof or registration of transfer or exchange shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by the Trustee. The Company may at any time
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deliver to the Trustee for cancellation any Debentures previously authenticated
and made available for delivery hereunder which the Company may have acquired in
any manner whatsoever, and all Debentures so delivered shall be promptly
canceled by the Trustee. The Company may not reissue or issue new Debentures to
replace Debentures it has paid or delivered to the Trustee for cancellation. No
Debentures shall be authenticated in lieu of or in exchange for any Debentures
canceled as provided in this Section 2.13, except as expressly permitted by this
Junior Indenture. All canceled Debentures held by the Trustee shall be returned
by the Trustee to the Company.
SECTION 2.14. CUSIP Numbers.
The Company in issuing any series of Debentures may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on such series of Debentures or as contained in any notice of
redemption and that reliance may be placed only on the other identification
numbers printed on such series of Debentures, and any such redemption shall not
be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE 3. REDEMPTION
SECTION 3.01. Redemption; Notice to Trustee.
(a) At the option of the Company, the Series 1997 Debentures shall be
redeemable prior to maturity (i) at any time on or after March __, 2002, in
whole or in part, and (ii) if a Special Event shall occur and be continuing, in
whole (but not in part), in each case at 100% of the principal amount thereof
plus accrued and unpaid interest to the Redemption Date. The Series 1997
Debentures shall not be subject to any sinking fund. Series 1997 Debentures in
denominations larger than $25 may be redeemed in part but only in integral
multiples of $25. A "Special Event" shall mean either a "Tax Event" or an
"Investment Company Event." A "Tax Event" shall mean that the Company or Trust I
shall have received an opinion of counsel (which may be regular counsel to the
Company or an Affiliate, but not an employee thereof and which must be
acceptable to Property Trustee I), rendered by a law firm having a recognized
federal and state tax and securities practice, to the effect that, as a result
of a Tax Action, there is more than an insubstantial risk that (i) Trust I is,
or will be within 90 days of the date of said opinion, subject to United States
federal income tax with respect to income received or accrued on the Series 1997
Debentures, (ii) interest payable by the Company to Trust I on the Series 1997
Debentures or by MECO or HELCO to Trust I on its Subsidiary Debentures is not,
or within 90 days of the date of said opinion will not be, deductible by such
company, in whole or in part, for United States federal income tax purposes or
(iii) Trust I is, or will be within 90 days of the date of said opinion, subject
to more than a de minimis amount of other taxes, duties, or other governmental
charges. A "Tax Action" includes (i) any amendment to or change (including any
announced prospective change) in the laws (or any regulations thereunder) of the
United States, or of any State or the District of Columbia, or of any political
subdivision or taxing authority thereof or therein, (ii) any administrative
pronouncement or action that represents an official position (including a
clarification of an official position) of the governmental authority or
regulatory body making such administrative pronouncement or taking such action
or (iii) any judicial decision interpreting, clarifying or applying such laws or
regulations, in each such case that occurs or becomes effective on or after the
date of original issuance of the Trust I Preferred Securities. An "Investment
Company Event" shall mean the receipt by the Company or Trust I of an opinion of
counsel, rendered by a law firm having a recognized federal securities practice,
to the effect that, as a result of the occurrence of a change in law or
regulation or a change (including a prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that Trust I is or will be considered an "investment
company" that is required to be registered under the Investment Company Act of
1940, as amended, which Change in 1940 Act Law becomes effective on or after the
date of original issuance of the Trust I Preferred Securities.
(b) The redemption terms for any additional series of Debentures shall be
as specified in an indenture supplemental hereto or in an Officer's Certificate
authorized by a Board Resolution creating such series of Debentures.
(c) If any or all of the Debentures are to be redeemed pursuant to Section
3.01(a) or 3.01(b) hereof, the Company shall deliver to the Trustee at least 45
days prior to the Redemption Date a Company Order specifying the series and
principal amount of Debentures to be redeemed and the Redemption Date and
Redemption Price for such Debentures. Such Company Order shall be accompanied
by a Board Resolution authorizing such redemption. If the Debentures of a
series are held by a Trust, the Company shall also deliver a copy of such
Company Order to the Property Trustee for such Trust.
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SECTION 3.02. Selection of Debentures to be Redeemed.
If less than all the outstanding Debentures of a series are to be redeemed
at any time, the Trustee shall select the Debentures of such series to be
redeemed by lot or by any other method the Trustee considers fair and
appropriate. The Trustee shall make the selection at least 30 but not more than
60 days before the Redemption Date from outstanding Debentures of such series
not previously called for redemption. Provisions of this Junior Indenture that
apply to Debentures called for redemption also apply to portions of Debentures
called for redemption. The Trustee shall notify the Company promptly of the
Debentures or portions of Debentures to be redeemed.
SECTION 3.03. Notice of Redemption.
(a) At least 30 days but not more than 60 days before the Redemption Date,
the Trustee, in the Company's name and at the Company's expense, shall mail or
cause to be mailed a notice of redemption by first-class mail, postage prepaid,
to each Holder of Debentures to be redeemed at such Holder's last address as it
appears in the Securities Register.
(b) The notice of redemption shall identify the Debentures to be redeemed,
the provision of the Debentures or this Junior Indenture pursuant to which the
Debentures called for redemption are being redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent;
(4) that payment of the Redemption Price of Debentures called for
redemption will be made only upon surrender of such Debentures to the
Paying Agent;
(5) if fewer than all the outstanding Debentures of any series are to
be redeemed, the identification and principal amounts of the particular
Debentures to be redeemed and that, on and after the Redemption Date, upon
surrender of such Debentures, a new Debenture or Debentures of the same
series and of like tenor and in a principal amount equal to the unredeemed
portion thereof will be issued; and
(6) that, unless the Company defaults in paying the Redemption Price
of the Debentures called for redemption, plus accrued interest thereon to
the Redemption Date, interest will cease to accrue on such Debentures on
and after the Redemption Date.
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(c) Any notice of redemption given in the manner provided herein shall be
conclusively presumed to have been given, whether or not such notice is actually
received. Failure to mail any notice or defect in the mailed notice or the
mailing thereof in respect of any Debenture shall not affect the validity of the
redemption of any other Debenture.
SECTION 3.04. Effect of Notice of Redemption.
After notice of redemption has been given, Debentures called for redemption
shall become due and payable on the Redemption Date and at the Redemption Price
and from and after the Redemption Date (unless the Company shall default in the
payment of the Redemption Price and accrued interest), such Debentures shall
cease to bear interest. Upon the later of the Redemption Date and the date such
Debentures are surrendered to the Paying Agent, such Debentures shall be paid at
the Redemption Price, plus accrued interest to the Redemption Date, provided
that installments of interest on Debentures with an Interest Payment Date which
is on or prior to the Redemption Date shall be payable to the Holders of such
Debentures, or one or more Predecessor Debentures, registered as such at the
close of business on the Regular Record Dates therefor according to their terms
and provisions.
SECTION 3.05. Deposit of Redemption Price.
On or prior to the Redemption Date, the Company shall deposit with the
Paying Agent (or if the Company or an Affiliate is the Paying Agent, shall
segregate and hold in trust or cause such Affiliate to segregate and hold in
trust) money sufficient to pay the Redemption Price of, and accrued interest on,
all Debentures to be redeemed on that Redemption Date. The Paying Agent shall
return to the Company any money in excess of the amount sufficient to pay the
Redemption Price of, and accrued interest on, all Debentures to be redeemed.
SECTION 3.06. Debentures Redeemed in Part.
Upon surrender of a Debenture that is redeemed in part, the Trustee shall
authenticate for the Holder a new Debenture of the same series and in a
principal amount equal to the unredeemed portion of such Debenture.
ARTICLE 4. COVENANTS
SECTION 4.01. Payment of Debentures.
(a) The Company shall pay the principal of and premium, if any, and
interest (including interest accruing during an Extension Period and/or on or
after the filing of a petition in
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bankruptcy or reorganization relating to the Company, whether or not a claim for
post-filing interest is allowed in such proceeding) on the Debentures on or
prior to the dates and in the manner provided in such Debentures or pursuant to
this Junior Indenture. An installment of principal, premium, if any, or
interest shall be considered paid on the applicable due date if on such date the
Trustee or the Paying Agent holds, in accordance with this Junior Indenture,
money sufficient to pay all of such installment then due. With respect to any
Debenture, the Company shall pay interest on overdue principal and interest on
overdue installments of interest (including interest accruing during an
Extension Period and/or on or after the filing of a petition in bankruptcy or
reorganization relating to the Company, whether or not a claim for post-filing
interest is allowed in such proceeding), to the extent lawful, at the rate per
annum borne by such Debenture, compounded quarterly. Interest on overdue
interest shall accrue from the date such amounts become overdue.
(b) Notwithstanding the provisions of Section 4.01(a) hereof or any other
provision herein to the contrary, the Company shall have the right in its sole
and absolute discretion at any time and from time to time while the Debentures
of any series are outstanding, so long as no Event of Default with respect to
such series of Debentures has occurred and is continuing, to defer payments of
interest by extending the interest payment period for such series of Debentures
for the Extension Period specified pursuant to Section 2.01 hereof for such
series of Debentures, provided that such Extension Period shall not extend
beyond the Stated Maturity Date or Redemption Date of any Debenture of such
series, and provided further that at the end of each Extension Period the
Company shall pay all amounts then due on any Interest Payment Date, including
interest then accrued and unpaid (together with interest thereon to the extent
permitted by applicable law at the rate per annum provided for such interest for
such series of Debentures). Prior to the termination of an Extension Period,
the Company may shorten or may further extend the interest payment period for
such series of Debentures, provided that any such further extension of the
Extension Period, together with all previous extensions thereof, may not exceed
the maximum duration of the Extension Period for such series of Debentures
specified pursuant to Section 2.01 hereof or extend beyond the Stated Maturity
Date or Redemption Date of any Debenture of such series. The Company shall give
the Trustee notice of the Company's election to begin an Extension Period for
any series of Debentures and any shortening or extension thereof at least one
Business Day prior to the date the notice of the record or payment date of the
related distribution on the Trust Preferred Securities issued by any Trust which
is the Holder of the Debentures of such series or the date payment of interest
on such Debentures is required to be given to any
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national securities exchange on which such Trust Preferred Securities or
Debentures are then listed or other applicable self-regulatory organization, but
in any event not less than two Business Days prior to the Record Date fixed by
the Company for the payment of such interest. The Company shall give or cause
the Trustee to give notice (a form of which shall be provided by the Company to
the Trustee) of the Company's election to begin an Extension Period to the
Holders by first class mail, postage prepaid. Upon the termination of any such
Extension Period and the payment of all amounts then due on any Interest Payment
Date, the Company may elect to begin a new Extension Period subject to the
requirements set forth herein.
SECTION 4.02. Prohibition on Distributions, Etc.
The Company shall not (i) declare or pay any dividends or distributions on,
or redeem, purchase, acquire or make a liquidation payment with respect to, any
of its Capital Stock, (ii) make any payment of principal, interest or premium,
if any, on or repay, repurchase or redeem any of its debt securities (including
other Debentures) that rank pari passu with or junior in interest to any series
of Debentures, or (iii) make any guarantee payments with respect to any
guarantee issued by the Company if such guarantee ranks pari passu with or
junior in interest to such series of Debentures (other than (a) dividends or
distributions in shares of, or options, warrants or rights to subscribe for or
purchase shares of its common stock and exchanges or conversions of common stock
of one class for common stock of another class, (b) payments by the Company
under any Trust Guarantee Agreement and the Subsidiary Guarantees, and (c)
purchases by the Company of its common stock required to prevent the loss or
secure the renewal or reinstatement of any government license or franchise held
by the Company or any of the Subsidiaries) if at such time (i) there shall have
occurred any event of which the Company has actual knowledge that (a) with the
giving of notice or the lapse of time, or both, would constitute an Event of
Default with respect to such series of Debentures and (b) in respect of which
the Company shall not have taken reasonable steps to cure, (ii) the Company
shall be in default with respect to its payment of any obligations under any
Trust Guarantee Agreement or (iii) the Company shall have given notice of its
election of an Extension Period for such Debentures or MECO or HELCO shall have
given notice of its election of an Extension Period with respect to its
respective Subsidiary Debentures pursuant to the MECO Indenture or the HELCO
Indenture, respectively, and, in each case, shall not have rescinded such
notice, or such Extension Period, or any extension thereof, shall be continuing.
SECTION 4.03. SEC Reports.
(a) The Company shall file with the Trustee, within 15 days after it files
them with the SEC, copies of its annual
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report and of the information, documents and other reports (or copies of such
portions of any of the foregoing as the SEC may by rules and regulations
prescribe) which the Company is required to file with the SEC pursuant to
Section 13 or 15(d) of the Exchange Act. If the Company is not subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall file with the Trustee such information, documents and other reports (or
copies of such portions of any of the foregoing as the SEC may by rules and
regulations prescribe) which are specified in Sections 13 or 15(d) of the
Exchange Act. The Company shall also comply with the provisions of Section
314(a) of the TIA.
(b) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer's Certificates).
SECTION 4.04. Compliance Certificates.
(a) The Company shall deliver to the Trustee, within 90 days after the end
of each of the Company's fiscal years, commencing with the Company's fiscal year
ending December 31, 1997, an Officer's Certificate stating whether or not the
signer knows of any Default or Event of Default. Such certificate shall contain
a certification from the principal executive officer, principal financial
officer or principal accounting officer of the Company as to his or her
knowledge of the Company's compliance with all conditions and covenants under
this Junior Indenture. For purposes of this Section 4.04(a), such compliance
shall be determined without regard to any period of grace or requirement of
notice provided under this Junior Indenture. If such Officer does know of such a
Default or Event of Default, the Officer's Certificate shall describe any such
Default or Event of Default, and its status. Such Officer's Certificate need not
comply with Sections 11.04 and 11.05 hereof.
(b) The Company shall deliver to the Trustee any information reasonably
requested by the Trustee in connection with the compliance by the Trustee or the
Company with the TIA.
(c) The Company shall deliver to the Trustee, as soon as possible and in
any event within five days after the Company becomes aware of the occurrence of
any Event of Default or an event which, with notice or the lapse of time or
both, would constitute an Event of Default, an Officer's Certificate setting
forth the details of such Event of Default or default
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and the action that the Company proposes to take with respect thereto.
SECTION 4.05. Further Instruments and Acts.
Upon request of the Trustee, the Company shall execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Junior Indenture.
SECTION 4.06. Additional Sums.
If and so long as (i) a Trust is the Holder of all Debentures of a
particular series and (ii) the Company shall not have (a) redeemed such
Debentures pursuant to their terms or (b) given any direction to distribute such
Debentures to holders of Trust Preferred Securities in exchange for such Trust
Preferred Securities (including, in the case of the Series 1997 Debentures,
pursuant to Section 8.02(b) of the Trust I Agreement), the Company shall pay to
such Trust such Additional Sums on the Debentures in proportion to the amount of
assets of such Trust made up by the Debentures of such series.
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SECTION 4.07. Payment of Expenses of Trust.
If and so long as a Trust is the Holder of all Debentures of a particular
series, the Company covenants for the benefit of the Holders of such Debentures
to pay all of the obligations, costs and expenses of such Trust in accordance
with the terms of the trust agreement for said Trust and to pay the taxes of
said Trust (if any) in accordance with the terms of said trust agreement in
order to permit said Trust to make distributions on and redemptions of the
applicable Trust Preferred Securities in accordance with the terms of said trust
agreement.
SECTION 4.08. Ownership of Trust Common Securities.
If and so long as a Trust is the Holder of all Debentures of a particular
series, the Company shall (i) maintain, directly or indirectly, 100% ownership
of said Trust's Trust Common Securities, provided that certain successors to the
Company which are permitted as provided below may succeed to the Company's
ownership of said Trust Common Securities, (ii) not voluntarily dissolve, wind-
up or liquidate said Trust, except (a) in connection with a distribution of said
Debentures to the holders of said Trust's Trust Preferred Securities in
liquidation of said Trust or (b) in connection with certain mergers,
consolidations or amalgamations as permitted by said Trust's trust agreement,
and (iii) to use its reasonable efforts, consistent with the terms and
provisions of said trust agreement, to cause said Trust to remain classified as
a grantor trust and not as an association taxable as a corporation for United
States federal income tax purposes.
ARTICLE 5. SUCCESSOR CORPORATION
SECTION 5.01. When the Company May Merge, Etc.
(a) The Company may not consolidate with or merge with or into, or sell,
convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety (either in one transaction or a series of
transactions) to any Person and no Person shall consolidate or merge with or
into the Company, or sell, convey, transfer or lease its properties and assets
as an entirety or substantially as an entirety (either in one transaction or a
series of transactions) to the Company unless:
(1) the Person formed by or surviving such consolidation or merger or
to which such sale, conveyance,
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transfer or lease shall have been made (the "Successor") if other than the
Company, (a) is organized under the laws of the United States of America or
any State thereof or the District of Columbia, and (b) shall expressly
assume by a supplemental Junior Indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the obligations of the
Company under the Debentures and this Junior Indenture;
(2) immediately prior to and after giving effect to such transaction
(and treating any Indebtedness which becomes an obligation of the Successor
Person or any Subsidiary as a result of such transaction as having been
incurred by such Person or such Subsidiary at the time of such
transaction), no Default or Event of Default, and no event which, after
notice or lapse of time or both, would become an Event of Default, shall
have occurred and be continuing;
(3) such transaction is permitted under each applicable Trust
Guarantee Agreement and does not give rise to a breach or violation of
any such Trust Guarantee Agreement; and
(4) the Company delivers to the Trustee an Officer's Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, sale,
conveyance, transfer or lease and such supplemental Junior Indenture
complies with this Junior Indenture.
(b) The Successor will be the successor to the Company, and will be
substituted for, and may exercise every right and power and become the obligor
on the Debentures, with the same effect as if the Successor had been named as
the Company herein but, in the case of a sale, conveyance, transfer or lease of
all or substantially all of the assets of the Company, the predecessor Company
will not be released from its obligation to pay the principal of and premium, if
any, and interest on the Debentures.
ARTICLE 6. DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.
(a) An "Event of Default" occurs with respect to the Debentures of any
series if one of the following shall have occurred and be continuing:
(1) The Company defaults in the payment, when due and payable, of (a)
interest on any Debenture of that series and the default continues for a
period of 30 days;
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provided, that during an Extension Period for the Debentures of that
series, failure to pay interest on the Debentures of that series shall not
constitute a Default or Event of Default hereunder, or (b) the principal of
or premium, if any, on any Debentures of that series when the same becomes
due and payable on the Stated Maturity Date thereof, upon acceleration, on
any Redemption Date, or otherwise;
(2) The Company defaults in the performance of or fails to comply
with, in a material respect, any of its other covenants or agreements in
the Debentures of that series or this Junior Indenture or in any indenture
supplemental hereto or Officer's Certificate authorized by a Board
Resolution under which the Debentures of that series may have been issued
(other than a covenant or agreement which has been expressly included in
this Indenture solely for the benefit of one or more series of Debentures
other than such series) and such failure continues for 90 days after
receipt by the Company of a written "Notice of Default", provided that such
90-day period shall be automatically extended if corrective action is
initiated by the Company within such period and is being diligently
pursued;
(3) The Company, pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order for relief against it in an
involuntary case or proceeding;
(C) consents to the appointment of a Custodian of it or for all
or substantially all of its property, and such Custodian is not
discharged within 60 days;
(D) makes a general assignment for the benefit of its creditors;
or
(E) admits in writing its inability to pay its debts generally as
they become due; or
(4) A court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company in an involuntary case or
proceeding;
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(B) appoints a Custodian of the Company for all or substantially
all of its properties;
(C) orders the liquidation of the Company; and
(D) in each case the order or decree remains unstayed and in
effect for 60 days.
(b) The foregoing will constitute an Event of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
(c) The term "Bankruptcy Law" means Title 11 of the United States Code, or
any similar federal or state law for the relief of debtors. "Custodian" means
any receiver, trustee, assignee, liquidator, sequestrator, custodian or similar
official under any Bankruptcy Law.
(d) A Default under clause (2) above is not an Event of Default until (i)
the Trustee provides a written "Notice of Default" to the Company or the Holders
of at least 25% in aggregate principal amount of the Debentures of that series
at the time outstanding or, if that series of Debentures is held by a Trust, the
holders of at least 25% in aggregate liquidation preference of the outstanding
Trust Preferred Securities of that Trust, provide a written "Notice of Default"
to the Company and the Trustee and (ii) the Company does not cure such Default
within the time specified in clause (2) above (including any automatic
extensions thereof) after receipt of such notice. Any such notice must be in
writing, specify the Default, demand that it be remedied and state that such
notice is a "Notice of Default."
SECTION 6.02. Acceleration.
(a) If any Event of Default with respect to the Debentures of any series
other than an Event of Default under clause (3) or (4) of Section 6.01 hereof
occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Debentures of that series then outstanding may
declare the principal of all the Debentures of that series due and payable,
provided that in the case of a series of Debentures then held by a Trust, if
upon an Event of Default with respect to the Debentures of that series the
Trustee has, or the Holders of at least 25% in aggregate principal amount of the
Debentures of that series have, failed to declare the principal of the
Debentures of that series to be immediately due and payable, the holders of at
least 25% in aggregate liquidation preference of the outstanding Trust Preferred
Securities of that Trust shall have such right by a
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notice in writing to the Company and the Trustee. If an Event of Default
specified in clause (3) or (4) of Section 6.01 hereof occurs, the principal of
and interest on all the Debentures shall ipso facto become and be immediately
due and payable without any declaration or other act on the part of the Trustee
or any Debentureholders. Upon such an acceleration, such principal, together
with all interest accrued thereon, shall be due and payable immediately.
(b) The Holders of at least a majority in aggregate principal amount of the
Debentures of that series at the time outstanding, in each case, by notice to
the Trustee, may rescind and annul such an acceleration and waive its
consequences if the rescission, annulment and waiver would not conflict with any
judgment or decree and if all existing Events of Default with respect to such
series of Debentures have been cured or waived, except nonpayment of principal
that has become due solely because of acceleration, and a sum sufficient to pay
all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Trustee; provided that if the principal
of a series of Debentures has been declared due and payable by the holders of
the Trust Preferred Securities of a Trust, no rescission of acceleration will be
effective unless consented to by the holders of at least a majority in aggregate
liquidation preference of the Trust Preferred Securities of that Trust and
further provided that should the Holders of such Debentures fail to rescind or
annul such declaration and waive such default, the holders of a majority in
aggregate liquidation preference of the Trust Preferred Securities of a Trust
that holds such Debentures may make such rescission, annulment and waiver. No
such rescission shall affect any subsequent Default or impair any right
consequent thereto.
SECTION 6.03. Other Remedies.
(a) If an Event of Default occurs and is continuing, the Trustee may, in
its own name or as trustee of an express trust, institute, pursue and prosecute
any proceeding, including, without limitation, any action at law or suit in
equity or other judicial or administrative proceeding to collect the payment of
principal of or premium, if any, or interest on the Debentures of the series
that is in default, to enforce the performance of any provision of the
Debentures of that series or this Junior Indenture or to obtain any other
available remedy.
(b) The Trustee may maintain a proceeding even if it does not possess any
of the Debentures or does not produce any of the Debentures in the proceeding.
A delay or omission by the Trustee, any Debentureholder or the holders of Trust
Preferred Securities in exercising any right or remedy accruing upon an
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Event of Default shall not impair such right or remedy or constitute a waiver
of, or acquiescence in, such Event of Default. No remedy is exclusive of any
other remedy. All available remedies are cumulative.
SECTION 6.04. Waiver of Past Defaults.
If a Default or Event of Default with respect to a series of Debentures has
occurred and is continuing, the Holders of at least a majority in aggregate
principal amount of the Debentures of that series at the time outstanding, or,
if that series of Debentures is held by a Trust, the holders of at least a
majority in aggregate liquidation preference of the Trust Preferred Securities
of that Trust, in each case by notice to the Trustee and the Company, may waive
an existing Default or Event of Default and its consequences except a Default or
Event of Default in the payment of the principal of or premium, if any, or
interest on any Debenture of that series (unless such default has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Trustee) or a default
in respect of a covenant or provisions which under this Indenture cannot be
modified or amended without the consent of the Holder of each of such
outstanding Debentures. When a Default or Event of Default is waived, it is
deemed cured and shall cease to exist, but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any consequent right.
SECTION 6.05. Control by Majority.
The Holders of a majority in aggregate principal amount of the Debentures
of each series affected (with each such series voting as a class) may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or of exercising any trust or power conferred on the Trustee. If the
Debentures of such series are held by a Trust and the Trustee and the trustee of
such Trust have failed to so direct or to so exercise for 60 days, the holders
of at least 25% in aggregate liquidation preference of the outstanding Trust
Preferred Securities of that Trust may institute proceedings to so direct or so
exercise. However, the Trustee may refuse to follow any direction that conflicts
with law or this Junior Indenture or that the Trustee determines in good faith
is unduly prejudicial to the rights of other Debentureholders or may involve the
Trustee in personal liability. The Trustee may take any other action deemed
proper by the Trustee which is not inconsistent with such direction, including
withholding notice to the Holders of the Debentures of such series of continuing
default (except in the payment of the principal of (other than any mandatory
sinking fund payment) or premium,
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if any, or interest on any Debentures) if the Trustee considers it in the
interest of the Holders of the Debentures to do so.
SECTION 6.06. Limitation on Suits.
(a) Except as provided in Sections 6.07 and 6.13 hereof, no Holder of
Debentures and no holder of Trust Preferred Securities of a Trust which is the
Holder of all the Debentures of such series may pursue any remedy with respect
to this Junior Indenture or the Debentures of such series unless:
(1) the Holders of Debentures or the holders of such Trust Preferred
Securities give to the Trustee written notice stating that an Event of
Default with respect to the corresponding Debentures is continuing;
(2) the Holders of at least 25% in aggregate principal amount of the
Debentures of that series or the holders of at least 25% in aggregate
liquidation preference of such Trust Preferred Securities make a written
request to the Trustee to pursue a remedy;
(3) the Holders of Debentures or the holders of such Trust Preferred
Securities provide to the Trustee reasonable security and indemnity against
any loss, liability or expense satisfactory to the Trustee;
(4) the Trustee does not comply with the request within 60 days after
receipt of the notice, the request and the offer of security and indemnity;
and
(5) during such 60 day period, the Holders of at least a majority in
aggregate principal amount of the Debentures of that series or the holders
of at least a majority in aggregate liquidation preference of such Trust
Preferred Securities do not give the Trustee a direction inconsistent with
the request.
In addition, no holder of Trust Preferred Securities of the Trust which is the
Holder of that series of Debentures may pursue any remedy with respect to this
Junior Indenture or the Debentures unless the above conditions have been
complied with and the Property Trustee for such Trust has also failed to act for
60 days. In such a case, the Holders of at least 25% in aggregate liquidation
preference of the such outstanding Trust Preferred Securities may institute
proceedings to pursue a remedy provided for herein.
(b) A Holder of Debentures or a holder of Trust Preferred Securities may
not use this Junior Indenture to prejudice the rights of another Debentureholder
or a holder of Trust Preferred Securities or to obtain a preference or priority
over another Debentureholder or holder of Trust Preferred Securities.
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SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Junior Indenture, the right of
any Holder to receive payment of the principal of and premium (if any) or
interest on the Debentures held by such Holder, on or after the respective due
dates expressed in the Debentures (in the case of interest, as the same may be
extended pursuant to Section 4.01(b) hereof) or any Redemption Date, is absolute
and unconditional and such right and the right to bring suit for the enforcement
of any such payment on or after such respective dates shall not be impaired or
affected adversely without the consent of such Holder.
SECTION 6.08. Collection Suit by the Trustee.
If an Event of Default described in Section 6.01(1) hereof occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company or any obligor on the Debentures for the
whole amount owing with respect to the Debentures and the amounts provided for
in Section 7.07 hereof.
SECTION 6.09. The Trustee May File Proofs of Claim.
(a) In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or its properties or assets, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise:
(1) to file and prove a claim for the whole amount of the principal of
and premium, if any, and interest on the Debentures and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding; and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
Custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Holders, to pay the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section
7.07 hereof.
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(b) Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Debentures
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities.
(a) If the Trustee collects any money pursuant to this Article 6, it shall,
subject to Article 10 hereof, pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07 hereof;
SECOND: to Holders of Debentures in respect of which or for the benefit
of which such money has been collected for amounts due and unpaid
on such Debentures for the principal amount, Redemption Price or
interest, if any, as the case may be, ratably, without preference
or priority of any kind, according to such amounts due and
payable on such Debentures; and
THIRD: the balance, if any, to the Company.
(b) Except as otherwise set forth in the Debentures, the Trustee may fix a
Record Date and payment date for any payment to Debentureholders pursuant to
this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Junior
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant (other than the Trustee) in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
the suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section 6.11 does not apply to a suit
by the Trustee, a suit by a Holder of Debentures or holder of Trust Preferred
Securities pursuant to Section 6.07 hereof or a suit by Holders of Debentures of
more than 10% in aggregate principal amount of the Debentures of any series or,
if a series of Debentures is held by a Trust, the holders of more than 10% in
aggregate liquidation preference of the Trust Preferred Securities of that
Trust.
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SECTION 6.12. Waiver of Stay; Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, that would
prohibit or forgive the Company from paying all or any portion of the principal
of or premium, if any, or interest on the Debentures as contemplated herein or
affect the covenants or the performance by the Company of its obligations under
this Junior Indenture; and the Company (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 6.13. Suits by Holders of Trust Preferred Securities.
Notwithstanding anything else contained herein, if an Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on Debentures held by a Trust on the date
such interest or principal is otherwise payable, a holder of Trust Preferred
Securities of such Trust may institute a direct action for payment against the
Company after such respective due date and this Indenture may not be amended to
remove the foregoing right to bring such a direct action without the prior
written consent of all the Holders of such Trust Preferred Securities affected
thereby. Notwithstanding any payment made to such holder of Trust Preferred
Securities in connection with a direct action, the Company shall remain
obligated to pay the principal of, premium on, if any, or interest on the
Debentures held by such Trust or the relevant Property Trustee and shall be
subrogated to the rights of the holders of such Trust Preferred Securities with
respect to payments on such Trust Preferred Securities to the extent of any
payments made by the Company to such holder in any direct action.
ARTICLE 7. THE TRUSTEE
SECTION 7.01. Duties of the Trustee.
(a) If an Event of Default occurs and is continuing with respect to the
Debentures of any series, the Trustee shall exercise the rights and powers
vested in it by this Junior Indenture with respect to that series and use the
same degree of care and skill in its exercise as a prudent person would
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exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) Except during the continuance of an Event of Default with respect to
the Debentures of any series, (i) the Trustee need perform only those duties
with respect to that series that are specifically set forth in this Junior
Indenture or the TIA and no others; and (ii) in the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Junior
Indenture. However, in the case of any certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Junior Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(1) this Section 7.01(c) does not limit the effect of Section 7.01(b)
hereof;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Every provision of this Junior Indenture that in any way relates to the
Trustee is subject to Section 7.01(a), (b), (c) and (e) and Section 7.02 hereof.
(e) The Trustee may refuse to perform any duty or exercise any right or
power or extend or risk its own funds or otherwise incur any financial liability
unless it receives security and indemnity reasonably satisfactory to it against
any loss, liability or expense (including reasonable counsel fees).
(f) Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. Except as otherwise
agreed in writing, the Trustee shall not be liable for interest on any money
held by it hereunder.
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SECTION 7.02. Rights of the Trustee.
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officer's Certificate and an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officer's Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized or within its
rights or powers.
(e) The Trustee may consult with counsel of its selection and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Junior Indenture at the request or direction of
any of the Holders pursuant to this Junior Indenture, unless such Holders shall
have offered to the Trustee reasonable security and indemnity against the costs,
expenses and liabilities (including reasonable counsel fees) which might be
incurred by it in compliance with such request or direction.
(g) The Trustee shall not be deemed to have notice of any Event of Default
unless a Trust Officer of the Trustee has actual knowledge thereof or unless
written notice of any event that is in fact such a default is received by the
Trustee at the principal corporate trust office of the Trustee, and such notice
references the applicable series of Debentures and this Indenture.
SECTION 7.03. Individual Rights of the Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Debentures and may otherwise deal with the Company or its Affiliates
with the same rights it would have if it were not Trustee. Any Paying Agent,
Registrar or co-Registrar may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11 hereof.
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SECTION 7.04. The Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of this
Junior Indenture or the Debentures. The Trustee shall not be accountable for
the Company's use of the proceeds from the Debentures, and the Trustee shall not
be responsible for any statement in this Junior Indenture or the Debentures or
any report or certificate issued by the Company hereunder or any registration
statement relating to the Debentures (other than the Trustee's Certificate of
Authentication and the Trustee's Statement of Eligibility on Form T-1), or the
determination as to which beneficial owners are entitled to receive any notices
hereunder.
SECTION 7.05. Notice of Defaults.
If a Default occurs and is continuing with respect to the Debentures of any
series and if it is known to the Trustee, the Trustee shall mail to each Holder
of a Debenture of that series notice of the Default within 90 days after the
occurrence thereof unless such Default shall have been cured or waived. Except
in the case of a Default described in Section 6.01(1) hereof, the Trustee may
withhold such notice if and so long as a committee of Trust Officers in good
faith determines that the withholding of such notice is in the interests of the
Holders of the Debentures of that series. The Trustee shall not be charged with
knowledge of any Default (except in the case of a Default under Section 6.01(1)
hereof) unless a responsible Trust Officer assigned to the Corporate Trust
Department of the Trustee shall have actual knowledge of the Default. The
second sentence of this Section 7.05 shall be in lieu of the proviso to TIA
Section 315(b). Said proviso is hereby expressly excluded from this Junior
Indenture, as permitted by the TIA.
SECTION 7.06. Reports by Trustee to Holders.
(a) Within 60 days after each May 31, beginning with the May 31 next
following the date of this Junior Indenture, the Trustee shall mail to each
Debentureholder, and such other holders that have submitted their names to the
Trustee for such purpose, a brief report dated as of such May 31 in accordance
with and to the extent required under TIA Section 313.
(b) A copy of each report at the time of its mailing to Debentureholders
shall be filed with the Company, the SEC and any securities exchange on which
the Debentures are listed. The Company agrees to promptly notify the Trustee
whenever the Debentures become listed on any securities exchange and of any
listing thereof.
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SECTION 7.07. Compensation and Indemnity.
(a) The Company agrees:
(1) to pay to the Trustee from time to time such compensation as shall
be agreed in writing between the Company and the Trustee for all services
rendered by it hereunder (which compensation, to the fullest extent
permitted by applicable law, shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
(2) to reimburse the Trustee upon its request for reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any provision of this Junior Indenture (including the reasonable
compensation and the expenses, and advances of its agents and counsel,
provided that prior to any Event of Default, the Trustee shall only have
one counsel at the same time), including all reasonable expenses and
advances incurred or made by the Trustee in connection with any Event of
Default or any membership on any creditors' committee, except any such
expense or advance as may be attributable to its negligence, willful
misconduct or bad faith; and
(3) to indemnify the Trustee, its officers, directors and
shareholders, for, and to hold it harmless against, any and all loss,
liability, damage, claim or expense, including taxes (other than taxes
based on the income of the Trustee), incurred without negligence or willful
misconduct on its part, arising out of or in connection with the acceptance
or administration of this trust, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
(b) Before, after or during an Event of Default with respect to the
Debentures of a series, the Trustee shall have a claim and lien prior to the
Debentures of that series as to all property and funds held by it hereunder for
any amount owing it for its fees and expenses or any predecessor Trustee
pursuant to this Section 7.07, except with respect to funds held by the Trustee
or any Paying Agent in trust for the payment of principal of or premium, if any,
or interest on particular Debentures pursuant to Section 2.06 or Section 8.01
hereof.
(c) The Company's payment obligations pursuant to this Section 7.07 are not
subject to Article 10 of this Junior Indenture and shall survive the discharge
of this Junior Indenture. When the Trustee renders services or incurs expenses
after the occurrence of a Default specified in Section 6.01 hereof, the
compensation for services and expenses are
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intended to constitute expenses of administration under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
(a) The Trustee may resign at any time, by so notifying the Company in
writing at least 30 days prior to the date of the proposed resignation;
provided, however, no such resignation shall be effective until a successor
Trustee has accepted its appointment pursuant to this Section 7.08. The Holders
of at least a majority in aggregate principal amount of the Debentures at the
time outstanding may remove the Trustee by so notifying the Trustee in writing
and may appoint a successor Trustee, which shall be subject to the consent of
the Company unless an Event of Default has occurred and is continuing. The
Trustee shall resign if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee or its
property; or
(4) the Trustee otherwise becomes incapable to act.
If the Trustee resigns or is removed or if a vacancy exists in the office of
Trustee for any reason, the Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Company. Thereupon the resignation or removal of
the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Junior
Indenture. The successor Trustee shall mail a notice of its succession to
Debentureholders. Subject to payment of all amounts owing to the Trustee under
Section 7.07 hereof and subject further to its lien under Section 7.07, the
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee. If a successor Trustee does not take office within 30
days after the retiring Trustee resigns or is removed, the Company, the
resigning Trustee or the Holders of at least a majority in aggregate principal
amount of the Debentures at the time outstanding may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(b) If the Trustee fails to comply with Section 7.10 hereof, any
Debentureholder may petition any court of competent jurisdiction for its removal
and the appointment of a successor Trustee.
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SECTION 7.09. Successor Trustee by Merger.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all its corporate trust business or assets to another
corporation, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA Sections
310(a) to the extent applicable. The Trustee (or any Affiliate thereof which
has unconditionally guaranteed the obligations of the Trustee hereunder) shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recently published annual report of condition. The Trustee shall comply
with TIA Section 310(b). In determining whether the Trustee has conflicting
interests as defined in TIA Section 310(b)(1), the provisions contained in the
proviso to TIA Section 310(b)(1) and the Trustee's Statement of Eligibility on
Form T-1 shall be deemed incorporated herein.
SECTION 7.11. Preferential Collection of Claims Against the Company.
If and when the Trustee shall be or become a creditor of the Company under
TIA Section 311(a), the Trustee shall be subject to the provisions of the TIA
regarding the collection of claims against the Company contained in TIA Section
311 to the extent applicable.
ARTICLE 8. SATISFACTION AND DISCHARGE OF JUNIOR INDENTURE; DEFEASANCE OF
CERTAIN OBLIGATIONS; UNCLAIMED MONEYS
SECTION 8.01. Satisfaction and Discharge of Junior Indenture.
(a) The Company shall be deemed to have paid, satisfied and discharged the
entire indebtedness on any series of the Debentures outstanding on the date when
all Debentures issued in such series not previously delivered to the Trustee for
cancellation as provided herein have become due and payable and the Company has
irrevocably deposited or caused to be irrevocably deposited with the Trustee or
any Paying Agent as trust funds in trust, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of the Debentures of such
series (1) cash (which may be held in a non-interest bearing account insured by
the Federal Deposit Insurance Corporation), in the currency or currencies in
which such Debentures are payable, in an amount, or (2) U.S. Government
Obligations, maturing as to principal and interest
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at such times and in such amounts as will ensure the availability of cash, or
(3) a combination thereof, sufficient to pay the principal of and premium, if
any, and interest on all Debentures of such series then outstanding on the date
of the deposit or to the Stated Maturity Date, as the case may be, provided that
in the case of redemption, notice of redemption shall have been given or the
Company shall have irrevocably instructed the Trustee to give such notice; and
further provided that the following conditions shall have been met:
(1) no Default or Event of Default with respect to the Debentures of
such series has occurred and is continuing on the date of such deposit or
occurs as a result of such deposit;
(2) the Company has delivered to the Trustee an Officer's Certificate
certifying that there does not exist (i) a default in the payment of all or
any portion of any Senior Indebtedness or (ii) any other default affecting
Senior Indebtedness permitting its acceleration as the result of which the
maturity of Senior Indebtedness has been accelerated;
(3) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent
relating to the defeasance contemplated by this provision have been
complied with; and
(4) the Company has delivered to the Trustee an Opinion of Counsel to
the effect that (A) the deposit shall not result in the Company, the
Trustee or, if the Debentures of such series are held by a Trust, such
Trust being deemed to be an "investment company" under the Investment
Company Act of 1940, as amended, and (B) such deposit creates a valid trust
in which the Holders of the Debentures of such series have the sole
beneficial interest or that the Holders of the Debentures of such series
have a nonavoidable first priority security interest in such trust.
Upon such deposit, provisions of this Junior Indenture with respect to such
series of Debentures shall no longer be in effect (except as to (1) the rights
of registration of transfer and exchange of Debentures of such series, (2) the
replacement of apparently mutilated, defaced, destroyed, lost or stolen
Debentures of such series, (3) the rights of the Holders of the Debentures of
such series to receive payments of the principal thereof and premium, if any,
and interest thereon, (4) the rights of the Holders of the Debentures of such
series as beneficiaries hereof with respect to the property so deposited with
the Trustee payable to all or any of them, (5) the
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obligation of the Company to maintain an office or agency for payments on and
registration of transfer of the Debentures of such series, (6) the rights,
obligations and immunities of the Trustee hereunder, and (7) the obligations of
the Company to the Trustee for compensation and indemnity under Section 7.07
hereof); and the Trustee shall, at the written request and expense of the
Company, execute proper instruments acknowledging the same.
(b) The Company shall be deemed to have paid, satisfied and discharged the
entire indebtedness on any series of the Debentures outstanding when all
Debentures issued in such series not previously delivered to the Trustee for
cancellation as provided herein will become due and payable at their Stated
Maturity Date within one year and shall be so deemed on the date the Company has
irrevocably deposited or caused to be irrevocably deposited with the Trustee or
any Paying Agent as trust funds in trust, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of the Debentures of such
series (1) cash (which may be held in a non-interest bearing account insured by
the Federal Deposit Insurance Corporation), in the currency or currencies in
which such Debentures are payable, in an amount, or (2) U.S. Government
Obligations, maturing as to principal and interest at such times and in such
amounts as will ensure the availability of cash, or (3) a combination thereof,
sufficient to pay the principal of and premium, if any, and interest on all
Debentures of such series then outstanding on the date of the deposit or to the
Stated Maturity Date, as the case may be, provided that in the case of
redemption, notice of redemption shall have been given or the Company shall have
irrevocably instructed the Trustee to give such notice; and further provided
that the following conditions shall have been met:
(1) no Default or Event of Default with respect to the Debentures of
such series has occurred and is continuing on the date of such deposit or
occurs as a result of such deposit or, insofar as Section 6.01(a)(3) or
6.01(a)(4) hereof is concerned, at any time during the period ending on the
91st day after the date of such deposit (it being understood that this
condition shall not be satisfied until the expiration of such period);
(2) no event or condition shall exist that, pursuant to the provisions
of Section 10.02, would prevent the Company from making payments of the
principal of or interest on the date of such deposit or at any time during
the period ending on the 91st day after the date of such deposit (it being
understood that this condition shall not be deemed satisfied until the
expiration of such period):
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(3) the Company has delivered to the Trustee an Officer's Certificate
certifying that there does not exist (i) a default in the payment of all or
any portion of any Senior Indebtedness or (ii) any other default affecting
Senior Indebtedness permitting its acceleration as the result of which the
maturity of Senior Indebtedness has been accelerated;
(4) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent
relating to the defeasance contemplated by this provision have been
complied with; and
(5) the Company has delivered to the Trustee (i) either a private
Internal Revenue Service ruling or, based upon a change in law since the
date of this Indenture, an Opinion of Counsel, in either case, to the
effect that the Holders of the Debentures of such series will not recognize
income, gain or loss for United States federal income tax purposes as a
result of such deposit, defeasance and discharge and will be subject to
United States federal income tax on the same amount and in the manner and
at the same times as would have been the case if such deposit, defeasance
and discharge had not occurred, and (ii) an Opinion of Counsel to the
effect that (A) the deposit shall not result in the Company, the Trustee
or, if the Debentures of such series are held by a Trust, such Trust being
deemed to be an "investment company" under the Investment Company Act of
1940, as amended, and (B) such deposit creates a valid trust in which the
Holders of the Debentures of such series have the sole beneficial interest
or that the Holders of the Debentures of such series have a nonavoidable
first priority security interest in such trust.
Upon such deposit, provisions of this Junior Indenture with respect to such
series of Debentures shall no longer be in effect (except as to (1) the rights
of registration of transfer and exchange of Debentures of such series, (2) the
replacement of apparently mutilated, defaced, destroyed, lost or stolen
Debentures of such series, (3) the rights of the Holders of the Debentures of
such series to receive payments of the principal thereof and premium, if any,
and interest thereon, (4) the rights of the Holders of the Debentures of such
series as beneficiaries hereof with respect to the property so deposited with
the Trustee payable to all or any of them, (5) the obligation of the Company to
maintain an office or agency for payments on and registration of transfer of the
Debentures of such series, (6) the rights, obligations and immunities of the
Trustee hereunder, and (7) the obligations of the Company to the Trustee for
compensation and indemnity under Section 7.07
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hereof); and the Trustee shall, at the written request and expense of the
Company, execute proper instruments acknowledging the same.
SECTION 8.02. Application by Trustee of Funds Deposited for Payment of
Debentures; Miscellaneous.
(a) Subject to Section 8.04 hereof, all moneys deposited with the Trustee
pursuant to Section 8.01 hereof shall be held in trust and applied by it to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent), to the Holders of the Debentures of the series
for the payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest;
but such money need not be segregated from other funds except to the extent
required by law.
(b) The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U. S. Government Obligations
deposited pursuant to Section 8.01 hereof or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of outstanding Debentures.
SECTION 8.03. Repayment of Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this Junior Indenture,
all moneys then held by any Paying Agent under this Junior Indenture shall, upon
demand of the Company, be repaid to it or paid to the Trustee, and thereupon
such Paying Agent shall be released from all further liability with respect to
such moneys.
SECTION 8.04. Return of Moneys Held by the Trustee and Paying Agent Unclaimed
for Two Years.
Any moneys deposited with or paid to the Trustee or any Paying Agent for
the payment of the principal of and premium, if any, or interest on the
Debentures of any series and not applied but remaining unclaimed for two years
after the date when such principal, premium, if any, or interest shall have
become due and payable shall, unless otherwise required by mandatory provisions
of applicable escheat or abandoned or unclaimed property law, be repaid, upon
written request, to the Company by the Trustee or such Paying Agent, and the
Holders of such Debentures shall, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed property laws,
thereafter look only to the Company for any payment which such Holder may be
entitled to collect, and all
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liability of the Trustee or any Paying Agent with respect to such moneys shall
thereupon cease.
ARTICLE 9. AMENDMENTS
SECTION 9.01. Without Consent of Holders.
From time to time, when authorized by a resolution of the Board of
Directors, the Company and the Trustee, without notice to or the consent of any
Holders of the Debentures, may amend, waive or supplement this Junior Indenture:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to comply with Article 5 hereof;
(iii) to provide for uncertificated Debentures in addition to or in
place of certificated Debentures;
(iv) to comply with any requirement of the SEC in connection with
the qualification of this Junior Indenture under the TIA; or
(v) to set forth the terms and conditions, which shall not be
inconsistent with this Junior Indenture, of any series of Debentures (other
than the Series 1997 Debentures) that are to be issued hereunder and the
form of Debentures of such series;
provided that any such action does not adversely affect the Holders of such
Debentures and, in the case of the outstanding Debentures of a series then held
by a Trust, any such action does not adversely affect the holders of the Trust
Preferred Securities of that Trust.
SECTION 9.02. With Consent of Holders.
(a) The Company and the Trustee may amend or supplement this Junior
Indenture in any manner not permitted by Section 9.01, or may waive future
compliance by the Company with any provisions of this Junior Indenture, with the
consent of the Holders of at least a majority in aggregate principal amount of
the Debentures of each series affected thereby. Such an amendment or waiver may
not, without the consent of each Holder of the Debentures affected thereby:
(1) reduce the principal amount of such Debentures;
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(2) reduce the percentage of principal amount of such Debentures
the Holders of which must consent to an amendment of this Junior
Indenture or a waiver;
(3) change the stated maturity of the principal of or the interest on
or rate of interest of such Debentures; or
(4) extend the time of payment of interest on such Debentures, except
as provided herein;
provided that, in the case of the outstanding Debentures of a series then held
by a Trust, (i) no such amendment shall be made that adversely affects the
holders of the Trust Preferred Securities of that Trust, (ii) no termination of
the Indenture may occur, and (iii) no waiver of any Event of Default with
respect to the Debentures of that series or compliance with any covenant under
this Indenture shall be effective, in each case without the prior consent of the
holders of at least a majority of the aggregate liquidation preference of the
outstanding Trust Preferred Securities of that Trust or the holder of each such
Preferred Security, as applicable.
(b) A supplemental Junior Indenture that changes or eliminates any covenant
or other provision of this Junior Indenture that has expressly been included
solely for the benefit of one or more particular series of Debentures, or which
modifies the rights of the Holders of Debentures of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Junior Indenture of the Holders of Debentures of any other series.
(c) It shall not be necessary for the consent of the Holders of Debentures
or holders of Trust Preferred Securities under this Section 9.02 to approve the
particular form of any proposed amendment, but it shall be sufficient if such
consent approves the substance thereof.
(d) If certain Holders agree to defer or waive certain obligations of the
Company hereunder with respect to Debentures held by them, such deferral or
waiver shall not affect the rights of any other Holder to receive the payment or
performance required hereunder in a timely manner.
(e) After an amendment or waiver under this Section 9.02 becomes effective,
the Company shall mail to each Holder a notice briefly describing the amendment
or waiver. Any failure of the Company to mail such notices, or any defect
therein, shall not, however, in any way impair or affect the validity of such
amendment or waiver.
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SECTION 9.03. Compliance with Trust Indenture Act.
Every supplemental Junior Indenture executed pursuant to this Article 9
shall comply with the TIA.
SECTION 9.04. Revocation and Effect of Consents; Waivers and Actions.
(a) Until an amendment, waiver or other action by Holders becomes
effective, a consent to it or any other action by a Holder of a Debenture
hereunder is a continuing consent by the Holder and every subsequent Holder of
that Debenture or portion of the Debenture that evidences the same obligation as
the consenting Holder's Debenture, even if notation of the consent, waiver or
action is not made on such Debenture. However, any such Holder or subsequent
Holder may revoke the consent, waiver or action as to such Holder's Debenture or
portion of the Debenture if the Trustee receives the notice of revocation before
the consent of the requisite aggregate principal amount of such Debentures then
outstanding has been obtained and not revoked. After an amendment, waiver or
action becomes effective, it shall bind every Holder of the Debentures of the
related series, except as provided in Section 9.02 hereof.
(b) The Company may, but shall not be obligated to, fix a Record Date for
the purpose of determining the Persons entitled to consent to any amendment or
waiver. If a Record Date is fixed, then, notwithstanding the first two
sentences of the immediately preceding paragraph, only Holders of Debentures or
holders of Trust Preferred Securities, as applicable, on such Record Date or
their duly designated proxies, and only those Persons, shall be entitled to
consent to such amendment, supplement or waiver or to revoke any consent
previously given, whether or not such Persons continue to be such after such
Record Date. No such consent shall be valid or effective for more than 90 days
after such Record Date.
SECTION 9.05. Notation on or Exchange of Debentures.
Debentures of the related series authenticated and made available for
delivery after the execution of any supplemental Junior Indenture pursuant to
this Article 9 may, and shall, if required by the Trustee, bear a notation in
form approved by the Trustee as to any matter provided for in such supplemental
Junior Indenture. If the Company shall so determine, new Debentures so modified
as to conform, in the opinion of the Trustee and the Board of Directors, to any
such supplemental Junior Indenture may be prepared and executed by the Company
and authenticated and made available for delivery by the Trustee in exchange for
outstanding Debentures.
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SECTION 9.06. Trustee to Execute Supplemental Junior Indentures.
The Trustee shall execute any supplemental Junior Indenture authorized
pursuant to this Article 9 if the supplemental Junior Indenture does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, but need not, execute it. In executing such
supplemental Junior Indenture the Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Officer's Certificate and Opinion
of Counsel stating that such supplemental Junior Indenture is authorized or
permitted by this Junior Indenture.
SECTION 9.07. Effect of Supplemental Junior Indentures.
Upon the execution of any supplemental Junior Indenture under this Article
9, this Junior Indenture shall be modified in accordance therewith, and such
supplemental Junior Indenture shall form a part of this Junior Indenture for all
purposes and every Holder of Debentures of the related series theretofore or
thereafter authenticated and made available for delivery hereunder shall be
bound thereby.
ARTICLE 10. SUBORDINATION
SECTION 10.01. Debentures Subordinated to Senior Indebtedness.
Notwithstanding the provisions of Section 6.10 hereof or any other
provision herein or in any Debenture, each of the Company and the Trustee and,
by their acceptance thereof, the Holders of each series of Debentures (a)
covenant and agree that all payments by the Company of the principal of and
premium, if any, and interest on such series of Debentures (other than any
series of Debentures which have been discharged pursuant to Article 8) shall be
junior and subordinated in accordance with the provisions of this Article 10 to
the prior payment in full, in cash or cash equivalents, of all amounts payable
on, under or in connection with Senior Indebtedness, and (b) acknowledge that
holders of Senior Indebtedness are or shall be relying on this Article 10.
SECTION 10.02. Priority and Payment of Proceeds in Certain Events; Remedies
Standstill.
(a) Upon any payment or distribution of the Company's assets, of any kind
or character, whether in cash, property or securities, to creditors upon any
dissolution or winding up or total or partial liquidation or reorganization of
the Company, whether voluntary or involuntary, or assignment for the benefit of
creditors, marshaling of assets or bankruptcy, insolvency, debt restructuring or
other similar proceedings in connection
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with any insolvency or bankruptcy proceeding of the Company, any amounts payable
on, under or in connection with Senior Indebtedness (including any interest
accruing on such Senior Indebtedness subsequent to the commencement of a
bankruptcy, insolvency or similar proceeding) shall first be paid in full in
cash, or payment provided for in cash or cash equivalents, before the Holders or
the Trustee on behalf of the Holders or the holders of Trust Preferred
Securities shall be entitled to receive from the Company any payment of
principal of or premium, if any, or interest on any series of Debentures or
distribution of any assets or securities.
(b) No direct or indirect payment by or on behalf of the Company of
principal of or premium, if any, or interest on any series of Debentures (other
than any series of Debentures which has been discharged pursuant to Article 8),
whether pursuant to the terms of such series of Debentures or upon acceleration
or otherwise, shall be made if, at the time of such payment, there exists (i) a
default in the payment of all or any portion of any Senior Indebtedness and the
Trustee has received written notice thereof from the Company, from holders of
Senior Indebtedness or from any trustee, representative or agent therefor, (ii)
any other default affecting Senior Indebtedness as a result of which the
maturity of Senior Indebtedness has been accelerated and the Trustee has
received written notice from the Company, from holders of Senior Indebtedness or
from any trustee, representative or agent therefor, or (iii) any judicial
proceedings are pending with respect to any such defaults, and such default
shall not have been cured or waived by or on behalf of the holders of such
Senior Indebtedness.
(c) If, notwithstanding the foregoing provisions prohibiting such payment
or distribution, the Trustee or any Holder shall have received any payment on
account of the principal of or premium, if any, or interest on any series of
Debentures when such payment is prohibited by this Section 10.02 and before all
amounts payable on, under or in connection with Senior Indebtedness are paid in
full in cash or cash equivalents, then and in such event (subject to the
provisions of Section 10.08 hereof) such payment or distribution shall be
received and held in trust for the holders of Senior Indebtedness and, at the
written direction of the trustee, representative or agent for the holders of the
Senior Indebtedness, shall be paid to the holders of the Senior Indebtedness
remaining unpaid to the extent necessary to pay such Senior Indebtedness in full
in cash or cash equivalents.
(d) Upon any payment or distribution of assets or securities referred to in
this Article 10, the Trustee and the Holders shall be entitled to rely upon any
order or decree of a court of competent jurisdiction in which such dissolution,
winding up, liquidation or reorganization proceedings are
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pending, and upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making any such payment or
distribution, delivered to the Trustee for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 10.
SECTION 10.03. Payments Which May Be Made Prior to Notice.
Nothing in this Article 10 or elsewhere in this Junior Indenture shall
prevent (i) the Company, except under the conditions described in Section 10.02
hereof, from making payments of principal of or premium, if any, or interest on
any series of Debentures or from depositing with the Trustee any monies for such
payments, or (ii) the application by the Trustee of any monies deposited with it
for the purpose of making such payments of principal of or premium, if any, or
interest on such series of Debentures, to the Holders entitled thereto, unless
at least one Business Day prior to the date when such payment would otherwise
(except for the prohibitions contained in Section 10.02 hereof) become due and
payable the Trustee shall have received the written notice provided for in
Section 10.02(b)(i) or (ii) hereof.
SECTION 10.04. Rights of Holders of Senior Indebtedness Not To Be Impaired.
(a) No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time or in any way be
prejudiced or impaired by any act or failure to act in good faith by any such
holder, or by any noncompliance by the Company with the terms and provisions and
covenants herein regardless of any knowledge thereof any such holder may have or
otherwise be charged with.
(b) The provisions of this Article 10 are intended to be for the benefit
of, and shall be enforceable directly by, the holders of Senior Indebtedness.
Notwithstanding anything to the contrary in this Article 10, to the extent any
Holders or the Trustee have paid over or delivered to any holder of Senior
Indebtedness any payment or distribution received on account of the principal of
or premium (if any) or interest on any series of Debentures to which any other
holder of Senior Indebtedness shall be entitled to share in accordance with
Section 10.02 hereof, no holder of Senior Indebtedness shall have a claim or
right against any Holders or the Trustee with respect to any such payment or
distribution or as a result of the failure to make payments or distributions to
such other holder of Senior Indebtedness.
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SECTION 10.05. Trustee May Take Action to Effectuate Subordination.
Each Holder of a Debenture, by such Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
required by the trustee, representative or agent for holders of Senior
Indebtedness or by the Company to effectuate, as between the holders of Senior
Indebtedness and the Holders, the subordination as provided in this Article 10
and appoints the Trustee such Holder's attorney-in-fact for any and all such
purposes.
SECTION 10.06. Subrogation.
(a) Upon the payment in full, in cash or cash equivalents, of all Senior
Indebtedness, Holders of each series of Debentures shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments or
distributions of assets of the Company made on such Senior Indebtedness until
all series of Debentures shall be paid in full; and for the purposes of such
subrogation, no payments or distributions to holders of such Senior Indebtedness
of any cash property or securities to which Holders of any series of Debentures
would be entitled except for this Article 10, and no payment pursuant to this
Article 10 to holders of such Senior Indebtedness by such Holders of the
Debentures, shall, as between the Company, its creditors other than holders of
such Senior Indebtedness and Holders of such series of Debentures, be deemed to
be a payment by the Company to or on account of such Senior Indebtedness, it
being understood that the provisions of this Article 10 are solely for the
purpose of defining the relative rights of the holders of such Senior
Indebtedness, on the one hand, and such Holders of such series of Debentures, on
the other hand.
(b) If any payment or distribution to which Holders of any series of
Debentures would otherwise have been entitled but for the provisions of this
Article 10 shall have been applied, pursuant to this Article 10, to the payment
of all Senior Indebtedness then and in such case Holders of such series of
Debentures shall be entitled to receive from the holders of such Senior
Indebtedness at the time outstanding any payments or distributions received by
such holders of Senior Indebtedness in excess of the amount sufficient to pay,
in cash or cash equivalents, all such Senior Indebtedness in full.
SECTION 10.07. Obligations of Company Unconditional; Reinstatement.
(a) Nothing in this Article 10 or elsewhere in this Junior Indenture or in
any Debenture is intended to or shall impair, as between the Company and Holders
of any series of Debentures, the obligations of the Company, which are
absolute and
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unconditional, to pay to such Holders the principal of and premium, if any, and
interest on such series of Debentures as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of Holders of such series of Debentures and creditors of the
Company other than the holders of the Senior Indebtedness, nor shall anything
herein or therein prevent the Trustee or any Holder of such series of Debentures
or holder of Trust Preferred Securities, as applicable, from exercising all
remedies otherwise permitted by applicable law under this Junior Indenture,
subject to the rights, if any, under this Article 10 of the holders of such
Senior Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
(b) The failure to make a scheduled payment of principal of or premium, if
any, or interest on any series of Debentures by reason of Section 10.02 shall
not be construed as preventing the occurrence of an Event of Default under
Section 6.01 hereof; provided, however, that if (i) the conditions preventing
the making of such payment no longer exist, and (ii) Holders of such series of
Debentures are made whole with respect to such omitted payments, the Event of
Default relating thereto (including any failure to pay any accelerated amounts)
shall be automatically waived, and the provisions of this Junior Indenture shall
be reinstated as if no such Event of Default had occurred.
SECTION 10.08. Trustee Entitled to Assume Payments Not Prohibited in Absence of
Notice.
(a) The Company shall give prompt written notice to the Trustee of any fact
known to the Company that would prohibit the making of any payment to or by the
Trustee in respect of any series of Debentures. Failure to give such notice
shall not affect the subordination of the Debentures to Senior Indebtedness.
Notwithstanding the provisions of this or any other provisions of this
Indenture, the Trustee or Paying Agent shall not be charged with the knowledge
of the existence of any default in the payment of all or a portion of any Senior
Indebtedness or any other default affecting Senior Indebtedness as a result of
which the maturity of the Senior Indebtedness has been accelerated, unless and
until the Trustee or Paying Agent shall have received written notice thereof
from the Company or one or more holders of Senior Indebtedness or from any
trustee, representative or agent therefor or unless the Trustee or Paying Agent
otherwise had actual knowledge thereof; and, prior to the receipt of any such
written notice or actual knowledge of a responsible Trust Officer in the
Corporate Trust Department of the Trustee or Paying Agent, the Trustee or Paying
Agent may conclusively assume that no such facts exist.
(b) Unless at least one Business Day prior to the date when by the terms of
this Junior Indenture any monies are to be
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deposited by the Company with the Trustee or any Paying Agent for any purpose
(including, without limitation, the payment of the principal of or premium, if
any, or interest on any Debenture), the Trustee or Paying Agent shall have
received with respect to such monies the notice provided for in Section 10.02 or
a responsible Trust Officer in the Corporate Trust Department of the Trustee or
Paying Agent shall have actual knowledge of default in the payment of all or a
portion of any Senior Indebtedness or any other default affecting Senior
Indebtedness as the result of which the maturity of the Senior Indebtedness has
been accelerated, the Trustee or Paying Agent shall have full power and
authority to receive and apply such monies to the purpose for which they were
received. Neither of them shall be affected by any notice to the contrary,
which may be received by either on or after such date. The foregoing shall not
apply to the Paying Agent if the Company is acting as Paying Agent. Nothing in
this Section 10.08 shall limit the right of the holders of Senior Indebtedness
to recover payments as contemplated by Section 10.02 hereof. The Trustee or
Paying Agent shall be entitled to rely on the delivery to it of a written notice
by a Person representing himself or itself to be a holder of such Senior
Indebtedness (or a trustee, representative or agent on behalf of such holder) to
establish that such notice has been given by a holder of such Senior
Indebtedness or a trustee, representative or agent on behalf of any such holder.
The Trustee shall not be deemed to have any duty to the holders (and shall be
fully protected in relying upon such notice) of Senior Indebtedness.
SECTION 10.09. Right of Trustee to Hold Senior Indebtedness.
(a) The Trustee and any Paying Agent shall be entitled to all of the rights
set forth in this Article 10 in respect of any Senior Indebtedness at any time
held by them to the same extent as any other holder of such Senior Indebtedness,
and nothing in this Junior Indenture shall be construed to deprive the Trustee
or any Paying Agent of any of its rights as such holder.
(b) Nothing in this Article 10 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 7.07 hereof.
SECTION 10.10. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee, and the Holders of each series of Debentures shall
be entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or
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proceeding is pending, or a certificate of the trustee in bankruptcy,
liquidating trustee, custodian, receiver, assignee for the benefit of creditors,
agent or other person making such payment or distribution, delivered to the
Trustee or to the Holders of such series of Debentures, for the purpose of
ascertaining the persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness and other indebtedness of the
Company, the amount thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article 10.
SECTION 10.11. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if the Trustee
shall in good faith mistakenly pay over or distribute to Holders of such series
of Debentures or to the Company or to any other person cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article 10 or otherwise. With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to observe only such of its
covenants or obligations as are specifically set forth in this Article 10 and no
implied covenants or obligations with respect to holders of Senior Indebtedness
shall be read into this Indenture against the Trustee.
ARTICLE 11. MISCELLANEOUS
SECTION 11.01. Trust Indenture Act Controls.
If any provision of this Junior Indenture limits, qualifies or conflicts
with the duties imposed by operation of subsection (c) of Section 318 of the
TIA, the imposed duties shall control. The provisions of Sections 310 to 317,
inclusive, of the TIA that impose duties on any Person (including provisions
automatically deemed included in an Junior Indenture unless the Junior Indenture
provides that such provisions are excluded) are a part of and govern this Junior
Indenture, except as, and to the extent, they are expressly excluded from this
Junior Indenture, as permitted by the TIA.
SECTION 11.02. Notices.
(a) Any notice, request or other communication required or permitted to be
given hereunder shall be in writing and delivered, telecopied or mailed by
first-class mail, postage prepaid, addressed as follows:
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if to the Company:
Hawaiian Electric Company, Inc.
900 Richards Street
Honolulu, Hawaii 96813
Facsimile No.: (808) 543-7966
Attention: Treasurer
if to the Trustee:
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Facsimile No.: (212) 815-5915
Attention: Corporate Trust Trustee
Administration
(b) The Company or the Trustee, by giving notice to the other, may
designate additional or different addresses for subsequent notices of
communications.
(c) Any notice or communication given to a Debentureholder shall be mailed
or delivered to the Debentureholder at the Debentureholder's address as it
appears on the Securities Register of the Registrar and shall be sufficiently
given if mailed within the time prescribed.
(d) Failure to mail a notice or communication to a Debentureholder or any
defect in it shall not affect its sufficiency with respect to other
Debentureholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not received by the addressee.
(e) If the Company mails a notice or communication to the Debentureholders,
it shall mail a copy to the Trustee and each Registrar, Paying Agent or co-
Registrar.
SECTION 11.03. Communication by Holders with Other Holders.
Debentureholders may communicate, pursuant to TIA Section 312(b), with
other Debentureholders with respect to their rights under this Junior Indenture
or any series of Debentures. The Company, the Trustee, the Registrar, the Paying
Agent, if any, and anyone else shall have the protection of TIA Section 312(c).
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SECTION 11.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Junior Indenture, the Company shall furnish to the Trustee:
(i) an Officer's Certificate (complying with Section 11.05 hereof)
stating that, in the opinion of such Officer, all conditions precedent to
the taking of such action have been complied with; and
(ii) if appropriate, an Opinion of Counsel (complying with Section
11.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent to the taking of such action have been complied with.
SECTION 11.05. Statements Required in Certificate or Opinion.
Each Officer's Certificate and Opinion of Counsel with respect to
compliance with a covenant or condition provided for in this Junior Indenture
shall include:
(i) a statement that each Person making such Officer's Certificate
or Opinion of Counsel has read such covenant or condition;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
Officer's Certificate or Opinion of Counsel are based;
(iii) a statement that, in the opinion of each such Person, such
Person has made such examination or investigation as is necessary to enable
such Person to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of such
Person, such covenant or condition has been complied with; provided,
however, that with respect to matters of fact not involving any legal
conclusion, an Opinion of Counsel may rely on an Officer's Certificate or
certificates of public officials.
SECTION 11.06. Severability Clause.
If any provision in this Junior Indenture or in any series of Debentures
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
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SECTION 11.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or for meeting of
Debentureholders. The Registrar and Paying Agent may make reasonable rules for
their functions.
SECTION 11.08. Legal Holidays.
A "Legal Holiday" is any day other than a Business Day. If any specified
date (including a date for giving notice) is a Legal Holiday, the action to be
taken on such date shall be taken on the next succeeding day that is not a Legal
Holiday, and if such action is a payment in respect of any series of Debentures,
unless otherwise specified pursuant to Section 2.01 hereof no principal, premium
(if any) or interest installment shall accrue for the intervening period; except
that if any interest payment is due on a Legal Holiday and the next succeeding
day is in the next succeeding calendar year, such payment shall be made on the
Business Day immediately preceding such Legal Holiday.
SECTION 11.09. Governing Law.
This Junior Indenture and each series of Debentures shall be governed by
and construed in accordance with the internal laws of the State of New York.
SECTION 11.10. No Recourse Against Others.
No director, officer, employee or stockholder, as such, of the Company
shall have any liability for any obligations of the Company under the Debentures
or this Junior Indenture or for any claim based on, in respect of or by reason
of such obligations or their creation. By accepting a Debenture, each
Debentureholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of each series of
Debentures.
SECTION 11.11. Successors.
All agreements of the Company in this Junior Indenture and Debentures shall
bind its successors and assigns. All agreements of the Trustee in this Junior
Indenture shall bind its successors and assigns.
SECTION 11.12. Multiple Original Copies of this Junior Indenture.
The parties may sign any number of copies of this Junior Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement. Any signed copy shall be sufficient proof of this Junior Indenture.
67
<PAGE>
SECTION 11.13. No Adverse Interpretation of Other Agreements.
This Junior Indenture may not be used to interpret another Junior
Indenture, loan or debt agreement of the Company or any subsidiary. Any such
Junior Indenture, loan or debt agreement may not be used to interpret this
Junior Indenture.
SECTION 11.14. Table of Contents; Headings, Etc.
The Table of Contents, Cross-Reference Table, and headings of the Articles
and Sections of this Junior Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 11.15. Benefits of this Junior Indenture.
Except as otherwise expressly provided herein with respect to holders of
Senior Indebtedness and holders of Trust Preferred Securities, nothing in this
Junior Indenture or in any series of Debentures, express or implied, shall give
to any person, other than the parties hereto and their successors hereunder and
the Holders of such series of Debentures, any benefit or any legal or equitable
right, remedy or claim under this Junior Indenture.
68
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this Junior Indenture on behalf of the respective parties hereto as of the date
first above written.
HAWAIIAN ELECTRIC COMPANY, INC.
By: _____________________________
Paul A. Oyer
Financial Vice President
and Treasurer
By: _____________________________
Marvin A. Hawthorne
Assistant Treasurer
THE BANK OF NEW YORK,
AS TRUSTEE
By: _____________________________
Name: _______________________
Title: ______________________
69
<PAGE>
EXHIBIT A
No. ____ $___________
HAWAIIAN ELECTRIC COMPANY, INC.
_____% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE,
SERIES 1997
Hawaiian Electric Company, Inc., a Hawaii corporation (the "Company",
which term includes any successor corporation under the Junior Indenture
hereinafter referred to), for value received, hereby promises to pay to The Bank
of New York, as Property Trustee (the "Property Trustee") for, and for the
benefit of, HECO Capital Trust I (the "Trust") or registered assigns, the
principal sum of $___________ Dollars on March __, 2027, or on such other date
which may be established by the Company in accordance with the terms of said
Junior Indenture but which may not, in any event, be a date earlier than March
___, 2002 or a date later than March ____, 2046, and to pay interest on said
principal sum from March __, 1997 or from the most recent Interest Payment Date
(as defined below) to which interest has been paid or duly provided for,
quarterly in arrears on March 31, June 30, September 30 and December 31,
commencing March 31, 1997 (each, an "Interest Payment Date"), at the rate of
_____% per annum until the principal hereof shall have become due and payable,
and on any overdue principal and (to the extent that payment of such interest is
enforceable under applicable law) on any overdue installment of interest at the
same rate per annum. The amount of interest payable on any Interest Payment Date
shall be computed on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full calendar month, interest will be computed on
the basis of the actual number of days elapsed in such period. In the event that
any Interest Payment Date is not a Business Day, then interest will be payable
on the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day (without any reduction in interest or other
payment in respect of such early payment), in each case with the same force and
effect as if made on the date such payment was originally payable. The interest
installment so payable, and punctually paid or duly provided for, on any
Interest Payment Date will, as provided in the Junior Indenture, be paid to the
Person in whose name this Debenture is registered at the close of business on
the Regular Record Date for such interest installment, which shall be the close
of business on the Business Day immediately preceding such Interest Payment
Date. Any such interest installment not punctually paid or duly provided for
shall forthwith cease to be payable to the Holder on such Regular Record Date,
and may
<PAGE>
be paid to the Person in whose name this Debenture is registered at the close of
business on a Special Record Date to be fixed by the Trustee (as defined below)
for the payment of such defaulted interest, notice whereof shall be given to the
Holders of the Series 1997 Debentures not less than 7 calendar days prior to
such Special Record Date, as more fully provided in the Junior Indenture.
Payment of the principal of and interest on this Debenture will be
made in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts. If this
Debenture is not held by a depository or the Property Trustee, payment of any
interest on this Debenture (other than on the Stated Maturity or Redemption
Date) shall be made at the office of the Trustee in the City of New York or at
the office of such Paying Agent or Paying Agents as the Company may designate
from time to time, except that at the option of the Company payment of any
interest may be made (i) by check mailed to the address of the person entitled
thereto as such address shall appear in the Securities Register or (ii) by
transfer to an account maintained by the person entitled thereto as specified in
the Securities Register, provided that proper and timely written transfer
instructions have been received by the Regular Record Date; provided, however,
that at the request of a Holder of at least $10,000,000 aggregate principal
amount of Series 1997 Debentures, interest on such Debentures will be payable by
wire transfer within the continental United States in immediately available
funds to the bank account number specified in writing by such Holder to the
Registrar prior to the Regular Record Date.
If this Debenture is not held by a depository or the Property Trustee,
the principal amount hereof, any premium and any interest due on the Stated
Maturity Date or a Redemption Date (other than an Interest Payment Date) will be
paid only upon surrender of this Debenture at the principal corporate office of
The Bank of New York, Paying Agent, in New York, New York, or at such other
office or agency of the Paying Agent as the Company shall designate by written
notice to the Holder of this Debenture.
As long as this Debenture is held by the Property Trustee or if this
Debenture is held by a depository, any payments of principal of and premium, if
any, and interest on this Debenture will be made pursuant to the terms of the
Junior Indenture.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Junior Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness, and this Debenture is
issued subject to the provisions of the Junior Indenture with respect thereto.
The Holder of this Debenture, by accepting the same, (a) agrees to and shall be
bound by such provisions, (b) authorizes and directs the Trustee on his behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee his
attorney-in-fact for any and all such purposes. The Holder of this Debenture,
by his acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions
2
<PAGE>
contained herein and in the Junior Indenture by each holder of Senior
Indebtedness, whether now outstanding or hereafter incurred, and waives reliance
by each such holder upon said provisions.
This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "Series 1997 Debentures"),
specified in the Junior Indenture, limited in aggregate principal amount to
$31,546,400, except if the Debenture Exchange has occurred, the aggregate
principal amount may not exceed $51,546,400, issued under and pursuant to a
Junior Indenture dated as of March 1, 1997 (the "Junior Indenture") executed and
delivered between the Company and The Bank of New York, as trustee (the
"Trustee"). The Series 1997 Debentures are initially being issued to the Trust,
to be held on behalf of the Trust by its property trustee (the "Property
Trustee"). Concurrently with the issuance of the Series 1997 Debentures, the
Trust is issuing its trust securities, representing undivided beneficial
interests in the assets of the Trust and having an aggregate liquidation
preference equal to the aggregate principal amount of the Series 1997 Debentures
and of the Subsidiary Debentures issued by HELCO and MECO, including the Trust's
_____% Cumulative Quarterly Income Preferred Securities, Series 1997 (the "Trust
Preferred Securities"). By the terms of the Junior Indenture, Debentures are
issuable in series which may vary as to amount, date of maturity, rate of
interest and in other respects as in the Junior Indenture provided. Reference is
made to the Junior Indenture for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and Holders of the Debentures. Each term used in this Debenture which is
defined in the Junior Indenture and not defined herein shall have the meaning
assigned to it in the Junior Indenture.
At the option of the Company, the Series 1997 Debentures are
redeemable prior to maturity (i) at any time on or after March __, 2002, in
whole or in part, and (ii) if a Special Event shall occur and be continuing, in
whole (but not in part), in each case at 100% of the principal amount thereof
plus accrued and unpaid interest to the Redemption Date. A "Special Event"
shall mean either a "Tax Event" or an "Investment Company Event." A "Tax Event"
shall mean that the Company or the Trust shall have received an opinion of
counsel (which may be regular counsel to the Company or an Affiliate, but not an
employee thereof and which must be acceptable to the Property Trustee of the
Trust), rendered by a law firm having a recognized federal and state tax and
securities practice, to the effect that, as a result of a Tax Action,
3
<PAGE>
there is more than an insubstantial risk that (i) the Trust is, or will be
within 90 days of the date of said opinion, subject to United States federal
income tax with respect to income received or accrued on the Debentures, (ii)
interest payable by the Company to the Trust on the 1997 Series Debentures or by
MECO or HELCO to the Trust on its Subsidiary Debentures is not, or within 90
days of the date of said opinion will not be, deductible by such company, in
whole or in part, for United States federal income tax purposes or (iii) the
Trust is, or will be within 90 days of the date of said opinion, subject to more
than a de minimis amount of other taxes, duties, or other governmental charges.
A "Tax Action" includes (a) any amendment to or change (including any announced
prospective change) in the laws (or any regulations thereunder) of the United
States, or of any State or the District of Columbia, or of any political
subdivision or taxing authority thereof or therein, (b) any administrative
pronouncement or action that represents an official position (including a
clarification of an official position) of the governmental authority or
regulatory body making such administrative pronouncement or taking such action
or (c) any judicial decision interpreting, clarifying or applying such laws or
regulations, in each such case that occurs or becomes effective on or after the
date of original issuance of the Trust Preferred Securities. An "Investment
Company Event" shall mean the receipt by the Company or the Trust of an opinion
of counsel, rendered by a law firm having a recognized federal securities
practice, to the effect that, as a result of the occurrence of a change in law
or regulation or a change (including a prospective change) in interpretation or
application of law or regulation by any legislative body, court, governmental
agency or regulatory authority (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that the Trust is or will be considered an "investment
company" that is required to be registered under the Investment Company Act of
1940, as amended, which Change in 1940 Act Law becomes effective on or after the
date of original issuance of the Trust Preferred Securities.
At least 30 days but not more than 60 days before the Redemption Date,
the Trustee shall mail or caused to be mailed a notice of redemption by first-
class mail, postage prepaid, to each Holder of Series 1997 Debentures to be
redeemed.
The Series 1997 Debentures shall not be subject to any sinking fund.
Series 1997 Debentures in denominations larger than $25 may be redeemed in part
but only in integral multiples of $25.
In the event of redemption of this Debenture in part only, a new
Series 1997 Debenture or Debentures for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default with respect to the Series 1997 Debentures
occurs and is continuing, the principal of and interest on the Series 1997
Debentures may (and, in certain circumstances, shall) be declared, and upon such
4
<PAGE>
declaration shall become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Junior Indenture.
The Junior Indenture contains provisions for defeasance within one
year of the Stated Maturity of the entire indebtedness of this Debenture upon
compliance by the Company with certain conditions set forth therein.
Subject to certain exceptions in the Junior Indenture which require
the consent of every Holder, the Company and the Trustee may amend the Junior
Indenture or may waive future compliance by the Company with any provisions of
the Junior Indenture, with the consent of the Holders of at least a majority in
aggregate principal amount of the Series 1997 Debentures if affected thereby,
provided that if the Series 1997 Debentures are held by the Trust, no such
amendment or waiver that adversely affects the holders of the Trust Preferred
Securities shall be effective without the prior consent of the holders of at
least a majority in aggregate liquidation preference of the outstanding Trust
Preferred Securities. Subject to certain exceptions in the Junior Indenture,
without the consent of any Debentureholder, the Company and the Trustee may
amend the Junior Indenture to cure any ambiguity, defect or inconsistency, to
bind a successor to the obligations of the Junior Indenture, to provide for
uncertificated Debentures in addition to certificated Debentures, or to comply
with any requirements of the Debentures and the Securities and Exchange
Commission in connection with the qualification of the Junior Indenture under
the TIA, provided that any such action does not adversely affect the rights of
any Debentureholder and, in the case of Series 1997 Debentures held by the
Trust, the rights of any holder of Trust Preferred Securities. Amendments bind
all Holders and subsequent Holders.
No reference herein to the Junior Indenture and no provision of this
Debenture or the Junior Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Debenture at the time and place and at the rate and in the
money herein prescribed.
So long as no Event of Default with respect to the Series 1997
Debentures has occurred and is continuing, the Company shall have the right at
any time and from time to time to extend the interest payment period of the
Series 1997 Debentures for up to 20 consecutive quarters (the "Extension
Period"), provided that no Extension Period shall extend beyond the Stated
Maturity Date or Redemption Date of any Series 1997 Debenture. At the end of
the Extension Period, the Company shall pay all interest then accrued and unpaid
(together with
5
<PAGE>
interest thereon at the rate specified for the Series 1997 Debentures,
compounded quarterly, to the extent that payment of such interest is enforceable
under applicable law). During such Extension Period and during any Extension
Period with respect to the Subsidiary Debentures, subject to certain exceptions
contained in the Junior Indenture, the Company may not (i) declare or pay any
dividends or distributions on, or redeem, purchase, acquire or make a
liquidation payment with respect to any of its Capital Stock, (ii) make any
payment of principal, interest or premium, if any, on or repay, repurchase or
redeem any of its debt securities (including other Debentures) that rank pari
passu with or junior in interest to the Series 1997 Debentures, or (iii) make
any guarantee payments with respect to any guarantee issued by the Company if
such guarantee ranks pari passu with or junior in interest to the Series 1997
Debentures. Prior to the termination of any such Extension Period, the Company
may further extend such Extension Period, provided that such Extension Period,
together with all such previous and further extensions, shall not exceed 20
consecutive quarters and shall not extend beyond the Stated Maturity Date or
Redemption Date of any Series 1997 Debenture. At the termination of any such
Extension Period and upon the payment of all amounts then due, the Company may
elect to begin a new Extension Period, subject to the foregoing restrictions.
Series 1997 Debentures are issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof. As provided
in the Junior Indenture and subject to certain limitations therein set forth,
this Debenture is exchangeable for a like aggregate principal amount of Series
1997 Debentures of a different authorized denomination, as requested by the
Holder surrendering the same.
As provided in the Junior Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the Holder hereof upon
surrender of this Debenture for registration of transfer at the office or agency
of the Registrar accompanied by a written instrument or instruments of transfer
in form satisfactory to the Registrar duly executed by the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Series 1997
Debentures of authorized denominations and for the same aggregate principal
amount will be issued to the designated transferee or transferees. No service
charge will be made for any such transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
relation thereto.
Prior to presentment for registration of transfer of this Debenture,
the Company, the Trustee, any Paying Agent and any Registrar may deem and treat
the Holder hereof as the absolute owner hereof (whether or not this Debenture
shall be
6
<PAGE>
overdue and notwithstanding any notice of ownership or writing hereon made by
anyone other than the Registrar) for the purpose of receiving payment of or on
account of the principal hereof and interest due hereon and for all other
purposes, and neither the Company nor the Trustee nor any Paying Agent nor any
Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Junior Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
This Debenture shall not be valid until an authorized signatory of the
Trustee manually signs and dates the Trustee's Certificate of Authentication
below.
This Debenture will be governed by and construed under the internal
laws of the State of New York.
IN WITNESS WHEREOF, the Company has caused this Debenture to be signed
manually or by facsimile by its duly authorized officers and its corporate seal
or a facsimile thereof to be affixed hereto or imprinted hereon.
HAWAIIAN ELECTRIC COMPANY, INC.
By: _____________________________
[SEAL] Name: _______________________
Title: ______________________
By: _____________________________
Name: _______________________
Title: ______________________
7
<PAGE>
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE DEBENTURES, OF THE SERIES
DESIGNATED, REFERRED TO IN THE WITHIN-MENTIONED JUNIOR
INDENTURE.
THE BANK OF NEW YORK, as Trustee
By: _____________________________
Authorized Signatory
Dated: __________________________
<PAGE>
ASSIGNMENT FORM
To assign this Debenture, fill in the form below: (I) or (we) assign
and transfer this Debenture to:
_______________________________________________________________
(Insert assignee's social security or tax I.D. number)
_______________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ____________________ agent to transfer this Debenture on
the books of the Securities Register. The agent may substitute another to act
for him.
Dated: __________________ Signature: ______________________
(Sign exactly as your name appears on
the other side of this Debenture)
Signature Guaranty: ____________________
<PAGE>
EXHIBIT 4(g)
================================================================================
TRUST GUARANTEE AGREEMENT
BETWEEN
HAWAIIAN ELECTRIC COMPANY, INC.
(AS GUARANTOR)
AND
THE BANK OF NEW YORK
(AS TRUST GUARANTEE TRUSTEE)
DATED AS OF
MARCH 1, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE 1. DEFINITIONS AND INTERPRETATION
SECTION 1.01. Definitions and Interpretation................. 2
ARTICLE 2. TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application............... 5
SECTION 2.02. List of Holders................................ 6
SECTION 2.03. Reports by the Trust Guarantee Trustee......... 6
SECTION 2.04. Periodic Reports to Trust Guarantee Trustee.... 6
SECTION 2.05. Evidence of Compliance with Conditions
Precedent...................................... 7
SECTION 2.06. Events of Default; Waiver...................... 7
SECTION 2.07. Event of Default; Notice....................... 7
ARTICLE 3. POWERS, DUTIES AND RIGHTS OF THE TRUST
GUARANTEE TRUSTEE
SECTION 3.01. Powers and Duties of the Trust Guarantee
Trustee........................................ 8
SECTION 3.02. Certain Rights of Trust Guarantee Trustee...... 10
SECTION 3.03. Not Responsible for Recitals or Issuance of
the Trust Guarantee............................ 12
SECTION 3.04. Compensation and Reimbursement................. 12
ARTICLE 4. TRUST GUARANTEE TRUSTEE
SECTION 4.01. Trust Guarantee Trustee; Eligibility........... 13
SECTION 4.02. Appointment, Removal and Resignation of the
Trust Guarantee Trustee........................ 14
ARTICLE 5. GUARANTEE
SECTION 5.01. Guarantee...................................... 14
SECTION 5.02. Waiver of Notice and Demand.................... 15
SECTION 5.03. Obligations Not Affected....................... 15
SECTION 5.04. Rights of Holders.............................. 16
SECTION 5.05. Guarantee of Payment........................... 16
SECTION 5.06. Subrogation.................................... 16
SECTION 5.07. Independent Obligations........................ 17
ARTICLE 6. SUBORDINATION AND RANKING
SECTION 6.01. Subordination.................................. 17
SECTION 6.02. Pari Passu Guarantees.......................... 17
ARTICLE 7. TERMINATION
SECTION 7.01. Termination................................... 17
</TABLE>
<PAGE>
<TABLE>
<S> <C>
ARTICLE 8. INDEMNIFICATION
SECTION 8.01. Indemnification................................ 18
ARTICLE 9. MISCELLANEOUS
SECTION 9.01. Successors and Assigns......................... 18
SECTION 9.02. Amendments..................................... 19
SECTION 9.03. Notices........................................ 19
SECTION 9.04. Benefit........................................ 20
SECTION 9.05. Governing Law.................................. 20
</TABLE>
<PAGE>
CROSS-REFERENCE TABLE*
<TABLE>
<CAPTION>
<S> <C>
Section of Section of
Trust Indenture Act Guarantee
of 1939, as amended Agreement
- ------------------- ----------------
310(a)............................................... 4.01(a)
310(b)............................................... 4.01(c)
310(c)............................................... Inapplicable
311(a)............................................... 2.02(b)
311(b)............................................... 2.02(b)
311(c)............................................... Inapplicable
312(a)............................................... 2.02(a)
312(b)............................................... 2.02(b)
313.................................................. 2.03
314(a)............................................... 2.04
314(b)............................................... Inapplicable
314(c)............................................... 2.05
314(d)............................................... Inapplicable
314(e)............................................... 1.01, 2.05, 3.02
314(f)............................................... 2.01, 3.02
315(a)............................................... 3.01(d)
315(b)............................................... 2.07
315(c)............................................... 3.01
315(d)............................................... 3.01(d)
316(a)............................................... 1.01, 2.06, 5.04
316(b)............................................... 5.03
316(c)............................................... 8.02
317(a)............................................... Inapplicable
317(b)............................................... Inapplicable
318(a)............................................... 2.01(b)
</TABLE>
- --------------------------
* This Cross-Reference Table does not constitute part of the Trust Guarantee
Agreement and shall not affect the interpretation of any of its terms or
provisions.
1
<PAGE>
TRUST GUARANTEE AGREEMENT
This TRUST GUARANTEE AGREEMENT (this "Trust Guarantee"), dated as of March
1, 1997, is executed and delivered by Hawaiian Electric Company, Inc., a Hawaii
corporation (the "Guarantor or "HECO"), to The Bank of New York, a New York
banking corporation, as trustee (the "Trust Guarantee Trustee"), for the benefit
of the Holders (as defined herein) from time to time of the Trust Preferred
Securities (as defined herein) of HECO Capital Trust I, a Delaware statutory
business trust (the "Trust").
WHEREAS, pursuant to an Amended and Restated Trust Agreement for the Trust
(the "Trust Agreement"), dated as of March 1, 1997 among the Trustees named
therein, the Guarantor, as Depositor, and the Holders from time to time of
undivided beneficial interests in the assets of the Trust, the Trust is issuing
2,000,000 _______% Cumulative Quarterly Income Trust Preferred Securities,
Series 1997 (liquidation preference $25 per preferred security) (the "Trust
Preferred Securities") representing preferred undivided beneficial interests in
the assets of the Trust and having the terms set forth in the Trust Agreement;
WHEREAS, the Trust Preferred Securities will be issued by the Trust and the
proceeds thereof, together with the proceeds from the sale by the Trust of its
Common Securities, will be used to purchase the Debentures (as defined in the
Trust Agreement) which will be deposited with The Bank of New York, as Property
Trustee under the Trust Agreement, as Trust Property (as defined in the Trust
Agreement); and
WHEREAS, as incentive for the Holders to purchase Trust Preferred
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth herein, to pay to the Holders the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the purchase by each Holder of Trust
Preferred Securities, which purchase the Guarantor hereby agrees shall benefit
the Guarantor, the Guarantor executes and delivers this Trust Guarantee for the
benefit of the Holders from time to time of the Trust Preferred Securities.
<PAGE>
ARTICLE 1. DEFINITIONS AND INTERPRETATION
SECTION 1.01. Definitions and Interpretation.
(a) In this Trust Guarantee, unless the context otherwise requires:
(1) capitalized terms used in this Trust Guarantee but not defined in
the preamble above have the respective meanings assigned to them in this
Section 1.01;
(2) capitalized terms used in this Trust Guarantee but not otherwise
defined herein shall have the respective meanings assigned to such terms in
the Trust Agreement as in effect on the date hereof;
(3) a term defined anywhere in this Trust Guarantee has the same
meaning throughout;
(4) all references to "this Trust Guarantee" are to this Trust
Guarantee Agreement as modified, supplemented or amended from time to time;
(5) all references in this Trust Guarantee to Articles and Sections
are to Articles and Sections of this Trust Guarantee unless otherwise
specified;
(6) a term defined in the Trust Indenture Act has the same meaning
when used in this Trust Guarantee unless otherwise defined in this Trust
Guarantee or unless the context otherwise requires;
(7) a reference to the singular includes the plural and vice versa;
and
(8) the masculine, feminine or neuter genders used herein shall
include the masculine, feminine and neuter genders.
(b) As used herein:
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
2
<PAGE>
"Common Securities" means the common securities representing
common undivided beneficial interests in the assets of the Trust and
having the rights provided therefor in the Trust Agreement.
"Covered Person" means any Holder or beneficial owner of Trust
Preferred Securities.
"Extension Period" has the meaning specified in Section 1.01 of each
of the Indentures.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Trust Guarantee; provided that,
except with respect to a default resulting from a failure to pay any
Guarantee Payment, the Guarantor shall have received written notice of
default and shall not have cured such default within 60 days after receipt
of such notice.
"Guarantee Payments" means the following payments, without
duplication, with respect to the Trust Preferred Securities, to the extent
not paid or made by or on behalf of the Trust: (i) any accumulated and
unpaid Distributions required to be paid on the Trust Preferred Securities,
to the extent the Trust shall have funds on hand available therefor at such
time, (ii) the redemption price, including all accumulated and unpaid
Distributions to the date of redemption (the "Redemption Price"), with
respect to the Trust Preferred Securities called for redemption by the
Trust, to the extent the Trust shall have funds on hand available therefor
at such time, and (iii) upon a voluntary or involuntary termination,
winding-up or liquidation of the Trust, unless Distributable HECO
Debentures are distributed to the Holders, the lesser of (aa) the aggregate
of the liquidation preference of $25 per Preferred Security plus
accumulated and unpaid Distributions on the Trust Preferred Securities to
the date of payment, to the extent the Trust shall have funds on hand
available therefor at such time and (bb) the amount of assets of the Trust
remaining available for distribution to Holders (in either case, the
"Liquidation Distribution").
"Holder" means a Person in whose name a Trust Preferred Security is
registered in the Securities Register; provided, however, that in
determining whether the holders of the requisite percentage of Trust
Preferred Securities have given any request, notice, consent or waiver
hereunder, "Holder" shall not include the Guarantor, the Trust Guarantee
Trustee or any Affiliate of the Guarantor or the Trust Guarantee Trustee.
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"Indemnified Person" means the Trust Guarantee Trustee, any
Affiliate of the Trust Guarantee Trustee, or any officers, directors,
shareholders, members, partners, employees, representatives, nominees,
custodians or agents of the Trust Guarantee Trustee.
"Indentures" means (i) the Junior Indenture dated as of March 1, 1997,
between HECO and The Bank of New York, as trustee thereunder (the "HECO
Indenture"), (ii) the Junior Indenture dated as of March 1, 1997 among Maui
Electric Company, Limited ("MECO"), a Hawaii corporation, HECO (as
guarantor of the obligations of MECO thereunder) and The Bank of New York,
as trustee thereunder (the "MECO Indenture"), and (iii) the Junior
Indenture dated as of March 1, 1997 among Hawaii Electric Light Company,
Inc. ("HELCO"), a Hawaii corporation, HECO (as guarantor of the obligations
of HELCO thereunder) and The Bank of New York, as trustee thereunder (the
"HELCO Indenture"), in each case as amended and supplemented; and
"Indenture" means any of the Indentures.
"List of Holders" has the meaning specified in Section 2.02(a).
"Majority in Liquidation Preference of the Trust Preferred Securities"
means, except as provided by the Trust Indenture Act, a vote by the
Holders, of more than 50% of the aggregate liquidation preference of all
then outstanding Trust Preferred Securities (excluding any Trust Preferred
Securities held by the Guarantor, the Trust Guarantee Trustee or any
Affiliate of the Guarantor or the Trust Guarantee Trustee).
"Officer's Certificate" means a certificate signed by the Chairman,
the President, any Vice President, the Treasurer, any Assistant Treasurer,
the Secretary or any Assistant Secretary of the Guarantor.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel for the Trust Guarantee Trustee or the Guarantor or an Affiliate of
the Guarantor, or an employee of any thereof, who shall be acceptable to
the Trust Guarantee Trustee.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
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"Responsible Officer" means, with respect to the Trust Guarantee
Trustee, any Vice President, any Assistant Vice President, any trust
officer or assistant trust officer or any other officer of the
corporate trust department of the Trust Guarantee Trustee customarily
performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular
corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with
the particular subject.
"Securities Register" has the meaning set forth in Section 5.04 of the
Trust Agreement.
"Senior Indebtedness" means Senior Indebtedness as defined in the HECO
Indenture.
"Successor Trust Guarantee Trustee" means a successor Trust Guarantee
Trustee possessing the qualifications to act as Trust Guarantee Trustee
under Section 4.01.
"Trust Guarantee Trustee" means The Bank of New York, until a
Successor Trust Guarantee Trustee has been appointed and has accepted such
appointment pursuant to the terms of this Trust Guarantee and thereafter
means each such Successor Trust Guarantee Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided,
--------
however, that in the event the Trust Indenture Act of 1939 is amended after
-------
such date, "Trust Indenture Act" means, to the extent required by any such
amendment, the Trust Indenture Act of 1939, as so amended.
ARTICLE 2. TRUST INDENTURE ACT
SECTION 2.01. Trust Indenture Act; Application.
(a) This Trust Guarantee is subject to the provisions of the Trust
Indenture Act that are required to be part of this Trust Guarantee and shall, to
the extent applicable, be governed by such provisions.
(b) If and to the extent that any provision of this Trust Guarantee limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
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SECTION 2.02. List of Holders.
(a) The Guarantor shall furnish or cause to be furnished to the Trust
Guarantee Trustee (i) semiannually, on or before January 15 and July 15 of each
year, a list, in such form as the Trust Guarantee Trustee may reasonably
require, of the names and addresses of the Holders ("List of Holders") as of a
date not more than 15 days prior to the delivery thereof, and (ii) at such other
times as the Trust Guarantee Trustee may request in writing, within 30 days
after the receipt by the Guarantor of any such request, a List of Holders as of
a date not more than 15 days prior to the time such list is furnished, in each
case to the extent such information is in the possession or control of the
Guarantor and is not identical to a previously supplied List of Holders or has
not otherwise been received by the Trust Guarantee Trustee in its capacity as
such. The Trust Guarantee Trustee may destroy any List of Holders previously
given to it on receipt of a new List of Holders.
(b) The Trust Guarantee Trustee shall comply with its obligations under
Sections 311(a), Section 311(b) and Section 312(b) of the Trust Indenture Act.
SECTION 2.03. Reports by the Trust Guarantee Trustee.
Within 60 days after May 31 of each year, the Trust Guarantee Trustee shall
provide to the Holders such reports as are required by Section 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by Section 313 of
the Trust Indenture Act. The Trust Guarantee Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.04. Periodic Reports to Trust Guarantee Trustee.
The Guarantor shall provide to the Trust Guarantee Trustee, the Securities
and Exchange Commission and the Holders such documents, reports and information,
if any, as required by Section 314 of the Trust Indenture Act and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form and
manner and at the times required by Section 314 of the Trust Indenture Act.
Delivery of such reports, information and documents to the Trust Guarantee
Trustee is for informational purposes only and the Trust Guarantee Trustee's
receipt thereof shall not constitute constructive notice of any information
contained therein, including the Guarantor's compliance with any of its
covenants hereunder (as to which the Trust Guarantee Trustee is entitled to rely
exclusively on Officer's Certificates).
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SECTION 2.05. Evidence of Compliance with Conditions Precedent.
The Guarantor shall provide to the Trust Guarantee Trustee such evidence of
compliance with such conditions precedent, if any, provided for in this Trust
Guarantee that relate to any of the matters set forth in Section 314(c) of the
Trust Indenture Act. Each Officer's Certificate and Opinion of Counsel
delivered with respect to compliance with a condition or covenant provided for
in this Trust Guarantee shall include:
(a) a statement that the officer or attorney signing the Officer's
Certificate or Opinion of Counsel has read the covenant or condition and
the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by such officer or attorney in rendering the
Officer's Certificate or Opinion of Counsel and upon which the statements
contained therein are based;
(c) a statement that such officer or attorney has made such
examination or investigation as, in such officer's or attorney's opinion,
is necessary to enable such officer or attorney to express an informed
opinion as to whether or not such covenant or condition has been complied
with; and
(d) a statement as to whether, in the opinion of such officer or
attorney, such condition or covenant has been complied with.
SECTION 2.06. Events of Default; Waiver.
The Holders of a Majority in Liquidation Preference of the Trust Preferred
Securities may, by vote, on behalf of the holders of Debentures, waive any past
Event of Default and its consequences. Upon such waiver, any such Event of
Default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been cured, for every purpose of this Trust Guarantee, but no
such waiver shall extend to any subsequent or other default or Event of Default
or impair any right consequent therefrom.
SECTION 2.07. Event of Default; Notice.
(a) The Trust Guarantee Trustee shall, within 90 days after the occurrence
of an Event of Default, transmit by mail, first class postage prepaid, to the
Holders, notices of all Events of Default known to the Trust Guarantee Trustee,
unless such defaults have been cured before
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the giving of such notice, provided, that, except in the case of a default in
the payment of a Guarantee Payment, the Trust Guarantee Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trust Guarantee Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders.
(b) The Trust Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless a Responsible Officer of the Trust Guarantee Trustee
shall have received written notice of such Event of Default.
ARTICLE 3. POWERS, DUTIES AND RIGHTS OF THE TRUST GUARANTEE TRUSTEE
SECTION 3.01. Powers and Duties of the Trust Guarantee Trustee.
(a) This Trust Guarantee shall be held by the Trust Guarantee Trustee for
the benefit of the Holders, and the Trust Guarantee Trustee shall not transfer
this Trust Guarantee to any Person except a Holder exercising his or her rights
pursuant to Section 5.04 or to a Successor Trust Guarantee Trustee on acceptance
by such Successor Trust Guarantee Trustee of its appointment to act as Successor
Trust Guarantee Trustee. The right, title and interest of the Trust Guarantee
Trustee shall automatically vest in any Successor Trust Guarantee Trustee upon
acceptance by such Successor Trust Guarantee Trustee of its appointment
hereunder and such vesting and cessation of title shall be effective whether or
not conveyancing documents have been executed and delivered pursuant to the
appointment of such Successor Trust Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible Officer of the
Trust Guarantee Trustee has occurred and is continuing, the Trust Guarantee
Trustee shall enforce this Trust Guarantee for the benefit of the Holders.
(c) The Trust Guarantee Trustee, during the period before the occurrence of
any Event of Default and during the period after the curing of all Events of
Default that may have occurred, shall undertake to perform only such duties as
are specifically set forth in this Trust Guarantee, and no implied covenants
shall be read into this Trust Guarantee against the Trust Guarantee Trustee. In
case an Event of Default has occurred and is continuing (and has not been cured
or waived pursuant to Section 2.06), the Trust Guarantee Trustee shall exercise
such of the rights and powers vested in it by this
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Trust Guarantee, and use the same degree of care and skill in its exercise
thereof, as a prudent person would exercise or use in the conduct of his or her
own affairs.
(d) No provision of this Trust Guarantee shall be construed to relieve the
Trust Guarantee Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that:
(1) during the period prior to the occurrence of any Event of Default
and during the period after the curing or waiving of all such Events of
Default that may have occurred:
(A) the duties and obligations of the Trust Guarantee Trustee
shall be determined solely by the express provisions of this Trust
Guarantee, and the Trust Guarantee Trustee shall not be liable except
for the performance of such duties and obligations as are specifically
set forth in this Trust Guarantee; and
(B) in the absence of bad faith on the part of the Trust
Guarantee Trustee, the Trust Guarantee Trustee may conclusively rely,
as to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to the
Trust Guarantee Trustee and conforming to the requirements of this
Trust Guarantee; but in the case of any such certificates or opinions
that by any provision hereof or of the Trust Indenture Act are
specifically required to be furnished to the Trust Guarantee Trustee,
the Trust Guarantee Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Trust Guarantee or the Trust Indenture Act;
(2) the Trust Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Trust Guarantee
Trustee, unless it shall be proved that the Trust Guarantee Trustee was
negligent in ascertaining the pertinent facts upon which such judgment was
made;
(3) the Trust Guarantee Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of a Majority in Liquidation Preference
of the Trust Preferred Securities relating to the time, method and place
of conducting any proceeding for any remedy
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available to the Trust Guarantee Trustee, or exercising any trust or
power conferred upon the Trust Guarantee Trustee under this Trust
Guarantee; and
(4) no provision of this Trust Guarantee shall require the Trust
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if the Trust Guarantee Trustee
shall have reasonable grounds for believing that the repayment of such
funds or liability is not reasonably assured to it under the terms of this
Trust Guarantee or reasonable indemnity against such risk or liability is
not reasonably assured to it.
SECTION 3.02. Certain Rights of Trust Guarantee Trustee.
(a) Subject to the provisions of Section 3.01:
(1) The Trust Guarantee Trustee may rely and shall be fully protected
in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness or
other paper or document believed by it to be genuine and to have been
signed, sent or presented by the proper party or parties.
(2) Any direction or act of the Guarantor contemplated by this Trust
Guarantee shall be sufficiently evidenced by an Officer's Certificate
unless otherwise prescribed herein.
(3) Whenever, in the administration of this Trust Guarantee, the Trust
Guarantee Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting to take any action
hereunder, the Trust Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon an Officer's Certificate which, upon receipt of such
request from the Trust Guarantee Trustee, shall be promptly delivered by
the Guarantor.
(4) The Trust Guarantee Trustee may consult with legal counsel of its
selection, and the advice or Opinion of Counsel with respect to legal
matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or opinion. Such legal
counsel may be legal counsel to the Guarantor or any of its Affiliates and
may be one of
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its employees. The Trust Guarantee Trustee shall have the right at any
time to seek instructions concerning the administration of this Trust
Guarantee from any court of competent jurisdiction.
(5) The Trust Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Trust Guarantee
at the request or direction of any Holder, unless such Holder shall have
provided to the Trust Guarantee Trustee such reasonable indemnity as would
satisfy a reasonable person in the position of the Trust Guarantee Trustee
against the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction; provided that nothing contained in this Section 3.02(a)(5) shall
be taken to relieve the Trust Guarantee Trustee, upon the occurrence of an
Event of Default, of its obligation to exercise the rights and powers
vested in it by this Trust Guarantee.
(6) The Trust Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trust Guarantee Trustee,
in its discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit.
(7) The Trust Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through its agents or attorneys, and the Trust Guarantee Trustee shall not
be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
(8) Whenever in the administration of this Trust Guarantee the Trust
Guarantee Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Trust Guarantee Trustee (i) may request instructions from
the Holders, (ii) may refrain from enforcing such remedy or right or taking
such other action until such instructions are received, and (iii) shall be
protected in acting in accordance with such instructions.
(9) The Trust Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or reregistration thereof).
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(10) Any action taken by the Trust Guarantee Trustee or its agents
hereunder shall bind the Holders, and the signature of the Trust Guarantee
Trustee or its agents alone shall be sufficient and effective to perform
any such action. No third party shall be required to inquire as to the
authority of the Trust Guarantee Trustee to so act or as to its compliance
with any of the terms and provisions of this Trust Guarantee, both of
which shall be conclusively evidenced by the Trust Guarantee Trustee or its
agent taking such action.
(11) The Trust Guarantee Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith and reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred upon it by this Trust Guarantee.
(b) No provision of this Trust Guarantee shall be deemed to impose any duty
or obligation on the Trust Guarantee Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it in any
jurisdiction in which it shall be illegal, or in which the Trust Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Trust Guarantee
Trustee shall be construed to be a duty to act in accordance with such power and
authority.
SECTION 3.03. Not Responsible for Recitals or Issuance of the Trust Guarantee.
The recitals contained in this Trust Guarantee shall be taken as the
statements of the Guarantor, and the Trust Guarantee Trustee does not assume any
responsibility for their correctness. The Trust Guarantee Trustee makes no
representation as to the validity or sufficiency of this Trust Guarantee.
SECTION 3.04. Compensation and Reimbursement.
The Guarantor covenants and agrees to pay to the Trust Guarantee Trustee
from time to time, and the Trust Guarantee Trustee shall be entitled to, such
compensation as the Guarantor and the Trust Guarantee Trustee shall from time to
time agree (which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts hereby created and in the exercise and
performance of any of the powers and duties hereunder of the Trust Guarantee
Trustee, and the Guarantor will pay or reimburse the Trust Guarantee Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trust Guarantee Trustee in accordance with any of
the
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provisions of this Trust Guarantee (including the reasonable compensation and
the expenses and disbursements of its counsel and of all persons not regularly
in its employ) except any such expense, disbursement or advance as may arise
from its willful misconduct, negligence or bad faith.
ARTICLE 4. TRUST GUARANTEE TRUSTEE
SECTION 4.01. Trust Guarantee Trustee; Eligibility.
(a) Until such time as this Trust Guarantee shall be terminated in
accordance with the provisions of Section 7.01, there shall at all times be a
Trust Guarantee Trustee which shall:
(1) not be an Affiliate of the Guarantor; and
(2) be a Person that is eligible pursuant to the Trust Indenture Act
to act as such and has a combined capital and surplus of at least fifty
million U.S. dollars ($50,000,000), and shall be a corporation meeting the
requirements of Section 310(a) of the Trust Indenture Act. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority, then,
for the purposes of this Section and to the extent permitted by the Trust
Indenture Act, the combined capital and surplus of such corporation shall
be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published.
(b) If at any time the Trust Guarantee Trustee shall cease to be eligible
to so act under Section 4.01(a), the Trust Guarantee Trustee shall immediately
resign in the manner and with the effect set out in Section 4.02(c).
(c) If the Trust Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Trust Guarantee Trustee and Guarantor shall in all respects comply with the
provisions of Section 310(b) of the Trust Indenture Act. In determining whether
the Trust Guarantee Trustee has a "conflicting interest" within the meaning of
Section 310(b)(1) of the Trust Indenture Act, the provisions contained in the
proviso to Section 310(b)(1) of the Trust Indenture Act and the Trust Guarantee
Trustee's Statement of Eligibility on Form T-1 shall be deemed incorporated
herein.
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SECTION 4.02. Appointment, Removal and Resignation of the Trust Guarantee
Trustee.
(a) Subject to Section 4.02(b), the Trust Guarantee Trustee may be
appointed or removed without cause at any time by the Guarantor.
(b) The Trust Guarantee Trustee shall not be removed until a Successor
Trust Guarantee Trustee has accepted such appointment and assumed the applicable
obligations hereunder by written instrument executed by such Successor Trust
Guarantee Trustee and delivered to the Guarantor.
(c) The Trust Guarantee Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument in writing executed by the
Trust Guarantee Trustee and delivered to the Guarantor, which resignation shall
not take effect until a Successor Trust Guarantee Trustee has been appointed and
has accepted such appointment by instrument in writing executed by such
Successor Trust Guarantee Trustee and delivered to the Guarantor and the
resigning Trust Guarantee Trustee.
(d) If no Successor Trust Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.02 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning Trust
Guarantee Trustee may petition, at the expense of the Guarantor, any court of
competent jurisdiction for appointment of a Successor Trust Guarantee Trustee.
Such court may thereupon, after prescribing such notice, if any, as it may deem
proper, appoint a Successor Trust Guarantee Trustee.
(e) No Trust Guarantee Trustee shall be liable for the acts or omission to
act of any Successor Trust Guarantee Trustee.
ARTICLE 5. GUARANTEE
SECTION 5.01. Guarantee.
The Guarantor irrevocably and unconditionally agrees to pay in full to the
Holders of the outstanding Trust Preferred Securities the Guarantee Payments
(without duplication of amounts theretofore paid by or on behalf of the Trust
pursuant to the Trust Agreement), as and when due, regardless of any defense,
right of set-off or counterclaim which the Trust may have or assert. The
Guarantor's obligation to make a Guarantee Payment may be satisfied by direct
payment of the required amounts by the Guarantor to the Holders or by causing
the Trust to pay such amounts to the Holders.
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SECTION 5.02. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of the Trust Guarantee and
of any liability to which it applies or may apply, presentment, demand for
payment, any right to require a proceeding first against the Trust Guarantee
Trustee, the Trust or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 5.03. Obligations Not Affected.
(a) The obligations, covenants, agreements and duties of the Guarantor
under this Trust Guarantee shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
(1) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Trust of any express or implied agreement,
covenant, term or condition relating to the Trust Preferred Securities to
be performed or observed by the Trust;
(2) the extension of time for the payment by the Trust of all or any
portion of the Distributions (other than an extension of time for payment
of Distributions that results from an Extension Period on the Debentures as
permitted in the applicable Indenture), Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Trust
Preferred Securities or the extension of time for the performance of any
other obligation under, arising out of, or in connection with, the Trust
Preferred Securities;
(3) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Trust
Preferred Securities, or any action on the part of the Trust granting
indulgence or extension of any kind;
(4) the voluntary or involuntary liquidation, termination, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust
or any of the assets of the Trust;
(5) any invalidity of, or defect or deficiency in, the Trust Preferred
Securities;
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(6) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(7) to the extent permitted by law, any other circumstance whatsoever
that might otherwise constitute a legal or equitable discharge or defense
of a guarantor, it being the intent of this Section 5.03 that the
obligations of the Guarantor hereunder shall be absolute and unconditional
under any and all circumstances.
(b) There shall be no obligation of the Holders to give notice to, or
obtain the consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.04. Rights of Holders.
The Guarantor expressly acknowledges that: (i) this Trust Guarantee will
be deposited with the Trust Guarantee Trustee to be held for the benefit of the
Holders; (ii) the Trust Guarantee Trustee has the right to enforce this Trust
Guarantee on behalf of the Holders; (iii) the Holders of a Majority in
Liquidation Preference of the Trust Preferred Securities have the right to
direct the time, method and place of conducting of any proceeding for any remedy
available to the Trust Guarantee Trustee in respect of this Trust Guarantee or
exercising any trust or power conferred upon the Trust Guarantee Trustee under
this Trust Guarantee; and (iv) any Holder may institute a legal proceeding
directly against the Guarantor to enforce the Trust Guarantee Trustee's rights
under this Trust Guarantee, without first instituting a legal proceeding against
the Trust, the Trust Guarantee Trustee or any other Person or entity. The
Guarantor waives any right or remedy to require that any action be brought first
against the Trust, the Trust Guarantee Trustee or any other Person or entity
before proceeding directly against the Guarantor.
SECTION 5.05. Guarantee of Payment.
This Trust Guarantee creates a guarantee of payment and not of collection.
This Trust Guarantee will not be discharged except by payment of the Guarantee
Payments in full (without duplication of amounts theretofore paid by or on
behalf of the Trust pursuant to the Trust Agreement) or upon distribution of the
HECO Distributable Debentures to Holders as provided in the Trust Agreement.
SECTION 5.06. Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Trust in respect of any amounts paid to the Holders by the Guarantor
under this Trust Guarantee and shall have the right to waive payment by the
Trust pursuant to
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Section 5.01; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any rights which it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Trust Guarantee, if, at the time of any such payment, any amounts are due and
unpaid under this Trust Guarantee. If any amount shall be paid to the Guarantor
in violation of the preceding sentence, the Guarantor agrees to hold such amount
in trust for the Holders and to pay over such amount to the Holders.
SECTION 5.07. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Trust with respect to the Trust Preferred Securities
and that the Guarantor shall be liable as principal and as debtor hereunder to
make Guarantee Payments pursuant to the terms of this Trust Guarantee
notwithstanding the occurrence of any event referred to in subsections (1)
through (7), inclusive, of Section 5.03.
ARTICLE 6. SUBORDINATION AND RANKING
SECTION 6.01. Subordination.
This Trust Guarantee shall constitute an unsecured obligation of the
Guarantor and shall rank subordinate and junior in right of payment to all
Senior Indebtedness of the Guarantor.
SECTION 6.02. Pari Passu Guarantees.
This Trust Guarantee shall rank pari passu with any similar trust guarantee
agreements issued by the Guarantor on behalf of the holders of securities
similar to the Trust Preferred Securities issued by any similar trusts in the
future.
ARTICLE 7. TERMINATION
SECTION 7.01. Termination.
This Trust Guarantee shall terminate and be of no further force and effect
upon (i) full payment of the Redemption Price for all Trust Preferred
Securities, (ii) the distribution of the HECO Distributable Debentures to the
Holders or (iii) full payment of the amounts payable in accordance with the
Trust Agreement upon liquidation of the Trust. Notwithstanding the foregoing,
this
17
<PAGE>
Trust Guarantee will continue to be effective or will be reinstated, as the case
may be, if at any time any Holder must restore payment of any sums paid with
respect to Trust Preferred Securities or this Trust Guarantee.
ARTICLE 8. INDEMNIFICATION
SECTION 8.01. Indemnification.
The Guarantor agrees to indemnify each Indemnified Person for, and to hold
each Indemnified Person harmless against, any and all loss, liability, damage,
claim or expense, including taxes (other than taxes based on the income of such
Indemnified Person) incurred without willful misconduct, gross negligence or bad
faith on its part, arising out of or in connection with the acceptance or
administration of the trust or trusts hereunder, including the costs and
expenses (including reasonable legal fees and expenses) of defending itself
against, or investigating, any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The
obligation to indemnify as set forth in this Section 8.01 shall survive the
termination of this Trust Guarantee or the earlier resignation or removal of the
Trust Guarantee Trustee. The Trust Guarantee Trustee will not claim or exact
any lien or charge on any Guarantee Payments as a result of any amount due to it
under this Trust Guarantee.
ARTICLE 9. MISCELLANEOUS
SECTION 9.01. Successors and Assigns.
All guarantees and agreements contained in this Trust Guarantee shall bind
the successors, assigns, receivers, trustees and representatives of the
Guarantor and shall inure to the benefit of the Holders of the Trust Preferred
Securities then outstanding. The Guarantor may not consolidate with or merge
with or into, or sell, convey, transfer or lease its properties and assets as an
entirety or substantially as an entirety (either in one transaction or a series
of transactions) to, any Person unless permitted under Article 5 of the HECO
Indenture. In connection with a consolidation, merger or sale involving the
Guarantor that is permitted under Article 5 of the HECO Indenture, the Person
formed by or surviving such consolidation or merger or to which such sale,
conveyance, transfer or lease shall have been made, if other than the Guarantor,
shall expressly assume all of the obligations of the Guarantor hereunder and
under the Trust Agreement.
18
<PAGE>
SECTION 9.02. Amendments.
Except with respect to any changes which do not adversely affect the rights
of the Holders in any material respect (in which case no consent of the Holders
will be required), this Trust Guarantee may only be amended with the prior
approval of the Holders of a Majority in Liquidation Preference of the Trust
Preferred Securities. The provisions of Article 6 of the Trust Agreement
concerning meetings of the Holders shall apply to the giving of such approval.
SECTION 9.03. Notices.
(a) Any notice, request or other communication required or permitted to be
given hereunder shall be in writing and delivered, telecopied or mailed by first
class mail, postage prepaid, as follows:
(1) if given to the Guarantor, to the address set forth below or such
other address as the Guarantor may give notice of to the Trust, the Trust
Guarantee Trustee and the Holders:
Hawaiian Electric Company, Inc.
900 Richards Street
Honolulu, Hawaii 96813
Facsimile No: (808) 543-7966
Attention: Treasurer
(2) if given to the Trust, in care of the Property Trustee at the
address set forth below or such other address as the Trust may give notice
of to the Guarantor, the Trust Guarantee Trustee and the Holders:
HECO Capital Trust I
c/o The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Facsimile No: (212) 815-5915
Attention: Corporate Trust Trustee
Administration
with a copy to:
Hawaiian Electric Company, Inc.
900 Richards Street
Honolulu, Hawaii 96813
Facsimile No.: (808) 543-7966
Attention: Treasurer
19
<PAGE>
(3) if given to the Trust Guarantee Trustee, to the address set forth
below or such other address as the Trust Guarantee Trustee may give notice
of to the Guarantor, the Trust and the Holders:
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Facsimile No: (212) 815-5915
Attention: Corporate Trust Trustee
Administration
with a copy to:
Hawaiian Electric Company, Inc.
900 Richards Street
Honolulu, Hawaii 96813
Facsimile No.: (808) 543-7966
Attention: Treasurer
(4) if given to any Holder, at the address set forth in the Securities
Register.
(b) All notices hereunder shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
SECTION 9.04. Benefit.
This Trust Guarantee is solely for the benefit of the Holders and is not
separately transferable from the Trust Preferred Securities.
SECTION 9.05. Governing Law.
THIS TRUST GUARANTEE SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAW
PRINCIPLES THEREOF.
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.
20
<PAGE>
THIS TRUST GUARANTEE is executed as of the day and year first above
written.
HAWAIIAN ELECTRIC COMPANY, INC.,
as Guarantor
By: _____________________________
Name:
Title:
By: _____________________________
Name:
Title:
THE BANK OF NEW YORK,
as Trust Guarantee Trustee
By: _____________________________
Name:
Title:
21
<PAGE>
EXHIBIT 4(h)
[SUBSIDIARY NAME]
AND
HAWAIIAN ELECTRIC COMPANY, INC., AS GUARANTOR
AND
THE BANK OF NEW YORK, AS TRUSTEE
JUNIOR INDENTURE
DATED AS OF MARCH 1, 1997
PROVIDING FOR THE ISSUANCE OF
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES IN SERIES
INCLUDING
_____% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES,
SERIES 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE........ 2
SECTION 1.01. Definitions............................... 2
SECTION 1.02. Other Definitions......................... 9
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act............................. 10
SECTION 1.04. Rules of Construction..................... 10
SECTION 1.05. Acts of Holders and Holders of Trust
Preferred Securities...................... 11
ARTICLE 2. THE DEBENTURES; THE SERIES 1997 DEBENTURES........ 12
SECTION 2.01. Issue of Debentures Generally............. 12
SECTION 2.02. Terms and Form of the Series 1997
Debentures................................ 14
SECTION 2.03. Payment of Principal and Interest......... 16
SECTION 2.04. Execution, Authentication and Delivery.... 18
SECTION 2.05. Registrar and Paying Agent................ 21
SECTION 2.06. Paying Agent to Hold Money in Trust....... 22
SECTION 2.07. Debentureholder Lists..................... 22
SECTION 2.08. Transfer and Exchange..................... 23
SECTION 2.09. Replacement Debentures.................... 23
SECTION 2.10. Outstanding Debentures; Determinations
of Holders' Action........................ 24
SECTION 2.11. Temporary Debentures...................... 25
SECTION 2.12. Book-Entry System......................... 26
SECTION 2.13. Cancellation.............................. 28
SECTION 2.14. CUSIP Numbers............................. 28
ARTICLE 3. REDEMPTION........................................ 29
SECTION 3.01. Redemption; Notice to Trustee............. 29
SECTION 3.02. Selection of Debentures to be Redeemed.... 30
SECTION 3.03. Notice of Redemption...................... 30
SECTION 3.04. Effect of Notice of Redemption............ 31
SECTION 3.05. Deposit of Redemption Price............... 32
SECTION 3.06. Debentures Redeemed in Part............... 32
ARTICLE 4. COVENANTS......................................... 32
SECTION 4.01. Payment of Debentures..................... 32
SECTION 4.02. Prohibition on Distributions, Etc......... 33
SECTION 4.03. SEC Reports............................... 34
SECTION 4.04. Compliance Certificates................... 34
SECTION 4.05. Further Instruments and Acts.............. 35
SECTION 4.06. Additional Sums........................... 35
SECTION 4.07. Payment of Expenses of Trust.............. 36
SECTION 4.08. Ownership of Trust Common Securities...... 36
ARTICLE 5. SUCCESSOR CORPORATION............................. 36
SECTION 5.01. When the Company May Merge, Etc........... 36
<PAGE>
ARTICLE 6. DEFAULTS AND REMEDIES............................. 37
SECTION 6.01. Events of Default......................... 37
SECTION 6.02. Acceleration.............................. 39
SECTION 6.03. Other Remedies............................ 40
SECTION 6.04. Waiver of Past Defaults................... 41
SECTION 6.05. Control by Majority....................... 41
SECTION 6.06. Limitation on Suits....................... 42
SECTION 6.07. Rights of Holders to Receive Payment...... 43
SECTION 6.08. Collection Suit by the Trustee............ 43
SECTION 6.09. The Trustee May File Proofs of Claim...... 43
SECTION 6.10. Priorities................................ 44
SECTION 6.11. Undertaking for Costs..................... 44
SECTION 6.12. Waiver of Stay; Extension or Usury
Laws...................................... 45
SECTION 6.13. Suits by Holders of Trust Preferred
Securities................................ 45
ARTICLE 7. THE TRUSTEE....................................... 45
SECTION 7.01. Duties of the Trustee..................... 45
SECTION 7.02. Rights of the Trustee..................... 47
SECTION 7.03. Individual Rights of the Trustee.......... 47
SECTION 7.04. The Trustee's Disclaimer.................. 48
SECTION 7.05. Notice of Defaults........................ 48
SECTION 7.06. Reports by Trustee to Holders............. 48
SECTION 7.07. Compensation and Indemnity................ 49
SECTION 7.08. Replacement of Trustee.................... 50
SECTION 7.09. Successor Trustee by Merger............... 51
SECTION 7.10. Eligibility; Disqualification............. 51
SECTION 7.11. Preferential Collection of Claims
Against the Company....................... 51
ARTICLE 8. SATISFACTION AND DISCHARGE OF JUNIOR INDENTURE;
DEFEASANCE OF CERTAIN OBLIGATIONS; UNCLAIMED
MONEYS............................................ 51
SECTION 8.01. Satisfaction and Discharge of Junior
Indenture................................. 51
SECTION 8.02. Application by Trustee of Funds
Deposited for Payment of Debentures;
Miscellaneous............................. 55
SECTION 8.03. Repayment of Moneys Held by Paying
Agent..................................... 55
SECTION 8.04. Return of Moneys Held by the Trustee
and Paying Agent Unclaimed for Two
Years..................................... 55
ARTICLE 9. AMENDMENTS........................................ 56
SECTION 9.01. Without Consent of Holders................ 56
SECTION 9.02. With Consent of Holders................... 56
SECTION 9.03. Compliance with Trust Indenture Act....... 58
SECTION 9.04. Revocation and Effect of Consents;
Waivers and Actions....................... 58
SECTION 9.05. Notation on or Exchange of Debentures..... 58
<PAGE>
SECTION 9.06. Trustee to Execute Supplemental Junior
Indentures................................ 59
SECTION 9.07. Effect of Supplemental Junior
Indentures................................ 59
ARTICLE 10. SUBORDINATION.................................... 59
SECTION 10.01. Debentures Subordinated to Senior
Indebtedness............................. 59
SECTION 10.02. Priority and Payment of Proceeds in
Certain Events; Remedies Standstill...... 59
SECTION 10.03. Payments Which May Be Made Prior to
Notice................................... 61
SECTION 10.04. Rights of Holders of Senior
Indebtedness Not To Be Impaired.......... 61
SECTION 10.05. Trustee May Take Action to Effectuate
Subordination............................ 62
SECTION 10.06. Subrogation.............................. 62
SECTION 10.07. Obligations of Company Unconditional;
Reinstatement............................ 63
SECTION 10.08. Trustee Entitled to Assume Payments
Not Prohibited in Absence of Notice...... 63
SECTION 10.09. Right of Trustee to Hold Senior
Indebtedness............................. 64
SECTION 10.10. Reliance on Judicial Order or
Certificate of Liquidating Agent......... 65
SECTION 10.11. Trustee Not Fiduciary for Holders of
Senior Indebtedness...................... 65
ARTICLE 11. GUARANTEE OF OBLIGATIONS OF THE COMPANY.......... 65
SECTION 11.01. Guarantee................................ 65
SECTION 11.02. Waiver of Notice and Demand.............. 66
SECTION 11.03. Obligations Not Affected................. 66
SECTION 11.04. Prohibition on Distributions, Etc........ 67
SECTION 11.05. Rights of Holders........................ 68
SECTION 11.06. Guarantee of Payment..................... 68
SECTION 11.07. Subrogation.............................. 68
SECTION 11.08. Independent Obligations.................. 69
SECTION 11.09. Subordination............................ 69
SECTION 11.10. Pari Passu Guarantees.................... 69
SECTION 11.11. Termination.............................. 69
SECTION 11.12. Exculpation.............................. 70
SECTION 11.13. Indemnification.......................... 70
ARTICLE 12. MISCELLANEOUS.................................... 71
SECTION 12.01. Trust Indenture Act Controls............. 71
SECTION 12.02. Notices.................................. 71
SECTION 12.03. Communication by Holders with Other
Holders.................................. 72
SECTION 12.04. Certificate and Opinion as to
Conditions Precedent..................... 72
SECTION 12.05. Statements Required in Certificate or
Opinion.................................. 72
<PAGE>
SECTION 12.06. Severability Clause...................... 73
SECTION 12.07. Rules by Trustee, Paying Agent and
Registrar................................ 73
SECTION 12.08. Legal Holidays........................... 73
SECTION 12.09. Governing Law............................ 73
SECTION 12.10. No Recourse Against Others............... 74
SECTION 12.11. Successors............................... 74
SECTION 12.12. Multiple Original Copies of this
Junior Indenture......................... 74
SECTION 12.13. No Adverse Interpretation of Other
Agreements............................... 74
SECTION 12.14. Table of Contents; Headings, Etc......... 74
SECTION 12.15. Benefits of this Junior Indenture........ 74
<PAGE>
Junior Indenture--[SUBSIDIARY NAME]
Certain Sections of this Junior Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939
<TABLE>
<CAPTION>
Trust Indenture Junior Indenture
Act Section Section
- ---------------------- ---------------------
<S> <C> <C>
(S) 310 (a)(1) .................... 7.10
(a)(2) .................... 7.10
(a)(3) .................... Not Applicable
(a)(4) .................... Not Applicable
(a)(5) .................... Not Applicable
(b) .................... 7.08; 7.10;12.01
(c) .................... Not Applicable
(S) 311 (a) .................... 7.11
(b) .................... 7.11
(c) .................... Not Applicable
(S) 312 (a) .................... 2.07
(b) .................... 12.03
(c) .................... 12.03
(S) 313 (a) .................... 7.06
(b)(1) .................... Not Applicable
(b)(2) .................... 7.06
(c) .................... 7.06; 12.02
(d) .................... 7.06
(S) 314 (a) .................... 4.03; 12.02
(b) .................... Not Applicable
(c)(1) .................... 2.02; 12.04; 12.05
(c)(2) .................... 2.02; 12.04; 12.05
(c)(3) .................... Not Applicable
(d) .................... Not Applicable
(e) .................... 12.05
(f) .................... Not Applicable
(S) 315 (a) .................... 7.01(b)
(b) .................... 7.05, 12.02
(c) .................... 7.01(a)
(d) .................... 7.01(c)
(e) .................... 6.11
(S) 316 (a)(1)(A)................... 6.05
(a)(1)(B)................... 6.04
(a)(2) .................... Not Applicable
(a) (last sentence)......... 2.10
(b) .................... 6.07
(c) .................... 1.05
(S) 317 (a)(1) .................... 6.08
(a)(2) .................... 6.09
(b) .................... 2.06
(S) 318 (a) .................... 12.01
- ------------------
</TABLE>
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed
to be a part of the Junior Indenture.
<PAGE>
JUNIOR INDENTURE (this "Indenture" or "Junior Indenture"), dated as of
March 1, 1997, by and among [SUBSIDIARY NAME], a corporation duly organized and
existing under the laws of the State of Hawaii (the "Company"), Hawaiian
Electric Company, Inc., a corporation duly organized and existing under the laws
of the State of Hawaii ("HECO"), and The Bank of New York, a New York banking
corporation, as trustee (the "Trustee").
WHEREAS, the Company may from time to time issue, authenticate and deliver
securities under this Indenture, in one or more series (the "Debentures").
WHEREAS, the Company is a wholly owned subsidiary of HECO.
WHEREAS, HECO may from time to time create or establish one or more
statutory business trusts for the purpose of issuing undivided beneficial
interests in the assets thereof (the "Trust Securities") and using the proceeds
thereof to acquire the Junior Subordinated Deferrable Interest Debentures of
HECO and HECO's subsidiaries, including any of the Company's Debentures.
WHEREAS, HECO, as depositor, The Bank of New York, as Property Trustee (the
"Property Trustee I"), The Bank of New York, as Delaware Trustee (the "Delaware
Trustee I"), and the Administrative Trustees named therein have heretofore duly
declared and established HECO Capital Trust I, a Delaware business trust ("Trust
I"), by entering into a Trust Agreement dated as of December 31, 1996 (the
"Original Trust Agreement") and by executing and filing with the Secretary of
State of the State of Delaware a Certificate of Trust on December 31, 1996.
WHEREAS, the Original Trust Agreement has been amended and restated
pursuant to an Amended and Restated Trust Agreement dated as of March 1, 1997
among HECO, as depositor, the Property Trustee I, the Delaware Trustee I, the
Administrative Trustees named therein and the holders, from time to time, of
undivided beneficial interests in the assets of Trust I (the "Trust I
Agreement").
WHEREAS, HECO has authorized the issuance of its _____% Junior Subordinated
Deferrable Interest Debentures, Series 1997 (the "HECO Series 1997 Debentures")
to be purchased by Trust I with the proceeds from the issuance and sale of the
Trust Securities of Trust I and
1
<PAGE>
HECO has duly authorized the execution and delivery of a related Junior
Indenture dated as of March 1, 1997 by and between HECO and The Bank of New
York, a New York banking corporation, as trustee (the "HECO Junior Indenture").
WHEREAS, the Company has authorized the issuance of its _____% Junior
Subordinated Deferrable Interest Debentures, Series 1997 (the "Series 1997
Debentures") to be purchased by Trust I with a portion of the proceeds from the
issuance and sale of the Trust Securities of Trust I, and the Company has duly
authorized the execution and delivery of this Junior Indenture.
WHEREAS, HECO has authorized the execution and delivery of this Junior
Indenture to provide for the Guarantee (as hereinafter defined) with respect to
the Debentures, and has performed all acts necessary to make its guarantee, when
endorsed on the Debentures and duly executed by HECO, the valid obligations of
HECO.
WHEREAS, all things necessary to make the securities issued hereunder, when
duly issued and executed by the Company and authenticated and delivered
hereunder, the valid obligations of the Company, and to make this Junior
Indenture a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, have been done.
NOW THEREFORE, each of the Company, the Trustee and HECO, intending to be
legally bound hereby, agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders (as hereinafter defined) of the
securities issued hereunder, including the Series 1997 Debentures:
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Additional Sums" means the additional amounts, as provided in Section 4.06
hereof, as may be necessary in order that the amount of distributions then due
and payable by any Trust on its outstanding Trust Securities shall not be
reduced as a result of any additional taxes, duties or other governmental
charges to which such Trust has become subject.
"Affiliate" of any specified Person means any other Person, directly or
indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. When used with respect to any Person,
"control" means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms
2
<PAGE>
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" means (i) a copy of a resolution certified by the
Secretary or the Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification and delivered to the Trustee or (ii) a certificate signed by an
authorized officer or officers to whom the Board of Directors has delegated its
authority, and in each case, delivered to the Trustee.
"Business Day" means any day that is not a Saturday, a Sunday or a day on
which banking institutions in the City of New York are authorized or required by
law or executive order to close.
"Capital Lease Obligations" of a Person means any obligation which is
required to be classified and accounted for as a capital lease on the face of a
balance sheet of such Person prepared in accordance with GAAP.
"Capital Stock" means any and all shares, interests, rights to purchase,
warrants, options, participation or other equivalents of or interests in
(however designated) corporate stock.
"Company" means [SUBSIDIARY NAME], a Hawaii corporation, or any successor
thereto.
"Company Order" means a written request or order signed in the name of the
Company by an Officer of the Company and delivered to the Trustee.
"Covered Person" means any Holder or beneficial owner of the Debentures.
"Debenture Exchange" means the issuance of HECO Series 1997 Debentures in
exchange for Debentures of the Company held by Trust I pursuant to Section
2.05(b) of the Trust I Agreement.
"Debentureholder" or "Holder" means a Person in whose name a Debenture is
registered on the Registrar's books.
"Debentures" shall mean any of the securities of any series issued,
authenticated and delivered under this Junior Indenture.
3
<PAGE>
"Default" means any event which is, or after notice or passage of time, or
both, would be, an Event of Default pursuant to Section 6.01 hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Extension Period", with respect to any series of Debentures, means the
period during which the Company may elect to extend the interest payment period
on such series of the Debentures pursuant to Section 4.01(b) hereof; provided
that no Extension Period shall extend beyond the Stated Maturity Date or the
Redemption Date of any Debenture of such series.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board.
"Guarantee" means the guaranty by HECO of the obligations of the Company as
provided for in Article 11 hereof.
"Guarantee Event of Default" means a default by the Guarantor on any of its
payment or other obligations under the Guarantee; provided, that except with
respect to a default resulting from a failure to pay any Guarantee Payment, the
Guarantor shall have received notice of default and shall not have cured such
default within 60 days after receipt of such notice.
"Guarantee Payments" means, with respect to any series of Debentures, to
the extent not paid or made by the Company, the due and punctual payment of the
principal of and premium, if any, and interest on such series of Debentures,
when and as the same shall become due and payable, whether at maturity by reason
of acceleration or otherwise, according to the terms of such series of
Debentures and of this Junior Indenture.
"Guarantor" means HECO.
"Guaranteed Obligations" means, with respect to any series of Debentures,
all indebtedness, liabilities, obligations, covenants and duties of, and all
terms and conditions to be observed by, the Company (including in its capacity
as a "debtor in possession" under any Bankruptcy Law) due or owing to, or in
favor or for the benefit of, the Trustee (or any other Person that becomes the
Trustee by reason of any succession or assignment at any time) or the Holders
under this Indenture, including the Company's obligations to make Guarantee
Payments with respect to such series of Debentures, in each case whether or not
an allowable claim against the Company under any Bankruptcy
4
<PAGE>
Law, or otherwise enforceable against the Company, and including, in any event,
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company whether or not such claim for post-
petition interest is allowed in such proceeding.
"HECO" means Hawaiian Electric Company, Inc., a corporation organized under
the laws of the State of Hawaii, or any successor thereto.
"HECO Junior Indenture" means the Junior Indenture, dated as of March 1,
1997, by and between HECO and The Bank of New York, a New York banking
corporation, as trustee thereunder, as amended or supplemented from time to time
in accordance with the terms thereof, including the provisions of the TIA that
are deemed to be a part thereof.
"Indebtedness" means, without duplication, with respect to the Company,
whether recourse is to all or a portion of the assets of the Company and whether
or not contingent, (i) every obligation of the Company for money borrowed; (ii)
every obligation of the Company evidenced by bonds, debentures, notes or other
similar instruments, including obligations incurred in connection with the
acquisition of property, assets or businesses; (iii) every reimbursement
obligation of the Company with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of the Company; (iv)
every obligation of the Company issued or assumed as the deferred purchase price
of property or services (but excluding trade accounts payable or accrued
liabilities arising in the ordinary course of business); (v) Capital Lease
Obligations of the Company; and (vi) every obligation of the type referred to in
clauses (i) through (v) above of another Person and all dividends of another
Person the payment of which, in either case, the Company has guaranteed or is
responsible or liable, directly or indirectly, as obligor or otherwise.
"Indemnified Person" means the Trustee, any Affiliate of the Trustee, or
any officers, directors, shareholders, members, partners, employees,
representatives, nominees, custodians or agents of the Trustee.
"Indenture" or "Junior Indenture" means this Junior Indenture, as amended
or supplemented from time to time in accordance with the terms hereof, including
the provisions of the TIA that are deemed to be a part hereof.
"Interest Payment Date", when used with respect to the Debentures of any
series, means the stated maturity of any installment of interest on the
Debentures of that series.
"Issue Date", with respect to a series of Debentures, means the date on
which the Debentures of such series are originally issued.
5
<PAGE>
"Holder" or "Debentureholder" means a Person in whose name a Debenture is
registered on the Registrar's books.
"Junior Indenture" means this Junior Indenture, as amended or supplemented
from time to time in accordance with the terms hereof, including the provisions
of the TIA that are deemed to be a part hereof.
"Officer" means, with respect to any corporation, the Chairman of the
Board, the President, any Vice President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary of such corporation.
"Officer's Certificate" means a written certificate containing the
applicable information specified in Sections 12.04 and 12.05 hereof, signed in
the name of the Company by any one or more of its Officers, and delivered to the
Trustee.
"Opinion of Counsel" means a written opinion containing the applicable
information specified in Sections 12.04 and 12.05 hereof, by legal counsel (who
may be counsel to the Company) and is reasonably acceptable to the Trustee.
"Paying Agent" means any Person authorized by the Company to pay the
principal of and premium, if any, and interest on the Debentures of any series
on behalf of the Company.
"Person" means any individual, corporation, partnership, limited liability
company, joint venture, association, joint-stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Predecessor Debentures" of any particular Debenture means every previous
Debenture evidencing all or a portion of the same debt as that evidenced by such
particular Debenture; and for purposes of this definition, any Debenture
authenticated and delivered under Section 2.09 hereof in exchange for or in lieu
of a mutilated, destroyed, lost or stolen Debenture shall be deemed to evidence
the same debt as the mutilated, destroyed, lost or stolen Debenture.
"Property Trustee I" means The Bank of New York and its successors and
assigns, as property trustee under the Trust I Agreement.
"Record Date", with respect to any series of the Debentures, means the
Regular Record Date, the Special Record Date or any date set to determine the
Holders of Debentures of such series entitled to vote, consent, make a request
or exercise any other right associated with such series of Debentures.
6
<PAGE>
"Redemption Date", with respect to any Debentures of any series to be
redeemed, means the date specified for the redemption thereof in accordance with
the terms thereof and pursuant to Article 3 of this Junior Indenture.
"Redemption Price", with respect to any Debentures of any series to be
redeemed, means the price at which such Debenture is to be redeemed in
accordance with the terms thereof and pursuant to Article 3 of this Junior
Indenture.
"Regular Record Date", with respect to an interest payment on any
Debentures of any series, means the date specified for the determination of
Holders entitled to receive payment of interest on the next succeeding Interest
Payment Date in accordance with the terms thereof or this Indenture.
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means, with respect to the Company, the principal of
(and premium, if any) and interest, if any (including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating to
the Company whether or not such claim for post-petition interest is allowed in
such proceeding), on Indebtedness, whether incurred on or prior to the date of
this Indenture or thereafter incurred, unless, in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are not superior in right of payment to the Debentures or
to other Indebtedness which is pari passu with, or subordinated to, the
Debentures; provided, however, that Senior Indebtedness shall not be deemed to
include (i) any Indebtedness of the Company which, when incurred and without
respect to any election under Section 1111(b) of the Bankruptcy Code, was
without recourse to the Company, (ii) any Indebtedness of the Company to any of
its subsidiaries, (iii) Indebtedness to any employee of the Company, (iv) any
liability for taxes, and (v) indebtedness or monetary obligations to trade
creditors or assumed by the Company or any of its subsidiaries in the ordinary
course of business in connection with the obtaining of materials or services.
"Series 1997 Debentures" means any of the Company's _____% Junior
Subordinated Deferrable Interest Debentures, Series 1997 issued under this
Junior Indenture.
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<PAGE>
"Special Record Date" for the payment of any Defaulted Interest on the
Debentures of any series means the date determined pursuant to Section 2.03(c)
hereof.
"Stated Maturity Date", with respect to any Debenture or any installment of
principal thereof, means the date specified for such Debenture as the fixed date
on which the principal of such Debenture or such installment is due and payable,
as such date may be shortened or extended pursuant to the terms thereof or this
Indenture.
"TIA" means the Trust Indenture Act of 1939, as amended and as in effect on
the date of this Junior Indenture; provided, however, that if the TIA is amended
after such date, TIA means, to the extent required by any such amendment, the
TIA as so amended.
"Trust" means any statutory business trust created by the Company to issue
Trust Securities and to use the proceeds from the sale thereof to purchase
Debentures.
"Trust Common Securities" means common securities of Trust, representing
undivided beneficial interests, excluding the interests represented by Trust
Preferred Securities, in the assets of such Trust.
"Trust I" means HECO Capital Trust I, a Delaware statutory business trust
created under the Delaware Business Trust Act, Chapter 38 of Title 12 of the
Delaware Code, 12 Del. C. (S) 3801, et seq.
"Trust I Agreement" means the Amended and Restated Trust Agreement dated as
of March 1, 1997, among the Company, as depositor, the Property Trustee I, the
Delaware Trustee I and the Administrative Trustees named therein and the
holders, from time to time, of undivided beneficial interests in the assets of
Trust I, as the same may be amended and modified from time to time.
"Trust I Common Securities" means the Trust Common Securities of Trust I,
representing the undivided beneficial interests, excluding the interests
represented by Trust I Preferred Securities, in the assets of Trust I.
"Trust I Guarantee Agreement" means the Trust Guarantee Agreement dated as
of March 1, 1997 from HECO, as guarantor, to The Bank of New York, as Trust
Guarantee Trustee, with respect to the Trust I Preferred Securities.
"Trust I Preferred Securities" means the Trust Preferred Securities of
Trust I, representing the undivided preferred beneficial interests, with certain
preferences, in the assets of Trust I, having a liquidation preference of $25
per security and having rights provided therefor in the Trust I Agreement.
"Trust Officer", when used with respect to the Trustee, means any Vice
President, any Assistant Vice President, any trust officer, or assistant trust
officer or any other officer
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of the corporate trust department of the Trustee customarily performing
functions similar to those performed by any of the above designated officers and
also means, with respect to a particular corporate trust matter, any other
officer to whom such matter is referred because of that officer's knowledge of
and familiarity with the particular subject.
"Trust Preferred Securities" means preferred securities of a Trust,
representing undivided beneficial interests in the assets of such Trust with a
preference under certain circumstances with respect to cash distributions and
amounts payable on liquidation, redemption or otherwise.
"Trust Securities" means the undivided beneficial interests in the assets
of a Trust.
"Trustee" means The Bank of New York, unless and until a successor replaces
it pursuant to the applicable provisions of this Junior Indenture and,
thereafter, shall mean such successor.
"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable at the issuer's option.
SECTION 1.02. Other Definitions.
<TABLE>
TERM DEFINED IN SECTION
---- ------------------
<S> <C>
"Act"................................... 1.05(a)
"Bankruptcy Law"........................ 6.01(c)
"Custodian"............................. 6.01(c)
"Defaulted Interest".................... 2.03(c)
"Depository"............................ 2.12(a)
"Event of Default"...................... 6.01(a)
"Global Debenture"...................... 2.12(a)
"Investment Company Event".............. 3.01(a)
"Legal Holiday"......................... 12.08
"Notice of Default"..................... 6.01(a)
"Registrar"............................. 2.05(a)
"Securities Register"................... 2.05(a)
</TABLE>
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<TABLE>
<S> <C>
"Special Event"........................... 3.01(a)
"Successor"............................... 5.01(a)
"Tax Action" ............................. 3.01(a)
"Tax Event"............................... 3.01(a)
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Junior Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Junior
Indenture. The following TIA terms used in this Junior Indenture have the
following meanings:
"Junior Indenture securities" means the Debentures.
"Junior Indenture security holder" means a Debentureholder or Holder.
"Junior Indenture to be qualified" means this Junior Indenture.
"Junior Indenture trustee" or "institutional trustee" means the
Trustee.
"Obligor" on the Junior Indenture securities means the Company and any
other obligor on the Debentures.
All other TIA terms used in this Junior Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rules have the
meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction.
Unless the context otherwise requires:
(a) Each capitalized term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to
it in accordance with GAAP;
(c) "or" is not exclusive;
(d) "including" means including, without limitation;
(e) words in the singular include the plural, and words in the plural
include the singular; and
(f) "herein," "hereof" and other words of similar import refer to this
Junior Indenture as a whole and not to any particular Article,
Section or other subdivision.
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SECTION 1.05. Acts of Holders and Holders of Trust Preferred Securities.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Junior Indenture to be given or taken by
Holders or by holders of Trust Preferred Securities may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Holders or holders of Trust Preferred Securities, as applicable, in person
or by an agent duly appointed in writing and, except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as the
"Act" of Holders or holders of Trust Preferred Securities signing such
instrument or instruments. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose of this
Junior Indenture and conclusive in favor of the Trustee and the Company, if made
in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved in any manner which the Trustee deems sufficient.
(c) The ownership of Debentures shall be proved by the Securities Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Debenture shall bind every future Holder of
the same Debenture and the Holder of every Debenture issued upon the
registration of transfer thereof or in exchange therefor or in lieu thereof in
respect of anything done, omitted or suffered to be done by the Trustee or the
Company in reliance thereon, whether or not notation of such action is made upon
such Debenture.
(e) If the Company solicits from the Holders any request, demand,
authorization, direction, notice, consent, waiver or other Act, the Company may,
at its option, by or pursuant to a resolution of its Board of Directors, fix in
advance a Record Date for the determination of Holders entitled to give such
request, demand, authorization, direction, notice, consent, waiver or other Act,
but the Company shall have no obligation to do so. If such a Record Date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such Record Date, but only Holders of
record at the close of business on such Record Date shall be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of
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<PAGE>
outstanding Debentures have authorized or agreed or consented to such request,
demand, authorization, direction, notice, consent, waiver or other Act, and for
that purpose the outstanding Debentures shall be computed as of such Record
Date.
ARTICLE 2. THE DEBENTURES; THE SERIES 1997 DEBENTURES
SECTION 2.01. Issue of Debentures Generally.
(a) The aggregate principal amount of any series of Debentures which may be
authenticated and delivered under this Junior Indenture is unlimited.
(b) The Debentures may be issued in one or more series as from time to time
shall be authorized by the Board of Directors pursuant to one or more
indentures supplemental hereto or Officer's Certificates authorized pursuant to
Board Resolutions. The Debentures of each series shall be pari passu with any
and all other notes, debentures and other evidences of indebtedness of the
Company that shall contain or have applicable thereto subordination provisions
substantially identical in effect to the subordination provisions set forth in
Section 10.01 hereof providing for such indebtedness being junior and
subordinate in right of payment to all Senior Indebtedness.
(c) The Debentures of each series and the Trustee's Certificate of
Authentication shall be substantially in the form attached to this Junior
Indenture as Exhibit A or, in the case of any series other than the Series 1997
Debentures, substantially in the forms to be attached as exhibits to an
indenture supplemental hereto or an Officer's Certificate authorized pursuant to
a Board Resolution creating such series with such inclusions, omissions and
variations as to letters, years, numbers or other marks of identification or
designation and such legends or endorsements printed, lithographed or engraved
thereon as the Company may deem appropriate and as are not inconsistent with the
provisions of this Junior Indenture, or as may be required to comply with any
law or with any rule or regulation made pursuant thereto or with any rule or
regulation of any securities exchange on which such Debentures may be listed, or
to conform to usage.
(d) Other series of Debentures may differ from the Series 1997 Debentures,
and as and between series, in respect of any or all of the following matters:
(1) designation;
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<PAGE>
(2) Stated Maturity Date or Dates, which may be serial, and the
Company's option, if any, to shorten or extend the Stated Maturity Date or
Dates;
(3) interest rate or method of determination of the interest rate;
(4) the basis upon which interest shall be computed if other than a
360-day year composed of twelve 30-day months;
(5) Interest Payment Dates and Regular Record Dates therefor;
(6) the maximum duration of the Extension Period;
(7) Issue Date or Dates and interest accrual provisions;
(8) authorized denominations;
(9) the place or places for the payment of principal (and premium,
if any) and interest;
(10) the aggregate principal amount of Debentures of such series
which may be issued;
(11) the optional and mandatory redemption provisions, if any;
(12) provisions, if any, for any sinking or analogous fund;
(13) the currency or currencies in which the principal of and
premium, if any, and interest on the Debentures may be paid by the Company;
(14) if the Debentures of any series will be issued as Global
Debentures pursuant to Section 2.12 hereof, the identity of the Depository
and any other terms relating thereto to the extent not set forth in Section
2.12 hereof; and
(15) any other provisions expressing or referring to the terms and
conditions upon which the Debentures of such series are to be issued under
this Junior Indenture which are not in conflict with the provisions of this
Junior Indenture;
in each case as determined by the Board of Directors and specified in an
indenture supplemental hereto or in an
13
<PAGE>
Officer's Certificate authorized pursuant to a Board Resolution creating such
series.
SECTION 2.02. Terms and Form of the Series 1997 Debentures.
(a) The Series 1997 Debentures shall be designated "[SUBSIDIARY NAME],
_____% Junior Subordinated Deferrable Interest Debentures, Series 1997." The
Series 1997 Debentures and the Trustee's Certificate of Authentication shall be
substantially in the form of Exhibit A attached hereto. The Series 1997
Debentures shall initially be represented by a single certificate registered in
the name of The Bank of New York as Property Trustee for the benefit of Trust I.
The terms and provisions contained in the Series 1997 Debentures shall
constitute, and are hereby expressly made, a part of this Junior Indenture. The
Company, the Trustee and the Guarantor, by their execution and delivery of this
Junior Indenture, expressly agree to such terms and provisions and to be bound
thereby.
(b) The Series 1997 Debentures shall be issued at 100% of their principal
amount.
(c) The aggregate principal amount of Series 1997 Debentures outstanding at
any time may not exceed $10,000,000, except as provided in Section 2.09 hereof.
The Series 1997 Debentures shall be authenticated and delivered upon receipt by
the Trustee of the items specified in Section 2.04(d) hereof.
(d) The Stated Maturity Date of the Series 1997 Debentures is March __,
2027. Upon the shortening or extension of the fixed date on which the principal
of the HECO Series 1997 Debentures is due and payable pursuant to the HECO
Junior Indenture, the Stated Maturity Date for the Series 1997 Debentures shall
be shortened or extended at the same time for the same period, without any
action on the part of the Company or any other Person.
(e) The interest rate for the Series 1997 Debentures is _____% per annum.
The Interest Payment Dates for the Series
14
<PAGE>
1997 Debentures are March 31, June 30, September 30 and December 31 of each
year, commencing March 31, 1997. In the event that any date on which interest is
payable on the Series 1997 Debentures is not a Business Day, then payment of the
interest payable on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay), except that if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day
(without any reduction in interest or other payments in respect of such early
payment), in each case with the same force and effect as if made on the date
such payment was originally payable. The Regular Record Date for each Interest
Payment Date for the Series 1997 Debentures shall be the close of business on
the Business Day immediately preceding such Interest Payment Date, provided that
in the event that the Series 1997 Debentures are issued in definitive form while
they are not held by Trust I, the Regular Record Date for each Interest Payment
Date for the Series 1997 Debentures shall be the close of business on the date
that is 15 days prior to such Interest Payment Date, whether or not such date is
a Business Day.
(f) Each Series 1997 Debenture shall bear interest from its Issue Date or
from the most recent Interest Payment Date to which interest has been paid or
duly provided for with respect to such Series 1997 Debenture; except that, so
long as there is no existing Defaulted Interest or Extension Period on the
Series 1997 Debentures, any Series 1997 Debenture authenticated by the Trustee
between the Regular Record Date for any Interest Payment Date and such Interest
Payment Date shall bear interest from such Interest Payment Date.
(g) Defaulted Interest on any Series 1997 Debenture shall bear additional
interest at the rate per annum of 2% thereof compounded quarterly (to the extent
permitted by applicable law).
(h) Overdue principal of any Series 1997 Debenture shall bear interest at a
rate per annum equal to the interest rate per annum payable on such Series 1997
Debenture.
(i) Interest on any Series 1997 Debenture which has been deferred pursuant
to Section 4.01(b) hereof shall bear interest (to the extent that the payment of
such interest shall be legally enforceable) at a rate per annum equal to the
interest rate per annum payable on such Series 1997 Debenture, compounded
quarterly from the most recent Interest Payment Date therefor.
(j) The Series 1997 Debentures shall be redeemable prior to maturity as
provided in Section 3.01(a) hereof.
15
<PAGE>
(k) The Series 1997 Debentures shall be issuable only in registered form
without coupons and only in denominations of $25 and any integral multiple
thereof.
(l) The maximum Extension Period for the Series 1997 Debentures shall be 20
consecutive quarters.
(m) The Guarantee with respect to the Series 1997 Debentures shall
terminate as set forth in Section 11.11 hereof and, in addition, shall terminate
upon the distribution of the Distributable Debentures (as defined in the HECO
Junior Indenture) to the holders of the Trust I Preferred Securities.
SECTION 2.03. Payment of Principal and Interest.
(a) Unless otherwise specified pursuant to Section 2.01(d) hereof, interest
on the Debentures shall be computed on the basis of a 360-day year composed of
twelve 30-day months, except that for any period shorter than a full calendar
month, interest will be computed on the basis of the actual number of days
elapsed in such period.
(b) Unless otherwise provided with respect to a series of Debentures,
(1) the principal and Redemption Price of and interest on each
Debenture shall be payable in such coin or currency of the United States of
America as at the time of payment is legal tender for the payment of public
and private debts;
(2) the principal and Redemption Price of any Debenture and interest
payable on the Stated Maturity Date (if other than an Interest Payment
Date) or Redemption Date shall be payable upon surrender of such Debenture
at the office or agency of any Paying Agent therefor; provided, however,
that payments of such principal, Redemption Price or interest in respect of
the Series 1997 Debentures to Trust I as the sole holder thereof or in
respect of Global Debentures shall be made in immediately available funds
to Property Trustee I on behalf of Trust I or to the Depository pursuant
to Section 2.12 hereof, as the case may be; and
(3) interest on any Debenture (other than on the Stated Maturity
Date or Redemption Date) shall be paid on each Interest Payment Date
therefor to the Holder thereof
16
<PAGE>
at the close of business on the Regular Record Date therefor, such interest
to be payable at the option of the Company by (i) check mailed to the
address of the Person entitled thereto as such address appears on the
Securities Register or (ii) by transfer to an account maintained by the
person entitled thereto as specified in the Securities Register, provided
that proper and timely transfer instructions have been received ten
Business Days prior to the Regular Record Date; provided however, that (i)
at the written request of the Holder of at least $10,000,000 aggregate
principal amount of Debentures received by the Registrar not later than ten
Business Days prior to the Regular Record Date for such Interest Payment
Date, such interest accrued on such Debenture will be payable by wire
transfer within the continental United States in immediately available
funds to the bank account number of such Holder specified in such request
and entered on the Securities Register by the Registrar and (ii) payments
of such interest made in respect of the Series 1997 Debentures to Trust I
as the sole holder thereof or in respect of Global Debentures shall be made
in immediately available funds to Property Trustee I on behalf of Trust I
or the Depository pursuant to Section 2.12 hereof, as the case may be.
(c) Except as specified pursuant to Section 2.01 or Section 4.01(b) hereof,
interest on any Debenture which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Debenture (or one or more Predecessor Debentures) is registered at the
close of business on the Regular Record Date for such interest. Any interest
(as used in this Indenture, the term "interest" shall include quarterly interest
payments, interest on quarterly interest payments not paid on the applicable
Interest Payment Date, and Additional Sums, as applicable) on any Debenture
which is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease
to be payable to the Holder on the relevant Regular Record Date by virtue of
having been such Holder, and such Defaulted Interest may be paid by the Company,
at its election in each case, as provided in Clause (1) and (2) below:
(1) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Debentures (or their respective
Predecessor Debentures) are registered at the close of business on a
Special Record Date for the payment of such Defaulted Interest, which shall
be fixed in the following manner. The Company shall, not less than 15
Business Days prior to the date of the proposed payment, notify the Trustee
and the Paying Agent in writing of the amount of Defaulted Interest
17
<PAGE>
proposed to be paid on each Debenture and the date of the proposed payment,
and at the same time the Company shall deposit with the Paying Agent an
amount of money equal to the aggregate amount proposed to be paid in
respect of such Defaulted Interest or shall make arrangements satisfactory
to the Paying Agent for such deposit prior to the date of the proposed
payment, such money when deposited to be held in trust for the benefit of
the Persons entitled to such Defaulted Interest as in this Clause provided.
The Special Record Date for the payment of such Defaulted Interest shall be
the close of business on the tenth calendar day prior to the date of the
proposed payment. The Trustee shall, in the name and at the expense of the
Company, cause notice of the proposed payment of such Defaulted Interest
and the Special Record Date therefor to be given to the Holders thereof,
not less than 7 calendar days prior to such Special Record Date. Notice of
the proposed payment of such Defaulted Interest and the Special Record Date
therefor having been given, such Defaulted Interest shall be paid to the
Persons in whose names the Debentures (or their respective Predecessor
Debentures) are registered at the close of business on such Special Record
Date and shall no longer be payable pursuant to the following Clause (2).
(2) The Company may make payment of any Defaulted Interest on the
Debentures in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Debentures may be
listed, and upon such notice as may be required by such exchange, if, after
notice given by the Company to the Trustee and the Paying Agent of the
proposed payment pursuant to this Clause, such manner of payment shall be
deemed practicable by the Paying Agent.
(d) Subject to the foregoing provisions of this Section, each Debenture
delivered under this Junior Indenture upon registration of transfer of or in
exchange for or in lieu of any other Debenture shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Debenture.
SECTION 2.04. Execution, Authentication and Delivery.
(a) The Debentures shall be executed on behalf of the Company by any two of
its Chairman, its President, its Financial Vice President or any of its
Assistant Treasurers, under its corporate seal imprinted or reproduced thereon.
The signature of any such Officer on the Debentures may be manual or facsimile.
18
<PAGE>
(b) Debentures bearing the manual or facsimile signatures of individuals
who were at any time the proper Officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Debentures or did not
hold such offices at the date of such Debentures.
(c) No Debenture shall be entitled to any benefit under this Junior
Indenture or be valid or obligatory for any purpose unless there appears on such
Debenture a Certificate of Authentication duly executed by the Trustee by manual
signature of an authorized signatory, and such Certificate of Authentication
upon any Debenture shall be conclusive evidence, and the only evidence, that
such Debenture has been duly authenticated and made available for delivery
hereunder.
(d) The Trustee shall authenticate and deliver Debentures of a series, for
original issue, at one time or from time to time in accordance with the Company
Order referred to below, upon receipt by the Trustee of:
(1) a Board Resolution approving the form or forms and terms of such
Debentures;
(2) a Company Order requesting the authentication and delivery of such
Debentures;
(3) unless previously delivered, this Junior Indenture, and, with
respect to each series of Debentures other than the Series 1997 Debentures,
an indenture supplemental hereto or an Officer's Certificate authorized
pursuant to a Board Resolution setting forth the form of such Debentures
and establishing the terms thereof;
(4) the Debentures of such series, executed on behalf of the Company
in accordance with Section 2.04(a) hereof;
(5) an Officer's Certificate certifying that no Default or Event of
Default has occurred and is continuing; and
(6) an Opinion of Counsel to the effect that:
(A) the form or forms and the terms of such Debentures have been
duly authorized by the Company and have been established in conformity with
the provisions of this Junior Indenture; and
(B) such Debentures, when authenticated and delivered by the
Trustee and issued and delivered by the Company in the manner and subject
to any
19
<PAGE>
conditions specified in such Opinion of Counsel, will have been duly issued
under this Junior Indenture and will constitute valid and legally binding
obligations of the Company, entitled to the benefits provided by this
Junior Indenture, and enforceable against the Company in accordance with
their terms, subject, as to enforcement to laws relating to or affecting
generally the enforcement of creditors' rights, including, without
limitation, bankruptcy and insolvency laws and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law); and
(C) that this Junior Indenture or any supplemental Junior
Indenture referred to in clause (3) above has been duly authorized,
executed and delivered by the Company and is a valid instrument legally
binding upon the Company, enforceable against the Company in accordance
with its terms, subject as to enforcement to laws relating to or affecting
creditors' rights, including, without limitation, bankruptcy and insolvency
laws and to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and
(D) that all consents, approvals and orders of any commission,
governmental authority or agency required in connection with the issuance
and delivery of such Debentures have been obtained.
(e) The Trustee shall act as the initial authenticating agent. Thereafter,
the Trustee may appoint an authenticating agent. An authenticating agent may
authenticate Debentures whenever the Trustee may do so. Each reference in this
Junior Indenture to authentication by the Trustee includes authentication by
such agent. The Company shall pay any authenticating agent appointed by the
Trustee reasonable compensation for its services. The provisions set forth in
Section 7.02, Section 7.03, Section 7.04 and Section 7.07 hereof shall be
applicable to any authenticating agent.
(f) The Trustee shall have the right to decline to authenticate and deliver
any Debentures under this Section 2.04 if the Trustee, being advised by counsel,
determines that such action may not lawfully be taken or if the Trustee in good
faith shall determine that such action would expose the Trustee to personal
liability to existing Holders.
20
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SECTION 2.05. Registrar and Paying Agent.
(a) The Company shall maintain or cause to be maintained, within or outside
the State of New York, an office or agency where Debentures of any series may be
presented for registration of transfer or for exchange ("Registrar") for each
place of payment for such series of Debentures, a Paying Agent at whose office
such series of Debentures may be presented or surrendered for payment, and an
office or agency where notices and demands to or upon the Company in respect of
the Debentures and this Junior Indenture may be served. The Registrar shall
keep a register (the "Securities Register") of such series of Debentures and of
their transfer and exchange. The Company may have one or more co-Registrars and
one or more additional Paying Agents. The term Registrar includes any
additional registrar and the term Paying Agent includes any additional paying
agent. The principal corporate trust office of the Trustee in New York, New
York, shall initially be the Registrar for the Series 1997 Debentures and agent
for service of notice or demands on the Company, and the Trustee shall initially
be the Paying Agent for the Series 1997 Debentures.
(b) The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-Registrar (if not the Company or the Trustee or an
affiliate of the Trustee). The agreement shall implement the provisions of this
Junior Indenture that relate to such agent. The Company shall give prompt
written notice to the Trustee and to the Holders of any change of location of
such office or agency. If at any time the Company shall fail to maintain or
cause to be maintained any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the address of the Trustee set
forth in Section 11.02 hereof. The Company shall notify the Trustee of the name
and address of any such agent. If the Company fails to maintain a Registrar,
Paying Agent or agent for service of notices or demands, the Trustee shall act
as such and shall be entitled to appropriate compensation therefor pursuant to
Section 7.07 hereof. The Company or any Affiliate of the Company may act as
Paying Agent, Registrar or co-Registrar or agent for service of notices and
demands.
(c) The Company may also from time to time designate one or more other
offices or agencies where Debentures of any series may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations. The Company will give prompt written notice to the Trustee and to
the Holders of any such designation or rescission and of any change in location
of any such other office or agency.
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SECTION 2.06. Paying Agent to Hold Money in Trust.
(a) Except as otherwise provided herein, prior to or on each due date of
the principal of and premium (if any) and interest on any Debenture, the Company
shall deposit with the Paying Agent a sum of money sufficient to pay such
principal, premium (if any) and interest so becoming due. The Company shall
require each Paying Agent (other than the Trustee or the Company) to agree in
writing that such Paying Agent shall hold in trust for the benefit of Holders or
the Trustee all money held by the Paying Agent for the payment of principal of
and premium (if any) and interest on the Debentures and shall notify the Trustee
of any Default by the Company in making any such payment. At any time during
the continuance of any such Default, the Paying Agent shall, upon the request of
the Trustee, forthwith pay to the Trustee all money so held in trust and account
for any money disbursed by it. The Company at any time may require a Paying
Agent to pay all money held by it to the Trustee and to account for any money
disbursed by it. Upon doing so, the Paying Agent shall have no further
liability for the money so paid over to the Trustee. If the Company, a
Subsidiary or an Affiliate of either of them acts as Paying Agent, it shall
segregate the money held by it as Paying Agent and hold it as a separate trust
fund.
(b) The Companies may at any time designate additional Paying Agents or
rescind the designation of any Paying Agent; however, the Companies shall at all
times be required to maintain a Paying Agent in each Place of Payment for any
series of Debentures.
(c) Any moneys deposited with the Trustee or any Paying Agent, or then held
by the Company in trust, for the payment of the principal of and premium, if
any, or interest on any series of Debentures and remaining unclaimed for two
years after such principal, premium, if any, or interest has become due and
payable shall, at the written request of the Company, be repaid to the Company
and the Holder of such Debentures shall thereafter look, as a general unsecured
creditor, only to the Company for payment thereof.
SECTION 2.07. Debentureholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Debentureholders. If the Trustee is not the Registrar, the Company shall cause
to be furnished to the Trustee on or before the Record Date for each Interest
Payment Date and at such other times as the Trustee may request in writing,
within five Business Days of such request, a list, in such form as the Trustee
may reasonably require of the names and addresses of Debentureholders.
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SECTION 2.08. Transfer and Exchange.
(a) When Debentures are presented to the Registrar or a co-Registrar with
a request to register the transfer or to exchange them for an equal aggregate
principal amount of Debentures of the same series of other authorized
denominations having the same date of original issuance and Stated Maturity Date
and bearing the same interest rate, the Registrar shall register the transfer or
make the exchange as requested if its reasonable requirements for such
transactions are met. To permit registrations of transfer and exchanges, the
Company shall execute and the Trustee shall authenticate Debentures, all at the
Registrar's request.
(b) Every Debenture presented or surrendered for registration of transfer
or for exchange shall (if so required by the Company or the Registrar) be duly
endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Registrar duly executed by the Holder or his attorney duly
authorized in writing.
(c) The Company shall not require payment of a service charge for any
registration of transfer or exchange of Debentures, but the Company may require
payment of a sum sufficient to pay all taxes, assessments or other governmental
charges that may be imposed in connection with the registration of the transfer
or exchange of Debentures from the Debentureholder requesting such transfer or
exchange (other than any exchange of a temporary Debenture for a definitive
Debenture not involving any change in ownership).
(d) In the event of any redemption, (i) the Company shall not be required
to issue any Debenture or to make, and the Registrar need not register,
transfers or exchanges of any Debenture for a period beginning at the opening of
business 15 days before the mailing of a notice of redemption of Debentures and
ending at the close of business on the day of such mailing or (ii) the Company
shall not be required to make, and the Registrar need not register, transfers or
exchanges of any Debenture selected, called or being called for redemption,
except, in the case of any Debenture to be redeemed in part, the portion thereof
not to be redeemed.
SECTION 2.09. Replacement Debentures.
(a) If (i) any mutilated Debenture is surrendered to the Company or the
Trustee, or (ii) the Company and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Debenture, and there is
delivered to the Company and the Trustee such Debenture or indemnity as may be
required by them to save each of them harmless, then, in the absence of notice
to the Company or the Trustee that such
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Debenture has been acquired by a bona fide purchaser, the Company shall execute
in exchange for any such mutilated Debenture or in lieu of any such destroyed,
lost or stolen Debenture, a new Debenture of the same series and of like tenor
and principal amount, bearing a number not contemporaneously outstanding, and
the Trustee shall authenticate and make such new Debenture available for
delivery.
(b) In case any such mutilated, destroyed, lost or stolen Debenture has
become or is about to become due and payable, or is about to be redeemed by the
Company pursuant to Article 3 hereof, the Company in its discretion may, instead
of issuing a new Debenture, pay or purchase such Debenture, as the case may be.
(c) Upon the issuance of any new Debentures under this Section 2.09, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.
(d) Every new Debenture issued pursuant to this Section 2.09 in lieu of any
mutilated, destroyed, lost or stolen Debenture shall constitute an original
additional contractual obligation of the Company (whether or not the mutilated,
destroyed, lost or stolen Debenture shall be at any time enforceable) and shall
be entitled to all benefits of this Junior Indenture equally and ratably with
any and all other Debentures duly issued hereunder.
(e) The provisions of this Section 2.09 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Debentures.
SECTION 2.10. Outstanding Debentures; Determinations of Holders' Action.
(a) Debentures outstanding at any time are all the Debentures authenticated
by the Trustee except for those canceled by it, those delivered to it for
cancellation, those mutilated, destroyed, lost or stolen Debentures referred to
in Section 2.09 hereof, those redeemed by the Company pursuant to Article 3
hereof, and those described in this Section 2.10 as not outstanding. A
Debenture does not cease to be outstanding because the Company or an Affiliate
thereof holds the Debenture; provided, however, that in determining whether the
Holders of the requisite principal amount of Debentures have given or concurred
in any request, demand, authorization, direction, notice, consent or waiver
hereunder, Debentures actually known by the Trustee to be owned by the Company
or an
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Affiliate (other than any Trust so long as any of the Trust Preferred Securities
of such Trust are outstanding) shall be disregarded and deemed not to be
outstanding.
(b) Subject to the foregoing, only Debentures outstanding at the time of
such determination shall be considered in any such determination (including
determinations pursuant to Articles 3, 6 and 9).
(c) If a Debenture is replaced pursuant to Section 2.09 hereof, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Debenture is held by a bona fide purchaser.
(d) If the Paying Agent (other than the Company) holds, in accordance with
this Junior Indenture, at the Stated Maturity Date or on a Redemption Date,
money sufficient to pay the Debentures payable on that date, then immediately on
the Stated Maturity Date or such Redemption Date, as the case may be, such
Debentures shall cease to be outstanding, and interest, if any, on such
Debentures shall cease to accrue.
SECTION 2.11. Temporary Debentures.
(a) The Company may execute temporary Debentures, and upon the Company's
Order, the Trustee shall authenticate and make such temporary Debentures
available for delivery. Temporary Debentures shall be printed, lithographed,
typewritten, mimeographed or otherwise produced, in any authorized denomination,
in the same series and principal amount and of like tenor as the definitive
Debentures in lieu of which they are issued and with such appropriate
insertions, omissions, substitutions and other variations as the Officers of the
Company executing such Debentures may determine, as conclusively evidenced by
their execution of such Debentures.
(b) After the preparation of definitive Debentures, the temporary
Debentures shall be exchangeable for definitive Debentures of the same series
upon surrender of the temporary Debentures at the office or agency of the
Company designated for such purpose pursuant to Section 2.05 hereof, without
charge to the Holders thereof. Upon surrender for cancellation of any one or
more temporary Debentures, the Company shall execute a like principal amount of
definitive Debentures of the same series of authorized denominations, and the
Trustee, upon receipt of a Company Order, shall authenticate and make such
Debentures available for delivery in exchange therefor. Until so exchanged, the
temporary Debentures shall in all respects be entitled to the same benefits
under this Junior Indenture as definitive Debentures.
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SECTION 2.12. Book-Entry System.
(a) In order to utilize a book-entry-only system for all or any portion of
the Debentures of any series, all or a portion of the Debentures of any series
may be issued in the form of one or more fully registered Debentures of the same
series for the aggregate principal amount of such Debentures of each Issue Date,
interest rate and Stated Maturity Date (a "Global Debenture"), which Global
Debenture shall be registered in the name of a depository (the "Depository")
selected by the Company or in the name of such Depository's nominee. Each
Global Debenture shall be delivered by the Trustee to the Depository or pursuant
to the Depository's instruction and shall bear a legend substantially to the
following effect: "Except as otherwise provided in Section 2.12 of the Junior
Indenture, this Debenture may be transferred, in whole but not in part, only to
another nominee of the Depository or to a successor Depository or to a nominee
of such successor Depository."
(b) Notwithstanding any other provision of this Section 2.12 or of Section
2.08 hereof, a Global Debenture may be transferred in whole but not in part and
in the manner provided in Section 2.08 hereof only to a nominee of such
Depository or by a nominee of such Depository to such Depository or another
nominee of such Depository or by the Depository or any nominee to a successor
Depository or any nominee of such successor.
(c) So long as the Depository for a Global Debenture, or its nominee, is
the registered owner of such Global Debenture, such Depository or such nominee,
as the case may be, shall be considered the sole owner or Holder of the
Debenture represented by such Global Debenture for all purposes under this
Indenture. Except as provided below, owners of beneficial interests in a Global
Debenture shall not be entitled to have any of the individual Debentures of the
series represented by such Global Debenture registered in their names, shall not
receive or be entitled to receive physical delivery of any such Debenture in
definitive form and shall not be considered the owners or Holders thereof under
this Indenture.
(d) Payments of principal of and premium, if any, and interest on
individual Debentures represented by a Global Debenture registered in the name
of a Depository or its nominee shall be made to the Depository or its nominee,
as the case may be, as the registered owner of the Global Debenture representing
such Debentures. None of the Company, the Trustee, any Paying Agent or the
Registrar for such Debenture shall have any responsibility or liability for any
aspect of the records relating to or payments made on account of beneficial
ownership interests of the Global Debenture representing such Debenture or for
maintaining, supervising or
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reviewing any records relating to such beneficial ownership interests.
(e) If (i) at any time the Depository for Global Debentures of any series
of Debentures notifies the Company that it is unwilling or unable to continue as
Depository for such Global Debentures and no successor depository shall have
been appointed within 90 days after the Company receives such notice, or if at
any time the Depository ceases to be a clearing agency registered under the
Exchange Act or other applicable statute or regulation at a time when the
Depository is required to be so registered to act as such depository, (ii) the
Company determines in its sole discretion, that the Debentures of any series
shall no longer be represented by one or more Global Debentures and delivers to
the Trustee an Officer's Certificate evidencing such determination, or (iii) an
Event of Default with respect to such Global Debenture occurs and is continuing,
then the provisions of this Section 2.12 shall no longer apply to the Debentures
of such series. In such event, the Company will execute and the Trustee, upon
receipt of an Officer's Certificate evidencing such determination by the
Company, will authenticate and deliver Debentures of such series and of like
tenor in definitive registered form, in authorized denominations, and in
aggregate principal amount equal to the principal amount of the Global
Debentures of such series in exchange for such Global Debentures. Upon the
exchange of Global Debentures for such Debentures in definitive registered form
without coupons, in authorized denominations, the Global Debentures shall be
canceled by the Trustee. Such Debentures in definitive registered form issued
in exchange for Global Debentures pursuant to this Section 2.12 shall be
registered in such names and in such authorized denominations as the Depository,
pursuant to instructions from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such Debentures to the
Persons in whose names such Debentures are so registered.
(f) Members of or participants in the Depository shall have no rights under
this Junior Indenture with respect to any Global Debenture held on their behalf
by the Depository, and such Depository or its nominee, as the case may be, may
be treated by the Company, the Trustee, and any agent of the Company or the
Trustee as the Holder of such Global Debentures for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee, or any agent of the Company or the Trustee, from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its members or participants, the
operation of customary practices governing exercise of the rights of a Holder of
any Debenture, including without limitation the granting of proxies or other
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authorization of participants to give or take any request, demand,
authorization, direction, notice, consent, waiver or other action which a Holder
is entitled to give or take under this Junior Indenture.
SECTION 2.13. Cancellation.
All Debentures surrendered for payment, redemption by the Company pursuant
to Article 3 hereof or registration of transfer or exchange shall, if
surrendered to any Person other than the Trustee, be delivered to the Trustee
and shall be promptly canceled by the Trustee. The Company may at any time
deliver to the Trustee for cancellation any Debentures previously authenticated
and made available for delivery hereunder which the Company may have acquired in
any manner whatsoever, and all Debentures so delivered shall be promptly
canceled by the Trustee. The Company may not reissue or issue new Debentures to
replace Debentures it has paid or delivered to the Trustee for cancellation. No
Debentures shall be authenticated in lieu of or in exchange for any Debentures
canceled as provided in this Section 2.13, except as expressly permitted by this
Junior Indenture. All canceled Debentures held by the Trustee shall be returned
by the Trustee to the Company.
SECTION 2.14. CUSIP Numbers.
The Company in issuing any series of Debentures may use "CUSIP" numbers (if
then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in
notices of redemption as a convenience to Holders; provided that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on such series of Debentures or as contained in any notice of
redemption and that reliance may be placed only on the other identification
numbers printed on such series of Debentures, and any such redemption shall not
be affected by any defect in or omission of such numbers. The Company will
promptly notify the Trustee of any change in the CUSIP numbers.
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ARTICLE 3. REDEMPTION
SECTION 3.01. Redemption; Notice to Trustee.
(a) At the option of the Company, the Series 1997 Debentures shall be
redeemable prior to maturity (i) at any time on or after March __, 2002, in
whole or in part, and (ii) if a Special Event shall occur and be continuing, in
whole (but not in part), in each case at 100% of the principal amount thereof
plus accrued and unpaid interest to the Redemption Date. The Series 1997
Debentures shall not be subject to any sinking fund. Series 1997 Debentures in
denominations larger than $25 may be redeemed in part but only in integral
multiples of $25. A "Special Event" shall mean either a "Tax Event" or an
"Investment Company Event." A "Tax Event" shall mean that the Company or Trust I
shall have received an opinion of counsel (which may be regular counsel to the
Company or an Affiliate, but not an employee thereof and which must be
acceptable to Property Trustee I), rendered by a law firm having a recognized
federal and state tax and securities practice, to the effect that, as a result
of a Tax Action there is more than an insubstantial risk that (i) Trust I is, or
will be within 90 days of the date of said opinion, subject to United States
federal income tax with respect to income received or accrued on the Series 1997
Debentures, (ii) interest payable by either Subsidiary (as defined in the HECO
Junior Indenture) to Trust I on its Subsidiary Debentures (as defined in the
HECO Junior Indenture) or by HECO to Trust I on the HECO Series 1997 Debentures
is not, or within 90 days of the date of said opinion will not be, deductible by
such company, in whole or in part, for United States federal income tax purposes
or (iii) Trust I is, or will be within 90 days of the date of said opinion,
subject to more than a de minimis amount of other taxes, duties, or other
governmental charges. A "Tax Action" includes (i) any amendment to or change
(including any announced prospective change) in the laws (or any regulations
thereunder) of the United States, or of any State or the District of Columbia,
or of any political subdivision or taxing authority thereof or therein, (ii) any
administrative pronouncement or action that represents an official position
(including a clarification of an official position) of the governmental
authority or regulatory body making such administrative pronouncement or taking
such action or (iii) any judicial decision interpreting, clarifying or applying
such laws or regulations, in each such case that occurs or becomes effective on
or after the date of original issuance of the Trust I Preferred Securities. An
"Investment Company Event" shall mean the receipt by the Company or Trust I of
an opinion of counsel, rendered by a law firm having a recognized federal
securities practice, to the effect that, as a result of the occurrence of a
change in law or regulation or a change (including a prospective change) in
interpretation or application of law or regulation by any legislative body,
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court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that Trust I is or will be considered
an "investment company" that is required to be registered under the Investment
Company Act of 1940, as amended, which Change in 1940 Act Law becomes effective
on or after the date of original issuance of the Trust I Preferred Securities.
(b) The redemption terms for any additional series of Debentures shall be
as specified in an indenture supplemental hereto or in an Officer's Certificate
authorized by a Board Resolution creating such series of Debentures.
(c) If any or all of the HECO Series 1997 Debentures are redeemed by HECO
pursuant to Section 3.01(a) or 3.01(b) of the HECO Junior Indenture, then the
Company shall redeem all of the Series 1997 Debentures.
(d) If any or all of the Debentures are to be redeemed pursuant to Section
3.01 (a), (b) or (c) hereof, the Company shall deliver to the Trustee at least
45 days prior to the Redemption Date a Company Order specifying the series and
principal amount of Debentures to be redeemed and the Redemption Date and
Redemption Price for such Debentures. Such Company Order shall be accompanied
by a Board Resolution authorizing such redemption. If the Debentures of a
series are held by a Trust, the Company shall also deliver a copy of such
Company Order to the Property Trustee for such Trust.
SECTION 3.02. Selection of Debentures to be Redeemed.
If less than all the outstanding Debentures of a series are to be redeemed
at any time, the Trustee shall select the Debentures of such series to be
redeemed by lot or by any other method the Trustee considers fair and
appropriate. The Trustee shall make the selection at least 30 but not more than
60 days before the Redemption Date from outstanding Debentures of such series
not previously called for redemption. Provisions of this Junior Indenture that
apply to Debentures called for redemption also apply to portions of Debentures
called for redemption. The Trustee shall notify the Company promptly of the
Debentures or portions of Debentures to be redeemed.
SECTION 3.03. Notice of Redemption.
(a) At least 30 days but not more than 60 days before the Redemption Date,
the Trustee, in the Company's name and at the Company's expense, shall mail or
cause to be mailed a notice of redemption by first- class mail, postage prepaid,
to each Holder of Debentures to be redeemed at such Holder's last address as it
appears in the Securities Register.
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(b) The notice of redemption shall identify the Debentures to be redeemed,
the provision of the Debentures or this Junior Indenture pursuant to which the
Debentures called for redemption are being redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the name and address of the Paying Agent;
(4) that payment of the Redemption Price of Debentures called for
redemption will be made only upon surrender of such Debentures to the
Paying Agent;
(5) if fewer than all the outstanding Debentures of any series are to
be redeemed, the identification and principal amounts of the particular
Debentures to be redeemed and that, on and after the Redemption Date, upon
surrender of such Debentures, a new Debenture or Debentures of the same
series and of like tenor and in a principal amount equal to the unredeemed
portion thereof will be issued; and
(6) that, unless the Company defaults in paying the Redemption Price
of the Debentures called for redemption, plus accrued interest thereon to
the Redemption Date, interest will cease to accrue on such Debentures on
and after the Redemption Date.
(c) Any notice of redemption given in the manner provided herein shall be
conclusively presumed to have been given, whether or not such notice is actually
received. Failure to mail any notice or defect in the mailed notice or the
mailing thereof in respect of any Debenture shall not affect the validity of the
redemption of any other Debenture.
SECTION 3.04. Effect of Notice of Redemption.
After notice of redemption has been given, Debentures called for redemption
shall become due and payable on the Redemption Date and at the Redemption Price
and from and after the Redemption Date (unless the Company shall default in the
payment of the Redemption Price and accrued interest), such Debentures shall
cease to bear interest. Upon the later of the Redemption Date and the date such
Debentures are surrendered to the Paying Agent, such Debentures shall be paid at
the Redemption Price, plus accrued interest to the Redemption Date, provided
that installments of interest on Debentures with an Interest Payment Date which
is on or prior to the Redemption Date shall be payable to the Holders of such
Debentures, or one or more Predecessor Debentures, registered as such at the
close
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of business on the Regular Record Dates therefor according to their terms and
provisions.
SECTION 3.05. Deposit of Redemption Price.
On or prior to the Redemption Date, the Company shall deposit with the
Paying Agent (or if the Company or an Affiliate is the Paying Agent, shall
segregate and hold in trust or cause such Affiliate to segregate and hold in
trust) money sufficient to pay the Redemption Price of, and accrued interest on,
all Debentures to be redeemed on that Redemption Date. The Paying Agent shall
return to the Company any money in excess of the amount sufficient to pay the
Redemption Price of, and accrued interest on, all Debentures to be redeemed.
SECTION 3.06. Debentures Redeemed in Part.
Upon surrender of a Debenture that is redeemed in part, the Trustee shall
authenticate for the Holder a new Debenture of the same series and in a
principal amount equal to the unredeemed portion of such Debenture.
ARTICLE 4. COVENANTS
SECTION 4.01. Payment of Debentures.
(a) The Company shall pay the principal of and premium, if any, and
interest (including interest accruing during an Extension Period and/or on or
after the filing of a petition in bankruptcy or reorganization relating to the
Company, whether or not a claim for post- filing interest is allowed in such
proceeding) on the Debentures on or prior to the dates and in the manner
provided in such Debentures or pursuant to this Junior Indenture. An
installment of principal, premium, if any, or interest shall be considered paid
on the applicable due date if on such date the Trustee or the Paying Agent
holds, in accordance with this Junior Indenture, money sufficient to pay all of
such installment then due. With respect to any Debenture, the Company shall pay
interest on overdue principal and interest on overdue installments of interest
(including interest accruing during an Extension Period and/or on or after the
filing of a petition in bankruptcy or reorganization relating to the Company,
whether or not a claim for post-filing interest is allowed in such proceeding),
to the extent lawful, at the rate per annum borne by such Debenture, compounded
quarterly. Interest on overdue interest shall accrue from the date such amounts
become overdue.
(b) Notwithstanding the provisions of Section 4.01(a) hereof or any other
provision herein to the contrary, the Company shall have the right in its sole
and absolute
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discretion at any time and from time to time while the Debentures of any series
are outstanding, so long as no Event of Default with respect to such series of
Debentures has occurred and is continuing, to defer payments of interest by
extending the interest payment period for such series of Debentures for the
Extension Period specified pursuant to Section 2.01 hereof for such series of
Debentures, provided that such Extension Period shall not extend beyond the
Stated Maturity Date or Redemption Date of any Debenture of such series, and
provided further that at the end of each Extension Period the Company shall pay
all amounts then due on any Interest Payment Date, including interest then
accrued and unpaid (together with interest thereon to the extent permitted by
applicable law at the rate per annum provided for such interest for such series
of Debentures). Prior to the termination of an Extension Period, the Company may
shorten or may further extend the interest payment period for such series of
Debentures, provided that any such further extension of the Extension Period,
together with all previous extensions thereof, may not exceed the maximum
duration of the Extension Period for such series of Debentures specified
pursuant to Section 2.01 hereof or extend beyond the Stated Maturity Date or
Redemption Date of any Debenture of such series. The Company shall give the
Trustee notice of the Company's election to begin an Extension Period for any
series of Debentures and any shortening or extension thereof at least one
Business Day prior to the date the notice of the record or payment date of the
related distribution on the Trust Preferred Securities issued by any Trust which
is the Holder of the Debentures of such series or the date payment of interest
on such Debentures is required to be given to any national securities exchange
on which such Trust Preferred Securities or Debentures are then listed or other
applicable self- regulatory organization, but in any event not less than two
Business Days prior to the Record Date fixed by the Company for the payment of
such interest. The Company shall give or cause the Trustee to give notice (a
form of which shall be provided by the Company to the Trustee) of the Company's
election to begin an Extension Period to the Holders by first class mail,
postage prepaid. Upon the termination of any such Extension Period and the
payment of all amounts then due on any Interest Payment Date, the Company may
elect to begin a new Extension Period subject to the requirements set forth
herein.
SECTION 4.02. Prohibition on Distributions, Etc.
The Company shall not (i) declare or pay any dividends or distributions on,
or redeem, purchase, acquire or make a liquidation payment with respect to, any
of its Capital Stock, (ii) make any payment of principal, interest or premium,
if any, on or repay, repurchase or redeem any of its debt securities (including
other Debentures) that rank pari passu
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with or junior in interest to any series of Debentures, or (iii) make any
guarantee payments with respect to any guarantee issued by the Company if such
guarantee ranks pari passu with or junior in interest to such series of
Debentures (other than (a) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of its common stock and
exchanges or conversions of common stock of one class for common stock of
another class, and (b) purchases by the Company of its common stock required to
prevent the loss or secure the renewal or reinstatement of any government
license or franchise held by the Company) if at such time (i) there shall have
occurred any event of which the Company has actual knowledge that (a) with the
giving of notice or the lapse of time, or both, would constitute an Event of
Default with respect to such series of Debentures and (b) in respect of which
the Company shall not have taken reasonable steps to cure or (ii) the Company
shall have given notice of its election of an Extension Period for such
Debentures and shall not have rescinded such notice, or such Extension Period,
or any extension thereof, shall be continuing.
SECTION 4.03. SEC Reports.
(a) The Company shall file with the Trustee, within 15 days after it files
them with the SEC, copies of its annual report and of the information, documents
and other reports (or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) which the Company is required to file
with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. If the
Company is not subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act, the Company shall file with the Trustee such information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which are specified in
Sections 13 or 15(d) of the Exchange Act. The Company shall also comply with
the provisions of Section 314(a) of the TIA.
(b) Delivery of such reports, information and documents to the Trustee is
for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officer's Certificates).
SECTION 4.04. Compliance Certificates.
(a) The Company shall deliver to the Trustee, within 90 days after the end
of each of the Company's fiscal years, commencing with the Company's fiscal year
ending December 31,
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1997, an Officer's Certificate stating whether or not the signer knows of any
Default or Event of Default. Such certificate shall contain a certification from
the principal executive officer, principal financial officer or principal
accounting officer of the Company as to his or her knowledge of the Company's
compliance with all conditions and covenants under this Junior Indenture. For
purposes of this Section 4.04(a), such compliance shall be determined without
regard to any period of grace or requirement of notice provided under this
Junior Indenture. If such Officer does know of such a Default or Event of
Default, the Officer's Certificate shall describe any such Default or Event of
Default, and its status. Such Officer's Certificate need not comply with
Sections 12.04 and 12.05 hereof.
(b) The Company shall deliver to the Trustee any information reasonably
requested by the Trustee in connection with the compliance by the Trustee or the
Company with the TIA.
(c) The Company shall deliver to the Trustee, as soon as possible and in
any event within five days after the Company becomes aware of the occurrence of
any Event of Default or an event which, with notice or the lapse of time or
both, would constitute an Event of Default, an Officer's Certificate setting
forth the details of such Event of Default or default and the action that the
Company proposes to take with respect thereto.
SECTION 4.05. Further Instruments and Acts.
Upon request of the Trustee, the Company shall execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Junior Indenture.
SECTION 4.06. Additional Sums.
If and so long as (i) a Trust is the Holder of all Debentures of a
particular series, (ii) the Company shall not have redeemed such Debentures
pursuant to their terms or (iii) HECO shall not have given any direction to
distribute the Distributable Debentures (as defined in the HECO Junior
Indenture) to holders of Trust Preferred Securities in exchange for such Trust
Preferred Securities (including, in the case of the Series 1997 Debentures,
pursuant to Section 8.02(b) of the Trust I Agreement), the Company shall pay to
such Trust such Additional Sums on the Debentures in proportion to the amount of
assets of such Trust made up by the Debentures of such series.
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SECTION 4.07. Payment of Expenses of Trust.
If and so long as a Trust is the Holder of all Debentures of a particular
series, the Company covenants for the benefit of the Holders of such Debentures
to pay all of the obligations, costs and expenses of such Trust in accordance
with the terms of the trust agreement for said Trust and to pay the taxes of
said Trust (if any) in accordance with the terms of said trust agreement in
order to permit said Trust to make distributions on and redemptions of the
applicable Trust Preferred Securities in accordance with the terms of said trust
agreement.
SECTION 4.08. Ownership of Trust Common Securities.
If and so long as a Trust is the Holder of all Debentures of a particular
series, the Company shall (i) maintain, directly or indirectly, 100% ownership
of said Trust's Trust Common Securities, provided that certain successors to the
Company which are permitted as provided below may succeed to the Company's
ownership of said Trust Common Securities, (ii) not voluntarily dissolve, wind-
up or liquidate said Trust, except (a) in connection with a distribution of said
Debentures to the holders of said Trust's Trust Preferred Securities in
liquidation of said Trust or (b) in connection with certain mergers,
consolidations or amalgamations as permitted by said Trust's trust agreement,
and (iii) to use its reasonable efforts, consistent with the terms and
provisions of said trust agreement, to cause said Trust to remain classified as
a grantor trust and not as an association taxable as a corporation for United
States federal income tax purposes.
ARTICLE 5. SUCCESSOR CORPORATION
SECTION 5.01. When the Company May Merge, Etc.
(a) The Company may not consolidate with or merge with or into, or sell,
convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety (either in one transaction or a series of
transactions) to any Person and no Person shall consolidate or merge with or
into the Company, or sell, convey, transfer or lease its properties and assets
as an entirety or substantially as an entirety (either in one transaction or a
series of transactions) to the Company unless:
(1) the Person formed by or surviving such consolidation or merger or
to which such sale, conveyance, transfer or lease shall have been made (the
"Successor") if other than the Company, (a) is organized under the laws of
the United States of America or any State thereof or
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the District of Columbia, and (b) shall expressly assume by a supplemental
Junior Indenture, executed and delivered to the Trustee, in form
satisfactory to the Trustee, all the obligations of the Company under the
Debentures and this Junior Indenture;
(2) immediately prior to and after giving effect to such transaction
(and treating any Indebtedness which becomes an obligation of the Successor
Person as a result of such transaction as having been incurred by such
Person at the time of such transaction), no Default or Event of Default,
and no event which, after notice or lapse of time or both, would become an
Event of Default, shall have occurred and be continuing;
(3) such transaction is permitted under the Trust I Agreement (if
applicable) and does not give rise to a breach or violation of the Trust I
Agreement (if applicable); and
(4) the Company delivers to the Trustee an Officer's Certificate and
an Opinion of Counsel, each stating that such consolidation, merger, sale,
conveyance, transfer or lease and such supplemental Junior Indenture
complies with this Junior Indenture.
(b) The Successor will be the successor to the Company, and will be
substituted for, and may exercise every right and power and become the obligor
on the Debentures, with the same effect as if the Successor had been named as
the Company herein but, in the case of a sale, conveyance, transfer or lease of
all or substantially all of the assets of the Company, the predecessor Company
will not be released from its obligation to pay the principal of and premium, if
any, and interest on the Debentures.
ARTICLE 6. DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default.
(a) An "Event of Default" occurs with respect to the Debentures of any
series if one of the following shall have occurred and be continuing:
(1) The Company defaults in the payment, when due and payable, of (a)
interest on any Debenture of that series and the default continues for a
period of 30 days; provided, that during an Extension Period for the
Debentures of that series, failure to pay interest on the Debentures of
that series shall not constitute a Default or Event of Default hereunder,
or (b) the principal of or
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premium, if any, on any Debentures of that series when the same becomes due
and payable on the Stated Maturity Date thereof, upon acceleration, on any
Redemption Date, or otherwise;
(2) The Company defaults in the performance of or fails to comply
with, in a material respect, any of its other covenants or agreements in
the Debentures of that series or this Junior Indenture or in any indenture
supplemental hereto or Officer's Certificate authorized by a Board
Resolution under which the Debentures of that series may have been issued
(other than a covenant or agreement which has been expressly included in
this Indenture solely for the benefit of one or more series of Debentures
other than such series) and such failure continues for 90 days after
receipt by the Company of a written "Notice of Default", provided that such
90-day period shall be automatically extended if corrective action is
initiated by the Company within such period and is being diligently
pursued;
(3) Either Subsidiary (as defined in the HECO Junior Indenture) or
HECO, pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding;
(B) consents to the entry of an order for relief against it in an
involuntary case or proceeding;
(C) consents to the appointment of a Custodian of it or for all
or substantially all of its property, and such Custodian is not
discharged within 60 days;
(D) makes a general assignment for the benefit of its creditors;
or
(E) admits in writing its inability to pay its debts generally as
they become due; or
(4) A court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against either Subsidiary (as defined in the
HECO Junior Indenture) or HECO in an involuntary case or proceeding;
(B) appoints a Custodian of either Subsidiary (as defined in the
HECO Junior Indenture) or HECO for all or substantially all of its
properties;
(C) orders the liquidation of either Subsidiary (as defined in
the HECO Junior Indenture) or HECO; and
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(D) in each case the order or decree remains unstayed and in
effect for 60 days.
(b) The foregoing will constitute an Event of Default whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
(c) The term "Bankruptcy Law" means Title 11 of the United States Code, or
any similar federal or state law for the relief of debtors. "Custodian" means
any receiver, trustee, assignee, liquidator, sequestrator, custodian or similar
official under any Bankruptcy Law.
(d) A Default under clause (2) above is not an Event of Default until (i)
the Trustee provides a written "Notice of Default" to the Company or the Holders
of at least 25% in aggregate principal amount of the Debentures of that series
at the time outstanding or, if that series of Debentures is held by a Trust, the
holders of at least 25% in aggregate liquidation preference of the outstanding
Trust Preferred Securities of that Trust, provide a written "Notice of Default"
to the Company and the Trustee and (ii) the Company does not cure such Default
within the time specified in clause (2) above (including any automatic
extensions thereof) after receipt of such notice. Any such notice must be in
writing, specify the Default, demand that it be remedied and state that such
notice is a "Notice of Default."
SECTION 6.02. Acceleration.
(a) If any Event of Default with respect to the Debentures of any series
other than an Event of Default under clause (3) or (4) of Section 6.01 hereof
occurs and is continuing, the Trustee or the Holders of at least 25% in
aggregate principal amount of the Debentures of that series then outstanding may
declare the principal of all the Debentures of that series due and payable,
provided that in the case of a series of Debentures then held by a Trust, if
upon an Event of Default with respect to the Debentures of that series the
Trustee has, or the Holders of at least 25% in aggregate principal amount of the
Debentures of that series have, failed to declare the principal of the
Debentures of that series to be immediately due and payable, the holders of at
least 25% in aggregate liquidation preference of the outstanding Trust Preferred
Securities of that Trust shall have such right by a notice in writing to the
Company and the Trustee. If an Event of Default specified in clause (3) or (4)
of Section 6.01 hereof occurs, the principal of and interest on all the
Debentures shall ipso facto become and be immediately due and
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payable without any declaration or other act on the part of the Trustee or any
Debentureholders. Upon such an acceleration, such principal, together with all
interest accrued thereon, shall be due and payable immediately.
(b) The Holders of at least a majority in aggregate principal amount of the
Debentures of that series at the time outstanding, in each case, by notice to
the Trustee, may rescind and annul such an acceleration and waive its
consequences if the rescission, annulment and waiver would not conflict with any
judgment or decree and if all existing Events of Default with respect to such
series of Debentures have been cured or waived, except nonpayment of principal
that has become due solely because of acceleration, and a sum sufficient to pay
all matured installments of interest and principal due otherwise than by
acceleration has been deposited with the Trustee; provided that if the principal
of a series of Debentures has been declared due and payable by the holders of
the Trust Preferred Securities of a Trust, no rescission of acceleration will be
effective unless consented to by the holders of at least a majority in aggregate
liquidation preference of the Trust Preferred Securities of that Trust and
further provided that should the Holders of such Debentures fail to rescind or
annul such declaration and waive such default, the holders of a majority in
aggregate liquidation preference of the Trust Preferred Securities of a Trust
that holds such Debentures may make such rescission, annulment and waiver. No
such rescission shall affect any subsequent Default or impair any right
consequent thereto.
SECTION 6.03. Other Remedies.
(a) If an Event of Default occurs and is continuing, the Trustee may, in
its own name or as trustee of an express trust, institute, pursue and prosecute
any proceeding, including, without limitation, any action at law or suit in
equity or other judicial or administrative proceeding to collect the payment of
principal of or premium, if any, or interest on the Debentures of the series
that is in default, to enforce the performance of any provision of the
Debentures of that series or this Junior Indenture or to obtain any other
available remedy.
(b) The Trustee may maintain a proceeding even if it does not possess any
of the Debentures or does not produce any of the Debentures in the proceeding.
A delay or omission by the Trustee, any Debentureholder or the holders of Trust
Preferred Securities in exercising any right or remedy accruing upon an Event of
Default shall not impair such right or remedy or constitute a waiver of, or
acquiescence in, such Event of Default. No remedy is exclusive of any other
remedy. All available remedies are cumulative.
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SECTION 6.04. Waiver of Past Defaults.
If a Default or Event of Default with respect to a series of Debentures has
occurred and is continuing, the Holders of at least a majority in aggregate
principal amount of the Debentures of that series at the time outstanding, or,
if that series of Debentures is held by a Trust, the holders of at least a
majority in aggregate liquidation preference of the Trust Preferred Securities
of that Trust, in each case by notice to the Trustee and the Company, may waive
an existing Default or Event of Default and its consequences except a Default or
Event of Default in the payment of the principal of or premium, if any, or
interest on any Debenture of that series (unless such default has been cured and
a sum sufficient to pay all matured installments of interest and principal due
otherwise than by acceleration has been deposited with the Trustee) or a default
in respect of a covenant or provisions which under this Indenture cannot be
modified or amended without the consent of the Holder of each of such
outstanding Debentures. When a Default or Event of Default is waived, it is
deemed cured and shall cease to exist, but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any consequent right.
SECTION 6.05. Control by Majority.
The Holders of a majority in aggregate principal amount of the Debentures
of each series affected (with each such series voting as a class) may direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee or of exercising any trust or power conferred on the Trustee. If the
Debentures of such series are held by a Trust and the Trustee and the trustee of
such Trust have failed to so direct or to so exercise, the holders of at least
25% in aggregate liquidation preference of the outstanding Trust Preferred
Securities of that Trust may institute proceedings to so direct or so exercise.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Junior Indenture or that the Trustee determines in good faith is unduly
prejudicial to the rights of other Debentureholders or may involve the Trustee
in personal liability. The Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction, including withholding
notice to the Holders of the Debentures of such series of continuing default
(except in the payment of the principal of (other than any mandatory sinking
fund payment) or premium, if any, or interest on any Debentures) if the Trustee
considers it in the interest of the Holders of the Debentures to do so.
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SECTION 6.06. Limitation on Suits.
(a) Except as provided in Sections 6.07 and 6.13 hereof, no Holder of
Debentures and no holder of Trust Preferred Securities of a Trust which is the
Holder of all the Debentures of such series may pursue any remedy with respect
to this Junior Indenture or the Debentures of such series unless:
(1) the Holders of Debentures or the holders of such Trust Preferred
Securities give to the Trustee written notice stating that an Event of
Default with respect to the corresponding Debentures is continuing;
(2) the Holders of at least 25% in aggregate principal amount of the
Debentures of that series or the holders of at least 25% in aggregate
liquidation preference of such Trust Preferred Securities make a written
request to the Trustee to pursue a remedy;
(3) the Holders of Debentures or the holders of such Trust Preferred
Securities provide to the Trustee reasonable security and indemnity against
any loss, liability or expense satisfactory to the Trustee;
(4) the Trustee does not comply with the request within 60 days after
receipt of the notice, the request and the offer of security and indemnity;
and
(5) during such 60-day period, the Holders of at least a majority in
aggregate principal amount of the Debentures of that series or the holders
of at least a majority in aggregate liquidation preference of such Trust
Preferred Securities do not give the Trustee a direction inconsistent with
the request.
In addition, no holder of Trust Preferred Securities of the Trust which is the
Holder of that series of Debentures may pursue any remedy with respect to this
Junior Indenture or the Debentures unless the above conditions have been
complied with and the Property Trustee for such Trust has also failed to act for
60 days. In such a case, the Holders of at least 25% in aggregate liquidation
preference of such outstanding Trust Preferred Securities may institute
proceedings to pursue a remedy provided for herein.
(b) A Holder of Debentures or a holder of Trust Preferred Securities may
not use this Junior Indenture to prejudice the rights of another Debentureholder
or a holder of Trust Preferred Securities or to obtain a preference or priority
over another Debentureholder or holder of Trust Preferred Securities.
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SECTION 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Junior Indenture, the right of
any Holder to receive payment of the principal of and premium (if any) or
interest on the Debentures held by such Holder, on or after the respective due
dates expressed in the Debentures (in the case of interest, as the same may be
extended pursuant to Section 4.01(b) hereof) or any Redemption Date, is absolute
and unconditional and such right and the right to bring suit for the enforcement
of any such payment on or after such respective dates shall not be impaired or
affected adversely without the consent of such Holder.
SECTION 6.08. Collection Suit by the Trustee.
If an Event of Default described in Section 6.01(1) hereof occurs and is
continuing, the Trustee may recover judgment in its own name and as trustee of
an express trust against the Company or any obligor on the Debentures for the
whole amount owing with respect to the Debentures and the amounts provided for
in Section 7.07 hereof.
SECTION 6.09. The Trustee May File Proofs of Claim.
(a) In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or its properties or assets, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise:
(1) to file and prove a claim for the whole amount of the principal of
and premium, if any, and interest on the Debentures and to file such other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and
counsel) and of the Holders allowed in such judicial proceeding; and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same; and any
Custodian in any such judicial proceeding is hereby authorized by each
Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Holders, to pay the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section
7.07 hereof.
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(b) Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Debentures
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Holder in any such proceeding.
SECTION 6.10. Priorities.
(a) If the Trustee collects any money pursuant to this Article 6, it shall,
subject to Article 10 hereof, pay out the money in the following order:
FIRST: to the Trustee for amounts due under Section 7.07 hereof;
SECOND: to Holders of Debentures in respect of which or for the benefit
of which such money has been collected for amounts due and unpaid
on such Debentures for the principal amount, Redemption Price or
interest, if any, as the case may be, ratably, without preference
or priority of any kind, according to such amounts due and
payable on such Debentures; and
THIRD: the balance, if any, to the Company.
(b) Except as otherwise set forth in the Debentures, the Trustee may fix a
Record Date and payment date for any payment to Debentureholders pursuant to
this Section 6.10.
SECTION 6.11. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Junior
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant (other than the Trustee) in the suit of an undertaking to pay the costs
of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys' fees and expenses, against any party litigant in
the suit, having due regard to the merits and good faith of the claims or
defenses made by the party litigant. This Section 6.11 does not apply to a suit
by the Trustee, a suit by a Holder of Debentures or holder of Trust Preferred
Securities pursuant to Section 6.07 hereof or a suit by Holders of Debentures of
more than 10% in aggregate principal amount of the Debentures of any series or,
if a series of Debentures is held by a Trust, the holders of more than 10% in
aggregate liquidation preference of the Trust Preferred Securities of that
Trust.
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SECTION 6.12. Waiver of Stay; Extension or Usury Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law or any usury or
other law wherever enacted, now or at any time hereafter in force, that would
prohibit or forgive the Company from paying all or any portion of the principal
of or premium, if any, or interest on the Debentures as contemplated herein or
affect the covenants or the performance by the Company of its obligations under
this Junior Indenture; and the Company (to the extent that it may lawfully do
so) hereby expressly waives all benefit or advantage of any such law, and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee, but will suffer and permit the execution of every
such power as though no such law had been enacted.
SECTION 6.13. Suits by Holders of Trust Preferred Securities.
Notwithstanding anything else contained herein, if an Event of Default has
occurred and is continuing and such event is attributable to the failure of the
Company to pay interest or principal on Debentures held by a Trust on the date
such interest or principal is otherwise payable, a holder of Trust Preferred
Securities of such Trust may institute a direct action for payment against the
Company after such respective due date and this Indenture may not be amended to
remove the foregoing right to bring such a direct action without the prior
written consent of all the Holders of such Trust Preferred Securities affected
thereby. Notwithstanding any payment made to such holder of Trust Preferred
Securities in connection with a direct action, the Company shall remain
obligated to pay the principal of, premium on, if any, or interest on the
Debentures held by such Trust or the relevant Property Trustee and shall be
subrogated to the rights of the holders of such Trust Preferred Securities with
respect to payments on such Trust Preferred Securities to the extent of any
payments made by the Company to such holder in any direct action.
ARTICLE 7. THE TRUSTEE
SECTION 7.01. Duties of the Trustee.
(a) If an Event of Default occurs and is continuing with respect to the
Debentures of any series, the Trustee shall exercise the rights and powers
vested in it by this Junior Indenture with respect to that series and use the
same degree of care and skill in its exercise as a prudent person would
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exercise or use under the circumstances in the conduct of his or her own
affairs.
(b) Except during the continuance of an Event of Default with respect to
the Debentures of any series, (i) the Trustee need perform only those duties
with respect to that series that are specifically set forth in this Junior
Indenture or the TIA and no others; and (ii) in the absence of bad faith on its
part, the Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this Junior
Indenture. However, in the case of any certificates or opinions which by any
provision hereof are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine whether or not
they conform to the requirements of this Junior Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(1) this Section 7.01(c) does not limit the effect of Section 7.01(b)
hereof;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05 hereof.
(d) Every provision of this Junior Indenture that in any way relates to the
Trustee is subject to Section 7.01(a), (b), (c) and (e) and Section 7.02 hereof.
(e) The Trustee may refuse to perform any duty or exercise any right or
power or extend or risk its own funds or otherwise incur any financial liability
unless it receives security and indemnity reasonably satisfactory to it against
any loss, liability or expense (including reasonable counsel fees).
(f) Money held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. Except as otherwise
agreed in writing, the Trustee shall not be liable for interest on any money
held by it hereunder.
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SECTION 7.02. Rights of the Trustee.
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officer's Certificate and an Opinion of Counsel. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Officer's Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it reasonably believes to be authorized or within its
rights or powers.
(e) The Trustee may consult with counsel of its selection and the advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.
(f) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Junior Indenture at the request or direction of
any of the Holders pursuant to this Junior Indenture, unless such Holders shall
have offered to the Trustee reasonable security and indemnity against the costs,
expenses and liabilities (including reasonable counsel fees) which might be
incurred by it in compliance with such request or direction.
(g) The Trustee shall not be deemed to have notice of any Event of Default
unless a Trust Officer of the Trustee has actual knowledge thereof or unless
written notice of any event that is in fact such a default is received by the
Trustee at the principal corporate trust office of the Trustee, and such notice
references the applicable series of Debentures and this Indenture.
SECTION 7.03. Individual Rights of the Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Debentures and may otherwise deal with the Company or its Affiliates
with the same rights it would have if it were not Trustee. Any Paying Agent,
Registrar or co-Registrar may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11 hereof.
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SECTION 7.04. The Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of this
Junior Indenture or the Debentures. The Trustee shall not be accountable for
the Company's use of the proceeds from the Debentures, and the Trustee shall not
be responsible for any statement in this Junior Indenture or the Debentures or
any report or certificate issued by the Company hereunder or any registration
statement relating to the Debentures (other than the Trustee's Certificate of
Authentication and the Trustee's Statement of Eligibility on Form T-1), or the
determination as to which beneficial owners are entitled to receive any notices
hereunder.
SECTION 7.05. Notice of Defaults.
If a Default occurs and is continuing with respect to the Debentures of any
series and if it is known to the Trustee, the Trustee shall mail to each Holder
of a Debenture of that series notice of the Default within 90 days after the
occurrence thereof unless such Default shall have been cured or waived. Except
in the case of a Default described in Section 6.01(1) hereof, the Trustee may
withhold such notice if and so long as a committee of Trust Officers in good
faith determines that the withholding of such notice is in the interests of the
Holders of the Debentures of that series. The Trustee shall not be charged with
knowledge of any Default (except in the case of a Default under Section 6.01(1)
hereof) unless a responsible Trust Officer assigned to the Corporate Trust
Department of the Trustee shall have actual knowledge of the Default. The second
sentence of this Section 7.05 shall be in lieu of the proviso to TIA Section
315(b). Said proviso is hereby expressly excluded from this Junior Indenture, as
permitted by the TIA.
SECTION 7.06. Reports by Trustee to Holders.
(a) Within 60 days after each May 31, beginning with the May 31 next
following the date of this Junior Indenture, the Trustee shall mail to each
Debentureholder, and such other holders that have submitted their names to the
Trustee for such purpose, a brief report dated as of such May 31 in accordance
with and to the extent required under TIA Section 313.
(b) A copy of each report at the time of its mailing to Debentureholders
shall be filed with the Company, the SEC and any securities exchange on which
the Debentures are listed. The Company agrees to promptly notify the Trustee
whenever the Debentures become listed on any securities exchange and of any
listing thereof.
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SECTION 7.07. Compensation and Indemnity.
(a) The Company agrees:
(1) to pay to the Trustee from time to time such compensation as shall
be agreed in writing between the Company and the Trustee for all services
rendered by it hereunder (which compensation, to the fullest extent
permitted by applicable law, shall not be limited by any provision of law
in regard to the compensation of a trustee of an express trust);
(2) to reimburse the Trustee upon its request for reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any provision of this Junior Indenture (including the reasonable
compensation and the expenses, and advances of its agents and counsel,
provided that prior to any Event of Default, the Trustee shall only have
one counsel at the same time), including all reasonable expenses and
advances incurred or made by the Trustee in connection with any Event of
Default or any membership on any creditors' committee, except any such
expense or advance as may be attributable to its negligence, willful
misconduct or bad faith; and
(3) to indemnify the Trustee, its officers, directors and
shareholders, for, and to hold it harmless against, any and all loss,
liability, damage, claim or expense, including taxes (other than taxes
based on the income of the Trustee), incurred without negligence or willful
misconduct on its part, arising out of or in connection with the acceptance
or administration of this trust, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder.
(b) Before, after or during an Event of Default with respect to the
Debentures of a series, the Trustee shall have a claim and lien prior to the
Debentures of that series as to all property and funds held by it hereunder for
any amount owing it for its fees and expenses or any predecessor Trustee
pursuant to this Section 7.07, except with respect to funds held by the Trustee
or any Paying Agent in trust for the payment of principal of or premium, if any,
or interest on particular Debentures pursuant to Section 2.06 or Section 8.01
hereof.
(c) The Company's payment obligations pursuant to this Section 7.07 are not
subject to Article 10 of this Junior Indenture and shall survive the discharge
of this Junior Indenture. When the Trustee renders services or incurs expenses
after the occurrence of a Default specified in Section
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6.01 hereof, the compensation for services and expenses are intended to
constitute expenses of administration under any Bankruptcy Law.
SECTION 7.08. Replacement of Trustee.
(a) The Trustee may resign at any time, by so notifying the Company in
writing at least 30 days prior to the date of the proposed resignation;
provided, however, no such resignation shall be effective until a successor
Trustee has accepted its appointment pursuant to this Section 7.08. The Holders
of at least a majority in aggregate principal amount of the Debentures at the
time outstanding may remove the Trustee by so notifying the Trustee in writing
and may appoint a successor Trustee, which shall be subject to the consent of
the Company unless an Event of Default has occurred and is continuing. The
Trustee shall resign if:
(1) the Trustee fails to comply with Section 7.10 hereof;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or public officer takes charge of the Trustee or its
property; or
(4) the Trustee otherwise becomes incapable to act.
If the Trustee resigns or is removed or if a vacancy exists in the office of
Trustee for any reason, the Company shall promptly appoint a successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment to the
retiring Trustee and to the Company. Thereupon the resignation or removal of
the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Junior
Indenture. The successor Trustee shall mail a notice of its succession to
Debentureholders. Subject to payment of all amounts owing to the Trustee under
Section 7.07 hereof and subject further to its lien under Section 7.07, the
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee. If a successor Trustee does not take office within 30
days after the retiring Trustee resigns or is removed, the Company, the
resigning Trustee or the Holders of at least a majority in aggregate principal
amount of the Debentures at the time outstanding may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(b) If the Trustee fails to comply with Section 7.10 hereof, any
Debentureholder may petition any court of competent
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jurisdiction for its removal and the appointment of a successor Trustee.
SECTION 7.09. Successor Trustee by Merger.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all its corporate trust business or assets to another
corporation, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA Sections
310(a) to the extent applicable. The Trustee (or any Affiliate thereof which
has unconditionally guaranteed the obligations of the Trustee hereunder) shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recently published annual report of condition. The Trustee shall comply
with TIA Section 310(b). In determining whether the Trustee has conflicting
interests as defined in TIA Section 310(b)(1), the provisions contained in the
proviso to TIA Section 310(b)(1) and the Trustee's Statement of Eligibility on
Form T-1 shall be deemed incorporated herein.
SECTION 7.11. Preferential Collection of Claims Against the Company.
If and when the Trustee shall be or become a creditor of the Company under
TIA Section 311(a), the Trustee shall be subject to the provisions of the TIA
regarding the collection of claims against the Company contained in TIA Section
311 to the extent applicable.
ARTICLE 8. SATISFACTION AND DISCHARGE OF JUNIOR INDENTURE; DEFEASANCE OF
CERTAIN OBLIGATIONS; UNCLAIMED MONEYS
SECTION 8.01. Satisfaction and Discharge of Junior Indenture.
(a) The Company shall be deemed to have paid, satisfied and discharged the
entire indebtedness on any series of the Debentures outstanding on the date when
all Debentures issued in such series not previously delivered to the Trustee for
cancellation as provided herein have become due and payable and the Company has
irrevocably deposited or caused to be irrevocably deposited with the Trustee or
any Paying Agent as trust funds in trust, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of the Debentures of such
series (1) cash (which may be held in a non-interest bearing account insured by
the Federal Deposit
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Insurance Corporation), in the currency or currencies in which such Debentures
are payable, in an amount, or (2) U.S. Government Obligations, maturing as to
principal and interest at such times and in such amounts as will ensure the
availability of cash, or (3) a combination thereof, sufficient to pay the
principal of and premium, if any, and interest on all Debentures of such series
then outstanding on the date of the deposit or to the Stated Maturity Date, as
the case may be, provided that in the case of redemption, notice of redemption
shall have been given or the Company shall have irrevocably instructed the
Trustee to give such notice; and further provided that the following conditions
shall have been met:
(1) no Default or Event of Default with respect to the Debentures of
such series has occurred and is continuing on the date of such deposit or
occurs as a result of such deposit;
(2) the Company has delivered to the Trustee an Officer's Certificate
certifying that there does not exist (i) a default in the payment of all or
any portion of any Senior Indebtedness or (ii) any other default affecting
Senior Indebtedness permitting its acceleration as the result of which the
maturity of Senior Indebtedness has been accelerated;
(3) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent
relating to the defeasance contemplated by this provision have been
complied with; and
(4) the Company has delivered to the Trustee an Opinion of Counsel to
the effect that (A) the deposit shall not result in the Company, the
Trustee or, if the Debentures of such series are held by a Trust, such
Trust being deemed to be an "investment company" under the Investment
Company Act of 1940, as amended, and (B) such deposit creates a valid trust
in which the Holders of the Debentures of such series have the sole
beneficial interest or that the Holders of the Debentures of such series
have a nonavoidable first priority security interest in such trust.
Upon such deposit, provisions of this Junior Indenture with respect to such
series of Debentures shall no longer be in effect (except as to (1) the rights
of registration of transfer and exchange of Debentures of such series, (2) the
replacement of apparently mutilated, defaced, destroyed, lost or stolen
Debentures of such series, (3) the rights of the Holders of the Debentures of
such series to receive payments of the principal thereof and premium, if any,
and interest thereon, (4) the
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rights of the Holders of the Debentures of such series as beneficiaries hereof
with respect to the property so deposited with the Trustee payable to all or any
of them, (5) the obligation of the Company to maintain an office or agency for
payments on and registration of transfer of the Debentures of such series, (6)
the rights, obligations and immunities of the Trustee hereunder, and (7) the
obligations of the Company to the Trustee for compensation and indemnity under
Section 7.07 hereof); and the Trustee shall, at the written request and expense
of the Company, execute proper instruments acknowledging the same.
(b) The Company shall be deemed to have paid, satisfied and discharged the
entire indebtedness on any series of the Debentures outstanding when all
Debentures issued in such series not previously delivered to the Trustee for
cancellation as provided herein will become due and payable at their Stated
Maturity Date within one year and shall be so deemed on the date the Company has
irrevocably deposited or caused to be irrevocably deposited with the Trustee or
any Paying Agent as trust funds in trust, specifically pledged as security for,
and dedicated solely to, the benefit of the Holders of the Debentures of such
series (1) cash (which may be held in a non-interest bearing account insured by
the Federal Deposit Insurance Corporation), in the currency or currencies in
which such Debentures are payable, in an amount, or (2) U.S. Government
Obligations, maturing as to principal and interest at such times and in such
amounts as will ensure the availability of cash, or (3) a combination thereof,
sufficient to pay the principal of and premium, if any, and interest on all
Debentures of such series then outstanding on the date of the deposit or to the
Stated Maturity Date, as the case may be, provided that in the case of
redemption, notice of redemption shall have been given or the Company shall have
irrevocably instructed the Trustee to give such notice; and further provided
that the following conditions shall have been met:
(1) no Default or Event of Default with respect to the Debentures of
such series has occurred and is continuing on the date of such deposit or
occurs as a result of such deposit or, insofar as Section 6.01(a)(3) or
6.01(a)(4) hereof is concerned, at any time during the period ending on the
91st day after the date of such deposit (it being understood that this
condition shall not be satisfied until the expiration of such period);
(2) no event or condition shall exist that, pursuant to the
provisions of Section 10.02 hereof, would prevent the Company from making
payments of the principal of or interest on the date of such deposit or at
any time during the period ending on the 91st day after the date of such
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deposit (it being understood that this condition shall not be deemed
satisfied until the expiration of such period):
(3) the Company has delivered to the Trustee an Officer's Certificate
certifying that there does not exist (i) a default in the payment of all or
any portion of any Senior Indebtedness or (ii) any other default affecting
Senior Indebtedness permitting its acceleration as the result of which the
maturity of Senior Indebtedness has been accelerated;
(4) the Company has delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel, each stating that all conditions precedent
relating to the defeasance contemplated by this provision have been
complied with; and
(5) the Company has delivered to the Trustee (i) either a private
Internal Revenue Service ruling or, based upon a change in law since the
date of this Indenture, an Opinion of Counsel, in either case, to the
effect that the Holders of the Debentures of such series will not recognize
income, gain or loss for United States federal income tax purposes as a
result of such deposit, defeasance and discharge and will be subject to
United States federal income tax on the same amount and in the manner and
at the same times as would have been the case if such deposit, defeasance
and discharge had not occurred, and (ii) an Opinion of Counsel to the
effect that (A) the deposit shall not result in the Company, the Trustee
or, if the Debentures of such series are held by a Trust, such Trust being
deemed to be an "investment company" under the Investment Company Act of
1940, as amended, and (B) such deposit creates a valid trust in which the
Holders of the Debentures of such series have the sole beneficial interest
or that the Holders of the Debentures of such series have a nonavoidable
first priority security interest in such trust.
Upon such deposit, provisions of this Junior Indenture with respect to such
series of Debentures shall no longer be in effect (except as to (1) the rights
of registration of transfer and exchange of Debentures of such series, (2) the
replacement of apparently mutilated, defaced, destroyed, lost or stolen
Debentures of such series, (3) the rights of the Holders of the Debentures of
such series to receive payments of the principal thereof and premium, if any,
and interest thereon, (4) the rights of the Holders of the Debentures of such
series as beneficiaries hereof with respect to the property so deposited with
the Trustee payable to all or any of them, (5) the obligation of the Company to
maintain an office or agency for payments on and registration of transfer of the
Debentures of
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such series, (6) the rights, obligations and immunities of the Trustee
hereunder, and (7) the obligations of the Company to the Trustee for
compensation and indemnity under Section 7.07 hereof); and the Trustee shall, at
the written request and expense of the Company, execute proper instruments
acknowledging the same.
SECTION 8.02. Application by Trustee of Funds Deposited for Payment of
Debentures; Miscellaneous.
(a) Subject to Section 8.04 hereof, all moneys deposited with the Trustee
pursuant to Section 8.01 hereof shall be held in trust and applied by it to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent), to the Holders of the Debentures of the series
for the payment or redemption of which such moneys have been deposited with the
Trustee, of all sums due and to become due thereon for principal and interest;
but such money need not be segregated from other funds except to the extent
required by law.
(b) The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U. S. Government Obligations
deposited pursuant to Section 8.01 hereof or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of outstanding Debentures.
SECTION 8.03. Repayment of Moneys Held by Paying Agent.
In connection with the satisfaction and discharge of this Junior Indenture,
all moneys then held by any Paying Agent under this Junior Indenture shall, upon
demand of the Company, be repaid to it or paid to the Trustee, and thereupon
such Paying Agent shall be released from all further liability with respect to
such moneys.
SECTION 8.04. Return of Moneys Held by the Trustee and Paying Agent Unclaimed
for Two Years.
Any moneys deposited with or paid to the Trustee or any Paying Agent for
the payment of the principal of and premium, if any, or interest on the
Debentures of any series and not applied but remaining unclaimed for two years
after the date when such principal, premium, if any, or interest shall have
become due and payable shall, unless otherwise required by mandatory provisions
of applicable escheat or abandoned or unclaimed property law, be repaid, upon
written request, to the Company by the Trustee or such Paying Agent, and the
Holders of such Debentures shall, unless otherwise required by mandatory
provisions of applicable escheat or abandoned or unclaimed
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property laws, thereafter look only to the Company for any payment which such
Holder may be entitled to collect, and all liability of the Trustee or any
Paying Agent with respect to such moneys shall thereupon cease.
ARTICLE 9. AMENDMENTS
SECTION 9.01. Without Consent of Holders.
From time to time, when authorized by a resolution of the Board of
Directors, the Company and the Trustee, without notice to or the consent of any
Holders of the Debentures, may amend, waive or supplement this Junior Indenture:
(i) to cure any ambiguity, defect or inconsistency;
(ii) to comply with Article 5 hereof;
(iii) to provide for uncertificated Debentures in addition to or in
place of certificated Debentures;
(iv) to comply with any requirement of the SEC in connection with
the qualification of this Junior Indenture under the TIA; or
(v) to set forth the terms and conditions, which shall not be
inconsistent with this Junior Indenture, of any series of Debentures (other
than the Series 1997 Debentures), that are to be issued hereunder and the
form of Debentures of such series;
provided that any such action does not adversely affect the Holders of such
Debentures and, in the case of the outstanding Debentures of a series then held
by a Trust, any such action does not adversely affect the holders of the Trust
Preferred Securities of that Trust.
SECTION 9.02. With Consent of Holders.
(a) The Company and the Trustee may amend or supplement this Junior
Indenture in any manner not permitted by Section 9.01 hereof, or may waive
future compliance by the Company with any provisions of this Junior Indenture,
with the consent of the Holders of at least a majority in aggregate principal
amount of the Debentures of each series affected thereby. Such an amendment or
waiver may not, without the consent of each Holder of the Debentures affected
thereby:
(1) reduce the principal amount of such Debentures;
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(2) reduce the percentage of principal amount of such Debentures the
Holders of which must consent to an amendment of this Junior Indenture or a
waiver;
(3) change the stated maturity of the principal of or the interest on
or rate of interest of such Debentures; or
(4) extend the time of payment of interest on such Debentures, except
as provided herein;
provided that, in the case of the outstanding Debentures of a series then held
by a Trust, (i) no such amendment shall be made that adversely affects the
holders of the Trust Preferred Securities of that Trust, (ii) no termination of
the Indenture may occur, and (iii) no waiver of any Event of Default with
respect to the Debentures of that series or compliance with any covenant under
this Indenture shall be effective, in each case without the prior consent of the
holders of at least a majority of the aggregate liquidation preference of the
outstanding Trust Preferred Securities of that Trust or the holder of each such
Preferred Security, as applicable.
(b) A supplemental Junior Indenture that changes or eliminates any covenant
or other provision of this Junior Indenture that has expressly been included
solely for the benefit of one or more particular series of Debentures, or which
modifies the rights of the Holders of Debentures of such series with respect to
such covenant or other provision, shall be deemed not to affect the rights under
this Junior Indenture of the Holders of Debentures of any other series.
(c) It shall not be necessary for the consent of the Holders of Debentures
or holders of Trust Preferred Securities under this Section 9.02 to approve the
particular form of any proposed amendment, but it shall be sufficient if such
consent approves the substance thereof.
(d) If certain Holders agree to defer or waive certain obligations of the
Company hereunder with respect to Debentures held by them, such deferral or
waiver shall not affect the rights of any other Holder to receive the payment or
performance required hereunder in a timely manner.
(e) After an amendment or waiver under this Section 9.02 becomes effective,
the Company shall mail to each Holder a notice briefly describing the amendment
or waiver. Any failure of the Company to mail such notices, or any defect
therein, shall not, however, in any way impair or affect the validity of such
amendment or waiver.
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SECTION 9.03. Compliance with Trust Indenture Act.
Every supplemental Junior Indenture executed pursuant to this Article 9
shall comply with the TIA.
SECTION 9.04. Revocation and Effect of Consents; Waivers and Actions.
(a) Until an amendment, waiver or other action by Holders becomes
effective, a consent to it or any other action by a Holder of a Debenture
hereunder is a continuing consent by the Holder and every subsequent Holder of
that Debenture or portion of the Debenture that evidences the same obligation as
the consenting Holder's Debenture, even if notation of the consent, waiver or
action is not made on such Debenture. However, any such Holder or subsequent
Holder may revoke the consent, waiver or action as to such Holder's Debenture or
portion of the Debenture if the Trustee receives the notice of revocation before
the consent of the requisite aggregate principal amount of such Debentures then
outstanding has been obtained and not revoked. After an amendment, waiver or
action becomes effective, it shall bind every Holder of the Debentures of the
related series, except as provided in Section 9.02 hereof.
(b) The Company may, but shall not be obligated to, fix a Record Date for
the purpose of determining the Persons entitled to consent to any amendment or
waiver. If a Record Date is fixed, then, notwithstanding the first two
sentences of the immediately preceding paragraph, only Holders of Debentures or
holders of Trust Preferred Securities, as applicable, on such Record Date or
their duly designated proxies, and only those Persons, shall be entitled to
consent to such amendment, supplement or waiver or to revoke any consent
previously given, whether or not such Persons continue to be such after such
Record Date. No such consent shall be valid or effective for more than 90 days
after such Record Date.
SECTION 9.05. Notation on or Exchange of Debentures.
Debentures of the related series authenticated and made available for
delivery after the execution of any supplemental Junior Indenture pursuant to
this Article 9 may, and shall, if required by the Trustee, bear a notation in
form approved by the Trustee as to any matter provided for in such supplemental
Junior Indenture. If the Company shall so determine, new Debentures so modified
as to conform, in the opinion of the Trustee and the Board of Directors, to any
such supplemental Junior Indenture may be prepared and executed by the Company
and authenticated and made available for delivery by the Trustee in exchange for
outstanding Debentures.
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SECTION 9.06. Trustee to Execute Supplemental Junior Indentures.
The Trustee shall execute any supplemental Junior Indenture authorized
pursuant to this Article 9 if the supplemental Junior Indenture does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may, but need not, execute it. In executing such
supplemental Junior Indenture the Trustee shall be entitled to receive, and
shall be fully protected in relying upon, an Officer's Certificate and Opinion
of Counsel stating that such supplemental Junior Indenture is authorized or
permitted by this Junior Indenture.
SECTION 9.07. Effect of Supplemental Junior Indentures.
Upon the execution of any supplemental Junior Indenture under this Article
9, this Junior Indenture shall be modified in accordance therewith, and such
supplemental Junior Indenture shall form a part of this Junior Indenture for all
purposes and every Holder of Debentures of the related series theretofore or
thereafter authenticated and made available for delivery hereunder shall be
bound thereby.
ARTICLE 10. SUBORDINATION
SECTION 10.01. Debentures Subordinated to Senior Indebtedness.
Notwithstanding the provisions of Section 6.10 hereof or any other
provision herein or in any Debenture, each of the Company and the Trustee and,
by their acceptance thereof, the Holders of each series of Debentures (a)
covenant and agree that all payments by the Company of the principal of and
premium, if any, and interest on Debentures (other than any series of Debentures
which have been discharged pursuant to Article 8 hereof) shall be junior and
subordinated in accordance with the provisions of this Article 10 to the prior
payment in full, in cash or cash equivalents, of all amounts payable on, under
or in connection with Senior Indebtedness, and (b) acknowledge that holders of
Senior Indebtedness are or shall be relying on this Article 10.
SECTION 10.02. Priority and Payment of Proceeds in Certain Events; Remedies
Standstill.
(a) Upon any payment or distribution of the Company's assets, of any kind
or character, whether in cash, property or securities, to creditors upon any
dissolution or winding up or total or partial liquidation or reorganization of
the Company, whether voluntary or involuntary, or assignment for the benefit of
creditors, marshaling of assets or bankruptcy, insolvency,
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debt restructuring or other similar proceedings in connection with any
insolvency or bankruptcy proceeding of the Company, any amounts payable on,
under or in connection with Senior Indebtedness (including any interest accruing
on such Senior Indebtedness subsequent to the commencement of a bankruptcy,
insolvency or similar proceeding) shall first be paid in full in cash, or
payment provided for in cash or cash equivalents, before the Holders or the
Trustee on behalf of the Holders or the holders of Trust Preferred Securities
shall be entitled to receive from the Company any payment of principal of or
premium, if any, or interest on any series of Debentures or distribution of any
assets or securities.
(b) No direct or indirect payment by or on behalf of the Company of
principal of or premium, if any, or interest on any series of the Debentures
(other than any series of Debentures which has been discharged pursuant to
Article 8 hereof), whether pursuant to the terms of such series of Debentures or
upon acceleration or otherwise, shall be made if, at the time of such payment,
there exists (i) a default in the payment of all or any portion of any Senior
Indebtedness and the Trustee has received written notice thereof from the
Company, from holders of Senior Indebtedness or from any trustee, representative
or agent therefor, (ii) any other default affecting Senior Indebtedness as a
result of which the maturity of Senior Indebtedness has been accelerated and the
Trustee has received written notice from the Company, from holders of Senior
Indebtedness or from any trustee, representative or agent therefor, or (iii) any
judicial proceedings are pending with respect to any such defaults, and such
default shall not have been cured or waived by or on behalf of the holders of
such Senior Indebtedness.
(c) If, notwithstanding the foregoing provisions prohibiting such payment
or distribution, the Trustee or any Holder shall have received any payment on
account of the principal of or premium, if any, or interest on any series of
Debentures when such payment is prohibited by this Section 10.02 and before all
amounts payable on, under or in connection with Senior Indebtedness are paid in
full in cash or cash equivalents, then and in such event (subject to the
provisions of Section 10.08 hereof) such payment or distribution shall be
received and held in trust for the holders of Senior Indebtedness and, at the
written direction of the trustee, representative or agent for the holders of the
Senior Indebtedness, shall be paid to the holders of the Senior Indebtedness
remaining unpaid to the extent necessary to pay such Senior Indebtedness in full
in cash or cash equivalents.
(d) Upon any payment or distribution of assets or securities referred to in
this Article 10, the Trustee and the Holders shall be entitled to rely upon any
order or decree of a court of competent jurisdiction in which such dissolution,
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winding up, liquidation or reorganization proceedings are pending, and upon a
certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent
or other Person making any such payment or distribution, delivered to the
Trustee for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of Senior Indebtedness and other Indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to this Article
10.
SECTION 10.03. Payments Which May Be Made Prior to Notice.
Nothing in this Article 10 or elsewhere in this Junior Indenture shall
prevent (i) the Company, except under the conditions described in Section 10.02
hereof, from making payments of principal of or premium, if any, or interest on
any series of Debentures or from depositing with the Trustee any monies for such
payments, or (ii) the application by the Trustee of any monies deposited with it
for the purpose of making such payments of principal of or premium, if any, or
interest on such series of Debentures, to the Holders entitled thereto, unless
at least one Business Day prior to the date when such payment would otherwise
(except for the prohibitions contained in Section 10.02 hereof) become due and
payable the Trustee shall have received the written notice provided for in
Section 10.02(b)(i) or 10.02(b)(ii) hereof.
SECTION 10.04. Rights of Holders of Senior Indebtedness Not To Be Impaired.
(a) No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time or in any way be
prejudiced or impaired by any act or failure to act in good faith by any such
holder, or by any noncompliance by the Company with the terms and provisions and
covenants herein regardless of any knowledge thereof any such holder may have or
otherwise be charged with.
(b) The provisions of this Article 10 are intended to be for the benefit
of, and shall be enforceable directly by, the holders of Senior Indebtedness.
Notwithstanding anything to the contrary in this Article 10, to the extent any
Holders or the Trustee have paid over or delivered to any holder of Senior
Indebtedness any payment or distribution received on account of the principal of
or premium (if any) or interest on any series of Debentures to which any other
holder of Senior Indebtedness shall be entitled to share in accordance with
Section 10.02 hereof, no holder of Senior Indebtedness shall have a claim or
right against any Holders or the Trustee with respect to any such payment or
distribution or as a result of the failure to
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make payments or distributions to such other holder of Senior Indebtedness.
SECTION 10.05. Trustee May Take Action to Effectuate Subordination.
Each Holder of a Debenture, by such Holder's acceptance thereof, authorizes
and directs the Trustee on such Holder's behalf to take such action as may be
required by the trustee, representative or agent for holders of Senior
Indebtedness or by the Company to effectuate, as between the holders of Senior
Indebtedness and the Holders, the subordination as provided in this Article 10
and appoints the Trustee such Holder's attorney-in-fact for any and all such
purposes.
SECTION 10.06. Subrogation.
(a) Upon the payment in full, in cash or cash equivalents, of all Senior
Indebtedness, Holders of each series of Debentures shall be subrogated to the
rights of the holders of such Senior Indebtedness to receive payments or
distributions of assets of the Company made on such Senior Indebtedness until
all series of Debentures shall be paid in full; and for the purposes of such
subrogation, no payments or distributions to holders of such Senior Indebtedness
of any cash property or securities to which Holders of any series of Debentures
would be entitled except for this Article 10, and no payment pursuant to this
Article 10 to holders of such Senior Indebtedness by Holders of such series of
Debentures, shall, as between the Company, its creditors other than holders of
such Senior Indebtedness and such Holders of such series of Debentures, be
deemed to be a payment by the Company to or on account of such Senior
Indebtedness, it being understood that the provisions of this Article 10 are
solely for the purpose of defining the relative rights of the holders of such
Senior Indebtedness, on the one hand, and such Holders of such series of
Debentures, on the other hand.
(b) If any payment or distribution to which Holders of any series of
Debentures would otherwise have been entitled but for the provisions of this
Article 10 shall have been applied, pursuant to this Article 10, to the payment
of all Senior Indebtedness then and in such case Holders of such series of
Debentures shall be entitled to receive from the holders of such Senior
Indebtedness at the time outstanding any payments or distributions received by
such holders of Senior Indebtedness in excess of the amount sufficient to pay,
in cash or cash equivalents, all such Senior Indebtedness in full.
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SECTION 10.07. Obligations of Company Unconditional; Reinstatement.
(a) Nothing in this Article 10 or elsewhere in this Junior Indenture or in
any Debenture is intended to or shall impair, as between the Company and Holders
of any series of Debentures, the obligations of the Company, which are absolute
and unconditional, to pay to such Holders the principal of and premium, if any,
and interest on such series of Debentures as and when the same shall become due
and payable in accordance with their terms, or is intended to or shall affect
the relative rights of Holders of such series of Debentures and creditors of the
Company other than the holders of the Senior Indebtedness, nor shall anything
herein or therein prevent the Trustee or any Holder of such series of Debentures
or holder of Trust Preferred Securities, as applicable, from exercising all
remedies otherwise permitted by applicable law under this Junior Indenture,
subject to the rights, if any, under this Article 10 of the holders of such
Senior Indebtedness in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.
(b) The failure to make a scheduled payment of principal of or premium, if
any, or interest on any series of Debentures by reason of Section 10.02 hereof
shall not be construed as preventing the occurrence of an Event of Default under
Section 6.01 hereof; provided, however, that if (i) the conditions preventing
the making of such payment no longer exist, and (ii) Holders of such series of
Debentures are made whole with respect to such omitted payments, the Event of
Default relating thereto (including any failure to pay any accelerated amounts)
shall be automatically waived, and the provisions of this Junior Indenture shall
be reinstated as if no such Event of Default had occurred.
SECTION 10.08. Trustee Entitled to Assume Payments Not Prohibited in Absence of
Notice.
(a) The Company shall give prompt written notice to the Trustee of any fact
known to the Company that would prohibit the making of any payment to or by the
Trustee in respect of any series of Debentures. Failure to give such notice
shall not affect the subordination of the Debentures to Senior Indebtedness.
Notwithstanding the provisions of this or any other provisions of this Junior
Indenture, the Trustee or Paying Agent shall not be charged with the knowledge
of the existence of any default in the payment of all or a portion of any Senior
Indebtedness or any other default affecting Senior Indebtedness as a result of
which the maturity of the Senior Indebtedness has been accelerated, unless and
until the Trustee or Paying Agent shall have received written notice thereof
from the Company or one or more holders of Senior Indebtedness or from
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any trustee, representative or agent therefor or unless the Trustee or Paying
Agent otherwise had actual knowledge thereof; and, prior to the receipt of any
such written notice or actual knowledge of a responsible Trust Officer in the
corporate trust department of the Trustee or Paying Agent, the Trustee or Paying
Agent may conclusively assume that no such facts exist.
(b) Unless at least one Business Day prior to the date when by the terms of
this Junior Indenture any monies are to be deposited by the Company with the
Trustee or any Paying Agent for any purpose (including, without limitation, the
payment of the principal of or premium, if any, or interest on any Debenture),
the Trustee or Paying Agent shall have received with respect to such monies the
notice provided for in Section 10.02 hereof or a responsible Trust Officer in
the corporate trust department of the Trustee or Paying Agent shall have actual
knowledge of default in the payment of all or a portion of any Senior
Indebtedness or any other default affecting Senior Indebtedness as the result of
which the maturity of the Senior Indebtedness has been accelerated, the Trustee
or Paying Agent shall have full power and authority to receive and apply such
monies to the purpose for which they were received. Neither of them shall be
affected by any notice to the contrary, which may be received by either on or
after such date. The foregoing shall not apply to the Paying Agent if the
Company is acting as Paying Agent. Nothing in this Section 10.08 shall limit
the right of the holders of Senior Indebtedness to recover payments as
contemplated by Section 10.02 hereof. The Trustee or Paying Agent shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself or itself to be a holder of such Senior Indebtedness (or a
trustee, representative or agent on behalf of such holder) to establish that
such notice has been given by a holder of such Senior Indebtedness or a trustee,
representative or agent on behalf of any such holder. The Trustee shall not be
deemed to have any duty to the holders (and shall be fully protected in relying
upon such notice) of Senior Indebtedness.
SECTION 10.09. Right of Trustee to Hold Senior Indebtedness.
(a) The Trustee and any Paying Agent shall be entitled to all of the rights
set forth in this Article 10 in respect of any Senior Indebtedness at any time
held by them to the same extent as any other holder of such Senior Indebtedness,
and nothing in this Junior Indenture shall be construed to deprive the Trustee
or any Paying Agent of any of its rights as such holder.
(b) Nothing in this Article 10 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 7.07 hereof.
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SECTION 10.10. Reliance on Judicial Order or Certificate of Liquidating Agent.
Upon any payment or distribution of assets of the Company referred to in
this Article 10, the Trustee, and the Holders of each series of Debentures shall
be entitled to rely upon any order or decree entered by any court of competent
jurisdiction in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, liquidating trustee,
custodian, receiver, assignee for the benefit of creditors, agent or other
person making such payment or distribution, delivered to the Trustee or to the
Holders of such series of Debentures, for the purpose of ascertaining the
persons entitled to participate in such payment or distribution, the holders of
Senior Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 10.
SECTION 10.11. Trustee Not Fiduciary for Holders of Senior Indebtedness.
The Trustee shall not be deemed to owe any fiduciary duty to the holders of
Senior Indebtedness and shall not be liable to any such holders if the Trustee
shall in good faith mistakenly pay over or distribute to Holders of such series
of Debentures or to the Company or to any other person cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article 10 or otherwise. With respect to the holders of Senior
Indebtedness, the Trustee undertakes to perform or to observe only such of its
covenants or obligations as are specifically set forth in this Article 10 and no
implied covenants or obligations with respect to holders of Senior Indebtedness
shall be read into this Junior Indenture against the Trustee.
ARTICLE 11. GUARANTEE OF OBLIGATIONS OF THE COMPANY
SECTION 11.01. Guarantee.
The Guarantor, pursuant to the terms of the Guarantee set forth in this
Article 11 (this "Guarantee"), irrevocably and unconditionally guarantees to the
Trustee (for its own benefit and the benefit of the Holders) and the Holders,
and agrees to pay in full, perform and observe, from time to time the due and
punctual payment, observance and performance of all of the Guaranteed
Obligations (without duplication of amounts theretofore paid by the Company), in
accordance with their respective terms and as and when due (whether at maturity,
by
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reason of acceleration or otherwise, but after giving effect to a valid
extension of an interest payment period by the Company pursuant to the terms of
the Debentures), regardless of any defense, right of set-off or counterclaim
which the Company may have or assert. The Guarantor's obligation to make a
Guarantee Payment may be satisfied by direct payment of the required amounts by
the Guarantor to the Holders or by causing the Company to pay such amounts to
the Holders.
SECTION 11.02. Waiver of Notice and Demand.
The Guarantor hereby waives notice of acceptance of and reliance on this
Guarantee and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the Company
or any other Person before proceeding against the Guarantor, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands, diligence and all other defenses under applicable law that would, but
for this Section 11.02, be available to the Guarantor as a defense against or a
reduction of its obligations hereunder.
SECTION 11.03. Obligations Not Affected.
(a) The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee shall in no way be affected or impaired by reason of the
happening from time to time of any of the following:
(1) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Company of the Guaranteed Obligations or
any discharge, disallowance, invalidity, illegality, voidness or other
unenforceability thereof;
(2) the extension of time for the payment by the Company of all or any
portion of the interest, principal or premiums, if any, or any other sums
payable in respect of the Guaranteed Obligations (other than as provided in
Section 11.01 hereof with respect to an extension of time for payment of
interest during an Extension Period) or any increase in the principal of,
or interest rate applicable to, the Debentures;
(3) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders in respect of the Guaranteed Obligations or
any action on the part of the Holders granting indulgence or extension of
any kind;
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(4) the voluntary or involuntary liquidation, termination, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Company or any of the assets of the Company;
(5) any invalidity of, or defect or deficiency in, the Guaranteed
Obligations;
(6) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred;
(7) any termination of or change in any relationship between the
Company and the Guarantor, including any resulting from a change in the
ownership of the Company; or
(8) to the extent permitted by law, any other circumstance whatsoever
that might otherwise constitute a legal or equitable discharge or defense
of a guarantor, it being the intent of this Section 11.03 that the
obligations of the Guarantor hereunder shall be absolute and unconditional
under any and all circumstances.
(b) There shall be no obligation of the Holders to give notice to, or
obtain the consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 11.04. Prohibition on Distributions, Etc.
If (i) there shall have occurred any event of which the Company has actual
knowledge that (a) with the giving of notice or the lapse of time, or both,
would constitute an Event of Default with respect to any series of Debentures
and (b) in respect of which the Company shall not have taken reasonable steps to
cure and (ii) the Guarantor defaults in the performance of the Guaranteed
Obligations, the Guarantor shall not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire or make a liquidation payment
with respect to, any of its Capital Stock, (ii) make any payment of principal,
interest or premium, if any, on or repay, repurchase or redeem any of its debt
securities that rank pari passu with or junior in interest to the Guarantor's
obligations under this Guarantee, or (iii) make any guarantee payments with
respect to any guarantee issued by the Guarantor if such guarantee ranks pari
passu with or junior in interest to the Guarantor's obligations under this
Guarantee (other than (a) dividends or distributions in shares of, or options,
warrants or rights to subscribe for or purchase shares of its common stock and
exchanges or conversions of common stock of one class for common stock of
another class, (b) payments by the Guarantor under any Trust Guarantee Agreement
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(as defined in the HECO Junior Indenture) and pursuant to this Guarantee, and
(c) purchases by the Guarantor of its common stock required to prevent the loss
or secure the renewal or reinstatement of any government license or franchise
held by the Guarantor).
SECTION 11.05. Rights of Holders.
(a) The Guarantor expressly acknowledges that: (i) the Guarantee set
forth in this Article 11 is for the benefit of the Trustee (for its own benefit
and the benefit of the Holders) and the Holders; (ii) the Trustee has the right
to enforce this Guarantee on behalf of the Holders; (iii) the Holders of a
majority in aggregate principal amount of the Debentures have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the Trustee in respect of this Guarantee or exercising any trust or
power conferred upon the Trustee under this Guarantee.
(b) If the Trustee fails to enforce its rights under this Guarantee after a
Holder has made a written request, such Holder may institute a legal proceeding
directly against the Guarantor to enforce the Trustee's rights under this
Guarantee, without first instituting a legal proceeding against the Company, the
Trustee or any other Person or entity. Notwithstanding the foregoing, if the
Guarantor has failed to make a Guarantee Payment, a Holder may directly
institute a proceeding in such Holder's own name against the Guarantor for
enforcement of the Guarantee of such payment. The Guarantor waives any right or
remedy to require that any action be brought first against the Company, the
Trustee or any other Person or entity before proceeding directly against the
Guarantor .
SECTION 11.06. Guarantee of Payment.
This Guarantee creates a guarantee of payment and not of collection. This
Guarantee will not be discharged except by payment, observance and performance
in full of the Guaranteed Obligations (without duplication of amounts
theretofore paid by or on behalf of the Company pursuant to this Junior
Indenture).
SECTION 11.07. Subrogation.
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Company in respect of any amounts paid to the Holders by the
Guarantor under this Guarantee and shall have the right to waive payment by the
Company's subsidiaries pursuant to Section 11.01 hereof; provided, however, that
the Guarantor shall not (except to the extent required by mandatory provisions
of law) be entitled to enforce or exercise
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any rights which it may acquire by way of subrogation or any indemnity,
reimbursement or other agreement, in all cases as a result of payment under this
Guarantee, until the prior payment, observance and performance in full of the
Guaranteed Obligations. If any amount shall be paid to the Guarantor in
violation of the preceding sentence, the Guarantor agrees to hold such amount in
trust for the Holders and to pay over such amount to the Holders.
SECTION 11.08. Independent Obligations.
The Guarantor acknowledges that its obligations hereunder are independent
of the obligations of the Company with respect to the Debentures and that the
Guarantor shall be liable as principal and as debtor hereunder to pay, observe
and perform the Guaranteed Obligations pursuant to the terms of this Guarantee
notwithstanding the occurrence of any event referred to in subsections (a)(1)
through (a)(8), inclusive, of Section 11.03 hereof.
SECTION 11.09. Subordination.
This Guarantee shall constitute an unsecured obligation of the Guarantor
and shall rank subordinate and junior in right of payment to all general
liabilities of the Guarantor.
SECTION 11.10. Pari Passu Guarantees.
This Guarantee shall rank pari passu with any similar guarantee agreements
issued by the Guarantor on behalf of the holders of securities similar to any
series of Debentures issued by any subsidiary of the Guarantor in the future.
SECTION 11.11. Termination.
This Guarantee shall terminate, with respect to any series of Debentures,
upon the payment in full of the Guaranteed Payments with respect to such series
of Debentures. Notwithstanding the foregoing, this Guarantee will continue to be
effective or will be reinstated, as the case may be, if at any time any Holder
of Debentures of any series must restore payment of any sums paid under such
Debentures or under this Guarantee or any payment, observance or performance of
any of the Guaranteed Obligations, with respect to such series of Debentures, is
otherwise recovered from or paid over by or for the account of the Trustee or
the Holders for any reason, including as a preference or fraudulent transfer,
whether effected by
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judgment, decree or order of any governmental authority, by any plan of
reorganization or by any settlement or compromise.
SECTION 11.12. Exculpation.
(a) No Indemnified Person shall be liable, responsible or accountable in
damages or otherwise to the Guarantor or any Covered Person for any loss, damage
or claim incurred by reason of any act or omission performed or omitted by such
Indemnified Person in good faith in accordance with this Guarantee and in a
manner that such Indemnified Person reasonably believed to be within the scope
of the authority conferred on such Indemnified Person by this Guarantee or by
law, except that an Indemnified Person shall be liable for any such loss, damage
or claim incurred by reason of such Indemnified Person's gross negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good faith
upon the records of the Guarantor and upon such information, opinions, reports
or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable care
by or on behalf of the Guarantor, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses, or any other facts pertinent to the existence and amount of assets from
which principal, interest or other payments to Holders might properly be paid.
SECTION 11.13. Indemnification.
The Guarantor agrees to indemnify each Indemnified Person for, and to hold
each Indemnified Person harmless against, any and all loss, liability, damage,
claim or expense, including taxes (other than taxes based on the income of such
Indemnified Person) incurred without negligence or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
trust or trusts hereunder, including the costs and expenses (including
reasonable legal fees and expenses) of defending itself against, or
investigating, any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder. The obligation to
indemnify as set forth in this Section 11.13 shall survive the termination of
this Guarantee or the earlier resignation or removal of the Trustee.
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ARTICLE 12. MISCELLANEOUS
SECTION 12.01. Trust Indenture Act Controls.
If any provision of this Junior Indenture limits, qualifies or conflicts
with the duties imposed by operation of subsection (c) of Section 318 of the
TIA, the imposed duties shall control. The provisions of Sections 310 to 317,
inclusive, of the TIA that impose duties on any Person (including provisions
automatically deemed included in a Junior Indenture unless the Junior Indenture
provides that such provisions are excluded) are a part of and govern this Junior
Indenture, except as, and to the extent, they are expressly excluded from this
Junior Indenture, as permitted by the TIA.
SECTION 12.02. Notices.
(a) Any notice, request or other communication required or permitted to be
given hereunder shall be in writing and delivered, telecopied or mailed by
first-class mail, postage prepaid, addressed as follows:
if to the Company:
[ SUBSIDIARY NAME ]
______________________________
______________________________
Facsimile No.: ______________
Attention: Treasurer
if to the Trustee:
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Facsimile No.: (212) 815-5915
Attention: Corporate Trust Trustee
Administration
if to the Guarantor:
Hawaiian Electric Company, Inc.
900 Richards Street
Honolulu, Hawaii 96813
Facsimile No.: (808) 543-7966
Attention: Treasurer
(b) The Company or the Trustee, by giving notice to the other, may
designate additional or different addresses for subsequent notices of
communications.
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(c) Any notice or communication given to a Debentureholder shall be mailed
or delivered to the Debentureholder at the Debentureholder's address as it
appears on the Securities Register of the Registrar and shall be sufficiently
given if mailed within the time prescribed.
(d) Failure to mail a notice or communication to a Debentureholder or any
defect in it shall not affect its sufficiency with respect to other
Debentureholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not received by the addressee.
(e) If the Company mails a notice or communication to the Debentureholders,
it shall mail a copy to the Trustee and each Registrar, Paying Agent or co-
Registrar.
SECTION 12.03. Communication by Holders with Other Holders.
Debentureholders may communicate, pursuant to TIA Section 312(b), with
other Debentureholders with respect to their rights under this Junior Indenture
or any series of Debentures. The Company, the Trustee, the Registrar, the
Paying Agent, if any, and anyone else shall have the protection of TIA Section
312(c).
SECTION 12.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take any
action under this Junior Indenture, the Company shall furnish to the Trustee:
(i) an Officer's Certificate (complying with Section 12.05 hereof)
stating that, in the opinion of such Officer, all conditions precedent to
the taking of such action have been complied with; and
(ii) if appropriate, an Opinion of Counsel (complying with Section
12.05 hereof) stating that, in the opinion of such counsel, all such
conditions precedent to the taking of such action have been complied with.
SECTION 12.05. Statements Required in Certificate or Opinion.
Each Officer's Certificate and Opinion of Counsel with respect to
compliance with a covenant or condition provided for in this Junior Indenture
shall include:
(i) a statement that each Person making such Officer's Certificate
or Opinion of Counsel has read such covenant or condition;
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(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
Officer's Certificate or Opinion of Counsel are based;
(iii) a statement that, in the opinion of each such Person, such
Person has made such examination or investigation as is necessary to enable
such Person to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(iv) a statement as to whether or not, in the opinion of such
Person, such covenant or condition has been complied with; provided,
however, that with respect to matters of fact not involving any legal
conclusion, an Opinion of Counsel may rely on an Officer's Certificate or
certificates of public officials.
SECTION 12.06. Severability Clause.
If any provision in this Junior Indenture or in any series of Debentures
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 12.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or for a meeting of
Debentureholders. The Registrar and Paying Agent may make reasonable rules for
their functions.
SECTION 12.08. Legal Holidays.
A "Legal Holiday" is any day other than a Business Day. If any specified
date (including a date for giving notice) is a Legal Holiday, the action to be
taken on such date shall be taken on the next succeeding day that is not a Legal
Holiday, and if such action is a payment in respect of any series of Debentures,
unless otherwise specified pursuant to Section 2.01 hereof, no principal,
premium (if any) or interest installment shall accrue for the intervening
period; except that if any interest payment is due on a Legal Holiday and the
next succeeding day is in the next succeeding calendar year, such payment shall
be made on the Business Day immediately preceding such Legal Holiday.
SECTION 12.09. Governing Law.
This Junior Indenture and each series of Debentures shall be governed by
and construed in accordance with the internal laws of the State of New York.
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SECTION 12.10. No Recourse Against Others.
No director, officer, employee or stockholder, as such, of the Company
shall have any liability for any obligations of the Company under the Debentures
or this Junior Indenture or for any claim based on, in respect of or by reason
of such obligations or their creation. By accepting a Debenture, each
Debentureholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of each series of
Debentures.
SECTION 12.11. Successors.
All agreements of the Company in this Junior Indenture and Debentures shall
bind its successors and assigns. All agreements of the Trustee in this Junior
Indenture shall bind its successors and assigns.
SECTION 12.12. Multiple Original Copies of this Junior Indenture.
The parties may sign any number of copies of this Junior Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement. Any signed copy shall be sufficient proof of this Junior Indenture.
SECTION 12.13. No Adverse Interpretation of Other Agreements.
This Junior Indenture may not be used to interpret another Junior
Indenture, loan or debt agreement of the Company or any subsidiary. Any such
Junior Indenture, loan or debt agreement may not be used to interpret this
Junior Indenture.
SECTION 12.14. Table of Contents; Headings, Etc.
The Table of Contents, Cross-Reference Table, and headings of the Articles
and Sections of this Junior Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 12.15. Benefits of this Junior Indenture.
Except as otherwise expressly provided herein with respect to holders of
Senior Indebtedness and holders of Trust Preferred Securities, nothing in this
Junior Indenture or in any series of Debentures, express or implied, shall give
to any person, other than the parties hereto and their successors hereunder and
the Holders of such series of Debentures, any benefit or any legal or equitable
right, remedy or claim under this Junior Indenture.
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SIGNATURES
IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed
this Junior Indenture on behalf of the respective parties hereto as of the date
first above written.
[SUBSIDIARY NAME]
By: ___________________________
Paul A. Oyer
Financial Vice President
and Treasurer
By: ___________________________
Marvin A. Hawthorne
Assistant Treasurer
THE BANK OF NEW YORK,
AS TRUSTEE
By: _____________________________
Name: _______________________
Title: ______________________
HAWAIIAN ELECTRIC COMPANY, INC.,
AS GUARANTOR
By: _____________________________
Paul A. Oyer
Financial Vice President
and Treasurer
By: _____________________________
Marvin A. Hawthorne
Assistant Treasurer
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EXHIBIT A
No. ____ $__________
[ SUBSIDIARY NAME ]
_____% JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE,
SERIES 1997
[ SUBSIDIARY NAME ], a Hawaii corporation (the "Company", which term
includes any successor corporation under the Junior Indenture hereinafter
referred to), for value received, hereby promises to pay to The Bank of New
York, as Property Trustee (the "Property Trustee") for, and for the benefit of,
HECO Capital Trust I (the "Trust") or registered assigns, the principal sum of
$___________ Dollars on March __, 2027, or on such other date which may be
established by the Company in accordance with the terms of said Junior Indenture
but which may not, in any event, be a date earlier than March ___, 2002 or a
date later than March ____, 2046, and to pay interest on said principal sum from
March __, 1997 or from the most recent Interest Payment Date (as defined below)
to which interest has been paid or duly provided for, quarterly in arrears on
March 31, June 30, September 30 and December 31, commencing March 31, 1997
(each, an "Interest Payment Date"), at the rate of _____% per annum until the
principal hereof shall have become due and payable, and on any overdue principal
and (to the extent that payment of such interest is enforceable under applicable
law) on any overdue installment of interest at the same rate per annum. The
amount of interest payable on any Interest Payment Date shall be computed on the
basis of a 360-day year of twelve 30-day months, and for any period shorter than
a full calendar month, interest will be computed on the basis of the actual
number of days elapsed in such period. In the event that any Interest Payment
Date is not a Business Day, then interest will be payable on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day (without any reduction in interest or other payment in respect of such early
payment), in each case with the same force and effect as if made on such date.
The interest installment so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in the Junior Indenture, be paid
to the Person in whose name this Debenture is registered at the close of
business on the Regular Record Date for such interest installment, which shall
be the close of business on the Business Day immediately preceding such Interest
Payment Date. Any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date, and may
<PAGE>
be paid to the Person in whose name this Debenture is registered at the close of
business on a Special Record Date to be fixed by the Trustee (as defined below)
for the payment of such defaulted interest, notice whereof shall be given to the
Holders of the Series 1997 Debentures not less than 7 calendar days prior to
such Special Record Date, as more fully provided in the Junior Indenture.
Payment of the principal of and interest on this Debenture will be
made in such coin or currency of the United States of America as at the time of
payment is legal tender for payment of public and private debts. If this
Debenture is not held by a depository or the Property Trustee, payment of any
interest on this Debenture (other than on the Stated Maturity or Redemption
Date) shall be made at the office of the Trustee in the City of New York or at
the office of such Paying Agent or Paying Agents as the Company may designate
from time to time, except that at the option of the Company payment of any
interest may be made (i) by check mailed to the address of the person entitled
thereto as such address shall appear in the Securities Register or (ii) by
transfer to an account maintained by the person entitled thereto as specified in
the Securities Register, provided that proper and timely transfer instructions
have been received by the Regular Record Date; provided, however, that at the
request of a Holder of at least $10,000,000 aggregate principal amount of Series
1997 Debentures, interest on such Debentures will be payable by wire transfer
within the continental United States in immediately available funds to the bank
account number specified in writing by such Holder to the Registrar prior to the
Regular Record Date.
If this Debenture is not held by a depository or the Property Trustee,
the principal amount hereof, any premium and any interest due on the Stated
Maturity Date or a Redemption Date (other than an Interest Payment Date) will be
paid only upon surrender of this Debenture at the principal corporate office of
The Bank of New York, Paying Agent, in New York, New York, or at such other
office or agency of the Paying Agent as the Company shall designate by written
notice to the Holder of this Debenture.
As long as this Debenture is held by the Property Trustee or if this
Debenture is held by a depository, any payments of principal of and premium, if
any, and interest on this Debenture will be made pursuant to the terms of the
Junior Indenture.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Junior Indenture, subordinate and subject in right of payment to
the prior payment in full of all Senior Indebtedness, and this Debenture is
issued subject to
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the provisions of the Junior Indenture with respect thereto. The Holder of this
Debenture, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes. The Holder of this Debenture, by his acceptance
hereof, hereby waives all notice of the acceptance of the subordination
provisions contained herein and in the Junior Indenture by each holder of Senior
Indebtedness, whether now outstanding or hereafter incurred, and waives reliance
by each such holder upon said provisions.
This Debenture is one of a duly authorized series of Debentures of the
Company (herein sometimes referred to as the "Series 1997 Debentures"),
specified in the Junior Indenture, limited in aggregate principal amount to
$___________, issued under and pursuant to an Junior Indenture dated as of March
1, 1997 (the "Junior Indenture") executed and delivered between the Company and
The Bank of New York, as trustee (the "Trustee"). The Series 1997 Debentures are
initially being issued to the Trust, to be held on behalf of the Trust by its
property trustee (the "Property Trustee"). Concurrently with the issuance of the
Series 1997 Debentures, the Trust is issuing its trust securities, including the
Trust's _____% Cumulative Quarterly Income Preferred Securities, Series 1997
(the "Trust Preferred Securities"), representing undivided beneficial interests
in the assets of the Trust and having an aggregate liquidation preference equal
to the aggregate principal amount of (i) the Series 1997 Debentures, (ii) the
Debentures issued by Hawaiian Electric Company, Inc., a Hawaii corporation and
the Company's sole owner ("HECO"), and (iii) the Debentures issued by [ OTHER
SUBSIDIARY NAME ], a Hawaii corporation which is also a wholly-owned subsidiary
of HECO. By the terms of the Junior Indenture, Debentures are issuable in series
which may vary as to amount, date of maturity, rate of interest and in other
respects as provided in the Junior Indenture. Reference is made to the Junior
Indenture for a description of the rights, limitations of rights, obligations,
duties and immunities thereunder of the Trustee, the Company and Holders of the
Debentures. Each term used in this Debenture which is defined in the Junior
Indenture and not defined herein shall have the meaning assigned to it in the
Junior Indenture.
At any time on or after March __, 2002, at the option of the Company,
the Series 1997 Debentures shall be redeemable in whole or in part.
Notwithstanding the foregoing, (i) upon a redemption by HECO of any or all of
the HECO Series 1997 Debentures (as such term is defined in the Junior
Indenture), the Series 1997 Debentures will immediately become redeemable
3
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and shall be redeemed by the Company in whole, and (ii) if a Special Event shall
occur and be continuing, then, at the option of either the Company or HECO, the
Series 1997 Debentures shall be redeemable in whole (but not in part). In any
case, a Series 1997 Debenture shall be redeemable at 100% of the principal
amount thereof plus accrued and unpaid interest to the Redemption Date. Up to an
aggregate limit of $20 million, any redemption of Series 1997 Debentures by HECO
may be accomplished by the exchange of a like amount of HECO Series 1997
Debentures therefor.
A "Special Event" shall mean either a "Tax Event" or an "Investment
Company Event." A "Tax Event" shall mean that the Company or the Trust shall
have received an opinion of counsel (which may be regular counsel to the Company
or an Affiliate, but not an employee thereof and which must be acceptable to the
Property Trustee of the Trust), rendered by a law firm having a recognized
federal and state tax and securities practice, to the effect that, as a result
of any amendment to or change (including any announced prospective change) in
the laws (or any regulations thereunder) of the United States, or of any State
or the District of Columbia, or any political subdivision or taxing authority
thereof or therein, or as a result of any administrative pronouncement or action
that represents an official position (including a clarification of an official
position) of the governmental authority or regulatory body making such
administrative pronouncement or taking such action or as a result of any
judicial decision interpreting, clarifying or applying such laws or regulations,
which amendment or change is effective or such interpretation or pronouncement
is announced on or after the date of original issuance of Trust Preferred
Securities, there is more than an insubstantial risk that (i) the Trust is, or
will be within 90 days of the date of said opinion, subject to United States
Federal income tax with respect to income received or accrued on the Debentures,
(ii) interest payable by the Company to the Trust on the 1997 Series Debentures
or by HECO to the Trust on the HECO 1997 Series Debentures is not, or within 90
days of the date of said opinion will not be, deductible by such company, in
whole or in part, for United States Federal income tax purposes or (iii) the
Trust is, or will be within 90 days of the date of said opinion, subject to more
than a de minimis amount of other taxes, duties, or other governmental charges.
An "Investment Company Event" shall mean the receipt by the Company or the Trust
of an opinion of counsel, rendered by a law firm having a recognized federal
securities practice, to the effect that, as a result of the occurrence of a
change in law or regulation or a change (including a prospective change) in
interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk
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that the Trust is or will be considered an "investment company" that is required
to be registered under the Investment Company Act of 1940, as amended, which
Change in 1940 Act Law becomes effective on or after the date of original
issuance of the Trust Preferred Securities.
At least 30 days but not more than 60 days before the Redemption Date,
the Trustee shall mail or caused to be mailed a notice of redemption by first-
class mail, postage prepaid, to each Holder of Series 1997 Debentures to be
redeemed.
The Series 1997 Debentures shall not be subject to any sinking fund.
Series 1997 Debentures in denominations larger than $25 may be redeemed in part
but only in integral multiples of $25.
In the event of redemption of this Debenture in part only, a new
Series 1997 Debenture or Debentures for the unredeemed portion hereof will be
issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default with respect to the Series 1997 Debentures
occurs and is continuing, the principal of and interest on the Series 1997
Debentures may (and, in certain circumstances, shall) be declared, and upon such
declaration shall become, due and payable, in the manner, with the effect and
subject to the conditions provided in the Junior Indenture.
The Junior Indenture contains provisions for defeasance within one
year of the Stated Maturity of the entire indebtedness of this Debenture upon
compliance by the Company with certain conditions set forth therein.
Subject to certain exceptions in the Junior Indenture which require
the consent of every Holder, the Company and the Trustee may amend the Junior
Indenture or may waive future compliance by the Company with any provisions of
the Junior Indenture, with the consent of the Holders of at least a majority in
aggregate principal amount of the Series 1997 Debentures of each series affected
thereby, provided that if the Series 1997 Debentures are held by the Trust, no
such amendment or waiver that adversely affects the holders of the Trust
Preferred Securities shall be effective without the prior consent of the holders
of at least a majority in aggregate liquidation preference of the outstanding
Trust Preferred Securities. Subject to certain exceptions in the Junior
Indenture, without the consent of any Debentureholder, the Company and the
Trustee may amend the Junior Indenture to cure any ambiguity, defect or
inconsistency, to bind a successor to the obligations of the Junior Indenture,
to provide for uncertificated Debentures in addition to certificated
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Debentures, to comply with any requirements of the Debentures and the Securities
and Exchange Commission in connection with the qualification of the Junior
Indenture under the TIA, provided that any such action does not adversely affect
the rights of any Debentureholder and, in the case of Series 1997 Debentures
held by the Trust, the rights of any holder of Trust Preferred Securities.
Amendments bind all Holders and subsequent Holders.
No reference herein to the Junior Indenture and no provision of this
Debenture or the Junior Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Debenture at the time and place and at the rate and in the
money herein prescribed.
So long as no Event of Default with respect to the Series 1997
Debentures has occurred and is continuing, the Company shall have the right at
any time and from time to time to extend the interest payment period of the
Series 1997 Debentures for up to 20 consecutive quarters (the "Extension
Period"), provided that no Extension Period shall extend beyond the Stated
Maturity Date or Redemption Date of any Series 1997 Debenture. At the end of
the Extension Period, the Company shall pay all interest then accrued and unpaid
(together with interest thereon at the rate specified for the Series 1997
Debentures, compounded quarterly, to the extent that payment of such interest is
enforceable under applicable law). During such Extension Period, subject to
certain exceptions contained in the Junior Indenture, the Company may not (i)
declare or pay any dividends or distributions on, or redeem, purchase, acquire
or make a liquidation payment with respect to any of its capital stock, (ii)
make any payment of principal, interest or premium, if any, on or repay,
repurchase or redeem any of its debt securities (including other Debentures)
that rank pari passu with or junior in interest to the Series 1997 Debentures,
or (iii) make any guarantee payments with respect to any guarantee issued by the
Company if such guarantee ranks pari passu with or junior in interest to the
Debentures. Prior to the termination of any such Extension Period, the Company
may further extend such Extension Period, provided that such Extension Period,
together with all such previous and further extensions, shall not exceed 20
consecutive quarters and shall not extend beyond the Stated Maturity Date or
Redemption Date of any Series 1997 Debenture. At the termination of any such
Extension Period and upon the payment of all amounts then due, the Company may
elect to begin a new Extension Period, subject to the foregoing restrictions.
Series 1997 Debentures are issuable only in registered form without
coupons in denominations of $25 and any integral multiple thereof. As provided
in the Junior Indenture
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and subject to certain limitations therein set forth, this Debenture is
exchangeable for a like aggregate principal amount of Series 1997 Debentures of
a different authorized denomination, as requested by the Holder surrendering the
same.
As provided in the Junior Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the Holder hereof upon
surrender of this Debenture for registration of transfer at the office or agency
of the Registrar accompanied by a written instrument or instruments of transfer
in form satisfactory to the Registrar duly executed by the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Series 1997
Debentures of authorized denominations and for the same aggregate principal
amount will be issued to the designated transferee or transferees. No service
charge will be made for any such transfer, but the Company may require payment
of a sum sufficient to cover any tax or other governmental charge payable in
relation thereto.
Prior to presentment for registration of transfer of this Debenture,
the Company, the Trustee, any Paying Agent and any Registrar may deem and treat
the Holder hereof as the absolute owner hereof (whether or not this Debenture
shall be overdue and notwithstanding any notice of ownership or writing hereon
made by anyone other than the Registrar) for the purpose of receiving payment of
or on account of the principal hereof and interest due hereon and for all other
purposes, and neither the Company nor the Trustee nor any Paying Agent nor any
Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Junior Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of the Company or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of any
assessment or penalty or otherwise, all such liability being, by the acceptance
hereof and as part of the consideration for the issuance hereof, expressly
waived and released.
This Debenture shall not be valid until an authorized signatory of the
Trustee manually signs and dates the Trustee's Certificate of Authentication
below.
This Debenture will be governed by and construed under the internal
laws of the State of New York.
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IN WITNESS WHEREOF, the Company has caused this Debenture to be signed
manually or by facsimile by its duly authorized officers and its corporate seal
or a facsimile thereof to be affixed hereto or imprinted hereon.
[ SUBSIDIARY NAME ]
By: _____________________________
Name: _______________________
Title: ______________________
By: _____________________________
Name: _______________________
Title: ______________________
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TRUSTEE'S CERTIFICATE OF AUTHENTICATION
THIS IS ONE OF THE DEBENTURES, OF THE SERIES DESIGNATED, REFERRED TO IN THE
WITHIN-MENTIONED JUNIOR INDENTURE.
THE BANK OF NEW YORK, as Trustee
By: _____________________________
Authorized Signatory
Dated: __________________________
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ASSIGNMENT FORM
To assign this Debenture, fill in the form below: (I) or (we) assign
and transfer this Debenture to:
________________________________________________________________________________
(Insert assignee's social security or tax I.D. number)
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ____________________ agent to transfer this Debenture on
the books of the Securities Register. The agent may substitute another to act
for him.
Dated: __________________ Signature: ______________________________________
(Sign exactly as your name appears on the other
side of this Debenture)
Signature Guaranty: ____________________
<PAGE>
Exhibit 4(i)
AGREEMENT AS TO EXPENSES AND LIABILITIES
----------------------------------------
AGREEMENT dated as of March 1, 1997, between Hawaiian Electric
Company, Inc., a Hawaii corporation ("HECO"), Maui Electric Company, Limited, a
Hawaii corporation ("MECO"), Hawaii Electric Light Company, Inc., a Hawaii
corporation ("HELCO") and HECO Capital Trust I, a Delaware statutory business
trust (the "Trust").
WHEREAS, the Trust intends to issue and sell its Common Securities
(the "Common Securities") to HECO and to issue and sell in a registered public
offering ___ % Cumulative Quarterly Income Preferred Securities, Series 1997,
(the "Trust Preferred Securities") with such powers, preferences and special
rights and restrictions as are set forth in the Amended and Restated Trust
Agreement of the Trust dated as of March 1, 1997, as the same may be amended
from time to time (the "Trust Agreement");
WHEREAS, HECO will own all of the Common Securities of the Trust, will
issue and sell its ___ % Junior Subordinated Deferrable Interest Debentures,
Series 1997 (the "HECO Debentures"), to the Trust and will fully, irrevocably
and unconditionally guarantee the obligations of MECO and HELCO under their
respective ___ % Junior Subordinated Deferrable Interest Debentures, Series 1997
(together with HECO Debentures, the "Debentures"), which Debentures are to be
sold by MECO and HELCO to the Trust;
NOW, THEREFORE, in consideration of the purchase of the Trust
Preferred Securities by each holder, which purchase HECO, MECO and HELCO hereby
agree shall benefit each of them and which purchase HECO, MECO and HELCO
acknowledge will be made in reliance upon the execution and delivery of this
Agreement, HECO (including in its capacity as holder of the Common Securities),
MECO and HELCO and the Trust, hereby agree as follows:
ARTICLE I
Section 1.1. Agreement by HECO, MECO and HELCO to
------------------------------------
Pay Pro Rata Share of Expenses.
------------------------------
Subject to the terms and conditions hereof, HECO, MECO and HELCO
hereby agree for the benefit of each person or entity to whom the Trust is now
or hereafter becomes indebted or liable (the "Beneficiaries") to pay, when and
as due, each of their respective Pro Rata Shares of any and all Obligations (as
hereinafter defined) to such Beneficiaries. "Pro Rata Share" means the
proportionate share of the Obligations of each
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of HECO, MECO and HELCO based on the aggregate principal amount of each of their
respective Debentures held by the Trust. As used herein, "Obligations" means any
indebtedness, expenses or liabilities of the Trust, other than obligations of
the Trust to pay to holders of any Trust Preferred Securities the amounts due
such holders pursuant to the terms of the Trust Preferred Securities. This
Agreement is intended to be for the benefit of, and to be enforceable by, all
such Beneficiaries, whether or not such Beneficiaries have received notice
hereof.
Section 1.2. HECO Guarantee.
--------------
HECO fully, irrevocably and unconditionally guarantees the payment in
full by each of MECO and HELCO of their respective Pro Rata Shares of the
Obligations (the Guarantee"), regardless of any defense, right of setoff or
counterclaim that HECO may have or assert. HECO hereby waives notice of
acceptance of the Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against MECO or HELCO or any other person, firm or corporation before proceeding
against HECO, protest, notice of nonpayment or dishonor, notice of redemption,
and all other notices and demands. The obligations of HECO under the Guarantee
shall in no way be affected or impaired by reason of the happening from time to
time of any of (i) the release or waiver, by operation of law or otherwise, of
the performance or observance by MECO or HELCO of any obligation to be performed
or observed by it under this Agreement, (ii) any failure, omission, delay or
lack of diligence on the part of MECO or HELCO, (iii) the voluntary or
involuntary liquidation, dissolution, receivership, insolvency, bankruptcy,
assignment for the benefit of creditors, reorganization, or other similar
proceedings affecting MECO or HELCO or (iv) any other circumstance whatsoever
that might otherwise constitute a legal or equitable discharge or defense of a
guarantor, it being the intent of HECO that its obligations under the Guarantee
shall be absolute and unconditional under any and all circumstances (and there
shall be no obligation of any person, firm or corporation to give notice to, or
obtain consent of, HECO with respect to the happening of any of the foregoing).
The Guarantee constitutes a guarantee of performance and payment and not
collection. HECO acknowledges that its obligations under the Guarantee are
independent of the obligations of MECO or HELCO under this Agreement, and that
HECO shall be liable as principal and debtor under the Guarantee notwithstanding
the occurrence of any event referred to above .
Section 1.3. Term of Agreement.
-----------------
This Agreement shall terminate and be of no further force and effect
upon the later of (a) the date on which full payment has been made of all
amounts payable to all holders of all the Trust Preferred Securities (whether
upon redemption, liquidation, exchange or otherwise) and (b) the date on which
there are no Beneficiaries remaining; provided, however, that this Agreement
shall continue to be effective or shall be reinstated, as the case may be, if at
any time any holder of Trust Preferred Securities or any Beneficiary must
restore payment of any sums paid under the Trust Preferred Securities, under any
Obligation, under the Trust Guarantee Agreement dated the date hereof by HECO
and The Bank of New York, as trust guarantee trustee, or under this Agreement
for any reason whatsoever. This Agreement is continuing, irrevocable,
unconditional and absolute.
Section 1.4. Waiver of Notice.
----------------
HECO, MECO and HELCO each hereby waives notice of acceptance of this
Agreement and of any Obligation to which it applies or may apply, and HECO, MECO
and HELCO each hereby waives presentment, demand for payment, protest, notice of
nonpayment, notice of dishonor, notice of redemption and all other notices and
demands.
Section 1.5. No Impairment.
-------------
The obligations, covenants, agreements and duties of HECO, MECO and
HELCO under this Agreement shall in no way be affected or impaired by reason of
the happening from time to time of any of the following:
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(a) the extension of time for the payment by the Trust of all or any
portion of the Obligations or for the performance of any other obligation
under, arising out of, or in connection with, the Obligations;
(b) any failure, omission, delay or lack of diligence on the part of
the Beneficiaries to enforce, assert or exercise any right, privilege,
power or remedy conferred on the Beneficiaries with respect to the
Obligations or any action on the part of the Trust granting indulgence or
extension of any kind;
(c) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust
or any of the assets of the Trust;
(d) the release or waiver, by operation of law or otherwise, of the
performance or observance by any Beneficiary of any express or implied
agreement, covenant, term or condition to be performed or observed
hereunder by any of HECO, HELCO or MECO, or any discharge, disallowance,
invalidity, illegality, voidness or other unenforceability thereof;
(e) any invalidity of, or defect or deficiency in, the Debentures;
(f) the settlement or compromise of any Obligation guaranteed hereby
or hereby incurred;
(g) any termination of or change in any relationship between HECO,
HELCO and MECO, including any resulting from a change in the ownership of
any of such companies; or
(h) to the extent permitted by law, any other circumstance whatsoever
that might otherwise constitute a legal or equitable discharge or defense
of a party to this Agreement, it being the intent of this Section 1.5 that
the Obligations shall be absolute and unconditional under any and all
circumstances.
There shall be no obligation of the Beneficiaries to give notice to, or obtain
the consent of, HECO, MECO or HELCO with respect to the happening of any of the
foregoing.
Section 1.6. Enforcement.
-----------
A Beneficiary may enforce this Agreement directly against HECO, MECO
and HELCO, jointly and severally, and HECO,
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MECO and HELCO each waives any right or remedy to require that any action be
brought against the Trust or any other person or entity before proceeding
against HECO, MECO or HELCO.
ARTICLE II
Section 2.1. Binding Effect.
--------------
This Agreement shall bind the successors, assigns, receivers, trustees
and representatives of each of HECO, MECO and HELCO and shall inure to the
benefit of the Beneficiaries.
Section 2.2. Amendment.
---------
So long as there remains any Beneficiary or any Trust Preferred
Securities are outstanding, this Agreement shall not be modified
or amended in any manner adverse to such Beneficiary or to the holders of the
Trust Preferred Securities.
Section 2.3. Notices.
-------
Any notice, request or other communication required or permitted to be
given hereunder shall be given in writing by delivering the same against receipt
therefor by facsimile transmission (confirmed by mail), or by registered or
certified mail, addressed as follows (and if so given, shall be deemed given
when mailed):
If to the Trust:
HECO Capital Trust I
c/o The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Facsimile No.: (212) 815-5915
Attention: Corporate Trust Trustee
Administration
If to HECO, MECO or HELCO:
Hawaiian Electric Company, Inc.
900 Richards Street
Honolulu, Hawaii 96813
Facsimile No.: (808) 543-7966
Attention: Treasurer
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Section 2.4. Governing Laws.
--------------
This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State of New York (without regard to conflict of
laws principles).
THIS AGREEMENT is executed as of the day and year first above written.
HAWAIIAN ELECTRIC COMPANY, INC.
By
_________________________________
Name:
Its:
By
_________________________________
Name:
Its:
MAUI ELECTRIC COMPANY, LIMITED
By
_________________________________
Name:
Its:
By
_________________________________
Name:
Its:
HAWAII ELECTRIC LIGHT COMPANY, INC.
By
_________________________________
Name:
Its:
By
_________________________________
Name:
Its:
5
<PAGE>
HECO CAPITAL TRUST I
By
_________________________________
T. Michael May, not in his
individual capacity, but solely
as Administrative Trustee
By
_________________________________
Paul A. Oyer, not in his
individual capacity, but solely
as Administrative Trustee
By
_________________________________
Marvin A. Hawthorne, not in his
individual capacity, but solely
as Administrative Trustee
6
<PAGE>
EXHIBIT 5(a)
[Letterhead of Goodsill Anderson Quinn & Stifel]
March 12, 1997
Hawaiian Electric Company, Inc.
900 Richards Street
Honolulu, Hawaii 96813
HECO Capital Trust I
c/o The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Ladies and Gentlemen:
Hawaiian Electric Company, Inc., a Hawaii corporation (the "Company"),
and HECO Capital Trust I, a statutory business trust created under the laws of
the State of Delaware (the "Trust") have filed a registration statement on Form
S-3 under the Securities Act of 1933 (the "Act"), as amended by Amendment No. 1
thereto (as amended, the "Registration Statement"), covering: (i) 2,000,000 ___%
Cumulative Quarterly Income Preferred Securities, Series 1997 (liquidation
preference $25 per preferred security) of the Trust (the "QUIPS"), (ii) an
indeterminate amount of Junior Subordinated Deferrable Interest Debentures of
the Company (the "QUIDS") and (iii) guarantees of the Company with respect to:
(a) the QUIPS (the "Trust Guarantee"), and (c) certain debentures of wholly-
owned subsidiaries of the Company (the "Subsidiary Guarantees" and, together
with the Trust Guarantee, the "Guarantees").
We have examined the Registration Statement and, for purposes of this
opinion, we have assumed that it has become effective. We have also examined
the Restated Articles of Incorporation of the Company, as amended (the
"Articles"), and such appropriate records of the Company, certificates of public
<PAGE>
Hawaiian Electric Company, Inc.
HECO Capital Trust I
Page 2
officials and other documents as we deem pertinent as a basis for the opinions
hereinafter expressed.
Based on such examination, we are of the opinion that:
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 QUIDS have been issued and sold in return for the
consideration specified therefor and as contemplated in the Registration
Statement, the QUIDS will be duly authorized and issued and will be valid and
binding obligations of the Company, except insofar as the binding effect thereof
may be (a) limited by bankruptcy, insolvency, reorganization, fraudulent
transfer, moratorium or similar laws now or hereinafter in effect relating to or
affecting the enforcement of creditors' rights generally and (b) affected by
limitations on the availability of equitable remedies by reason of equitable
principles of general applicability (regardless of whether considered in a
proceeding at law or in equity).
3. When the Guarantees have been duly executed and delivered so
as not to violate any applicable law or result in a default under or breach of
any agreement or instrument binding upon the Company and so as to comply with
any requirement or restriction imposed by any court or governmental or
regulatory body having jurisdiction over the Company, and when the respective
conditions precedent for the obligations of the Company under the Guarantees to
arise have been satisfied as contemplated in the Registration Statement, the
Guarantees will constitute valid and binding obligations of the Company, except
insofar as the binding effect thereof may be (a) limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or transfer, moratorium or
similar laws now or hereinafter in effect relating to or affecting the
enforcement of creditors' rights generally and (b) affected by limitations on
the availability of equitable remedies by reason of equitable principles of
general applicability (regardless of whether considered in a proceeding at law
or in equity).
We are members of the Bar of the State of Hawaii, and we do not hold
ourselves out as experts on the laws of any
<PAGE>
Hawaiian Electric Company, Inc.
HECO Capital Trust I
Page 3
other jurisdiction. This opinion is limited in all respects to matters governed
by the laws of the State of Hawaii. We express no opinion concerning compliance
with the laws or regulations of any other jurisdiction or jurisdictions, or as
to the validity, meaning or effect of any act or document under the laws of any
other jurisdiction or jurisdictions. As to matters governed by Delaware law, we
are relying on the opinion of Richards, Layton & Finger submitted concurrently
herewith as Exhibit 5(b) to the Registration Statement. As to the validity and
binding effect of any document that is governed by the laws of a jurisdiction
other than the State of Hawaii, to the extent that the validity and binding
effect of such document is covered by or relates to this opinion, we have
assumed that the laws of such other jurisdiction are identical in all material
respects to the laws of the State of Hawaii.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) the legal capacity
of natural persons who are signatories to the documents examined by us, (ii)
that each of the parties to the documents examined by us has the power and
authority to execute and deliver, and to perform its obligations under, such
documents, (iii) that all documents examined by us have been duly authorized,
executed and delivered by all parties thereto (other than the Company).
The opinions expressed herein are based on laws and regulations as in
effect on the date hereof and facts as we understand them as of the date hereof.
We are not assuming any obligation, and do not undertake, to revise, update or
supplement this opinion after the date hereof notwithstanding any change in
applicable law or regulation or interpretation thereof, any amendment,
supplement, modification or rescission of any document examined or relied on in
connection herewith, or any change in the facts, after the execution and
delivery of this opinion on the date hereof.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the references
<PAGE>
Hawaiian Electric Company, Inc.
HECO Capital Trust I
Page 4
to our firm under the caption "Legal Matters." In giving this consent, however,
we do not hereby admit that we are within the category of persons whose consent
is required under Section 7 of the Securities Act of 1933 and the rules and
regulations of the Securities and Exchange Commission thereunder. This opinion
may not be furnished or quoted to, or relied upon, by any person for any
purpose, without our prior written consent.
Very truly yours,
/s/ Goodsill Anderson Quinn & Stifel
<PAGE>
EXHIBIT 5(b)
[Letterhead of Richards, Layton & Finger]
March 12, 1997
HECO Capital Trust I
900 Richards Street
Honolulu, Hawaii 96813
Re: HECO Capital Trust I
--------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel for Hawaiian Electric
Company, Inc., a Hawaii corporation (the "Company"), and HECO Capital Trust I, a
Delaware business trust (the "Trust"), in connection with the matters set forth
herein. At your request, this opinion is being furnished to you.
For purposes of giving the opinions hereinafter set forth, our
examination of documents has been limited to the examination of originals or
copies of the following:
(a) The Certificate of Trust of the Trust, dated December 31, 1996
(the "Certificate"), as filed in the office of the Secretary of State of the
State of Delaware (the "Secretary of State") on December 31, 1996;
(b) The Trust Agreement of the Trust, dated as of December 31, 1996,
among the Company, as Depositor, and the trustees of the Trust named therein;
<PAGE>
HECO Capital Trust I
March 12, 1997
Page 2
(c) Amendment No. 1 to the Registration Statement (the "Registration
Statement") on Form S-3, including a preliminary prospectus (the "Prospectus")
relating to the ___% Cumulative Quarterly Income Preferred Securities, Series
1997, of the Trust representing preferred undivided beneficial interests in the
assets of the Trust (each, a "Preferred Security" and collectively, the
"Preferred Securities"), as proposed to be filed by the Company and the Trust
with the Securities and Exchange Commission on or about March 12, 1997;
(d) A form of Amended and Restated Trust Agreement of the Trust, to be
entered into among the Company, as Depositor, the trustees of the Trust named
therein, and the holders, from time to time, of undivided beneficial interests
in the assets of the Trust (including Exhibits A, C and D thereto) (the "Trust
Agreement"), incorporated by reference into the Registration Statement; and
(e) A Certificate of Good Standing for the Trust, dated March 12,
1997, obtained from the Secretary of State.
Initially capitalized terms used herein and not otherwise defined are
used as defined in the Trust Agreement.
For purposes of this opinion, we have not reviewed any documents other
than the documents listed in paragraphs (a) through (e) above. In particular,
we have not reviewed any document (other than the documents listed in paragraphs
(a) through (e) above) that is referred to in or incorporated by reference into
the documents reviewed by us. We have assumed that there exists no provision in
any document that we have not reviewed that is inconsistent with the opinions
stated herein. We have conducted no independent factual investigation of our
own but rather have relied solely upon the foregoing documents, the statements
and information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
With respect to all documents examined by us, we have assumed (i) the
authenticity of all documents submitted to us as authentic originals, (ii) the
conformity with the originals of all documents submitted to us as copies or
forms, and (iii) the genuineness of all signatures.
For purposes of this opinion, we have assumed (i) that the Trust
Agreement and the Certificate are in full force and effect and have not been
amended, (ii) except to the extent provided in paragraph 1 below, the due
creation or due organization or due formation, as the case may be, and valid
existence in good standing
<PAGE>
HECO Capital Trust I
March 12, 1997
Page 3
of each party to the documents examined by us under the laws of the jurisdiction
governing its creation, organization or formation, (iii) the legal capacity of
natural persons who are parties to the documents examined by us, (iv) that each
of the parties to the documents examined by us has the power and authority to
execute and deliver, and to perform its obligations under, such documents, (v)
the due authorization, execution and delivery by all parties thereto of all
documents examined by us, (vi) the receipt by each Person to whom a Preferred
Security is to be issued by the Trust (collectively, the "Preferred Security
Holders") of a Trust Preferred Securities Certificate for such Preferred
Security and the payment for the Preferred Security acquired by it, in
accordance with the Trust Agreement and the Registration Statement, and (vii)
that the Preferred Securities are issued and sold to the Preferred Security
Holders in accordance with the Trust Agreement and the Registration Statement.
We have not participated in the preparation of the Registration Statement and
assume no responsibility for its contents.
This opinion is limited to the laws of the State of Delaware
(excluding the securities laws of the State of Delaware), and we have not
considered and express no opinion on the laws of any other jurisdiction,
including federal laws and rules and regulations relating thereto. Our opinions
are rendered only with respect to Delaware laws and rules, regulations and
orders thereunder which are currently in effect.
Based upon the foregoing, and upon our examination of such questions
of law and statutes of the State of Delaware as we have considered necessary or
appropriate, and subject to the assumptions, qualifications, limitations and
exceptions set forth herein, we are of the opinion that:
1. The Trust has been duly created and is validly existing in good
standing as a business trust under the Delaware Business Trust Act.
2. The Preferred Securities will represent valid and, subject to the
qualifications set forth in paragraph 3 below, fully paid and nonassessable
undivided beneficial interests in the assets of the Trust.
3. The Preferred Security Holders, as beneficial owners of the Trust,
will be entitled to the same limitation of personal liability extended to
stockholders of private corporations for profit organized under the General
Corporation Law of the State of Delaware. We note that the Preferred Security
Holders may be obligated to make payments as set forth in the Trust Agreement.
<PAGE>
HECO Capital Trust I
March 12, 1997
Page 4
We consent to the filing of this opinion with the Securities and
Exchange Commission as an exhibit to the Registration Statement. In addition, we
hereby consent to the use of our name under the heading "Legal Opinions" in the
Prospectus. In giving the foregoing consents, we do not thereby admit that we
come within the category of Persons whose consent is required under Section 7 of
the Securities Act of 1933, as amended, or the rules and regulations of the
Securities and Exchange Commission thereunder. Except as stated above, without
our prior written consent, this opinion may not be furnished or quoted to, or
relied upon by, any other Person for any purpose.
Very truly yours,
/s/ Richards, Layton & Finger
Richards, Layton & Finger
BJK/dgw
<PAGE>
EXHIBIT 8
[Letterhead of Goodsill Anderson Quinn & Stifel]
March 12, 1997
Hawaiian Electric Company, Inc.
900 Richards Street
Honolulu, Hawaii 96813
HECO Capital Trust I
c/o The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Re: HECO Capital Trust I's issuance and sale of ___%
Cumulative Quarterly Income Preferred Securities
------------------------------------------------
Ladies and Gentlemen:
We have acted as counsel with respect to federal income tax matters to
Hawaiian Electric Company, Inc., a Hawaii corporation (the "Company"), and HECO
Capital Trust I, a statutory business trust organized under the Business Trust
Act of the State of Delaware (the "Trust"), in connection with the preparation
and filing by the Company and the Trust with the Securities and Exchange
Commission of a Registration Statement on Form S-3 (Registration Nos. 333-20757
and 333-20757-01) (as amended, the "Registration Statement")/1/ under the
Securities Act of 1933 with respect to the issuance and sale of (i) the
Preferred Securities of the Trust (the "QUIPS"), (ii) the Company's Junior
Subordinated Deferrable Interest Debentures (the "QUIDS"), (iii) the Company's
guarantee with respect to the QUIPS (the "Trust Guarantee"), and (iv) the
Company's guarantees of debentures of its wholly-owned subsidiaries (the
"Subsidiary Guarantees").
In rendering our opinions, we have reviewed and relied upon (i) the
facts set forth in the Registration
- --------------------------
/1/ Capitalized terms used but not defined herein have the meanings ascribed to
them in the Registration Statement.
<PAGE>
Hawaiian Electric Company, Inc.
HECO Capital Trust I
Page 2
Statement, (ii) the forms of the Trust Agreement, the HECO Indenture, the QUIPS,
the QUIDS, the Trust Guarantee and the Subsidiary Guarantees, each filed as an
exhibit to the Registration Statement, and (iii) certain representations made by
officers of the Company and certain of its subsidiaries.
On the basis of the foregoing, and assuming that the Trust is formed
and will be maintained in compliance with the terms of the Trust Agreement, we
hereby confirm (i) our opinions set forth in the Registration Statement under
the caption "Certain Federal Income Tax Considerations" and (ii) that, subject
to the qualifications set forth therein, in our opinion the discussion set
forth in the Registration Statement under such caption is an accurate summary of
the United States federal income tax matters described therein.
We express no opinion with respect to the transactions described in
the Registration Statement other than as expressly set forth herein. Moreover,
we note that there is no authority directly on point dealing with securities
such as the QUIPS and the QUIDS or transactions of the type described in the
Registration Statement, and that our opinions are not binding on the Internal
Revenue Service or the courts, either of which could take a contrary position.
Nevertheless, we believe that if challenged, the opinions set forth in the
Registration Statement would be sustained by a court with jurisdiction in a
properly presented case.
Our opinions are based upon the Internal Revenue Code of 1986, as
amended, the Treasury regulations promulgated thereunder, and other relevant
authorities, all as in effect on the date hereof. Consequently, future changes
in the law may cause the tax treatment of the transactions referred to herein to
be materially different from that described in the Registration Statement.
We hereby consent to the use of our name in the Registration Statement
and to the filing of this letter as an exhibit to the Registration Statement.
In giving this consent, however, we do not hereby admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933 and the rules and regulations of the Securities and Exchange
Commission thereunder.
Very truly yours,
/s/ Goodsill Anderson Quinn & Stifel
<PAGE>
EXHIBIT 12(a)
HAWAIIAN ELECTRIC COMPANY, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
YEAR ENDED DECEMBER 31, 1996, 1995, 1994, 1993 AND 1992
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
FIXED CHARGES
Total interest charges ............. $ 47,451 $ 44,377 $ 37,340 $ 35,287 $ 33,011
Interest component of rentals ...... 690 672 808 970 1,070
Pretax preferred stock dividend
requirements of subsidiaries ...... 4,358 4,494 4,651 3,425 3,117
--------- --------- --------- --------- ---------
TOTAL FIXED CHARGES ................ $ 52,499 $ 49,543 $ 42,799 $39,682 $ 37,198
========= ========= ========= ======= =========
EARNINGS
Income before preferred stock
dividends of HECO ................. $ 85,213 $ 77,023 $ 65,961 $ 56,126 $ 53,678
Fixed charges, as shown ............ 52,499 49,543 42,799 39,682 37,198
Income taxes (see note below) ...... 55,888 50,198 43,588 36,897 23,843
Allowance for borrowed funds used
during construction ............... (5,862) (5,112) (4,043) (3,869) (2,095)
--------- --------- --------- --------- ---------
EARNINGS AVAILABLE FOR FIXED CHARGES $ 187,738 $ 171,652 $ 148,305 $ 128,836 $ 112,624
========= ========= ========= ========= =========
RATIO OF EARNINGS TO FIXED CHARGES 3.58 3.46 3.47 3.25 3.03
========= ========= ========= ========= =========
NOTE:
Income taxes is comprised of the
following
Income tax expense relating to
operating income for regulatory
purposes ........................ $ 56,170 $ 50,719 $ 43,820 $ 37,007 $ 26,254
Income tax benefit relating to
nonoperating loss ............... (282) (521) (232) (110) (2,411)
--------- --------- --------- --------- ---------
$ 55,888 $ 50,198 $ 43,588 $ 36,897 $ 23,843
========= ========= ========= ========= =========
</TABLE>
<PAGE>
EXHIBIT 12(b)
HAWAIIAN ELECTRIC COMPANY, INC.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
Years ended December 31, 1996, 1995, 1994, 1993 and 1992
<TABLE>
<CAPTION>
1996 1995 1994 1993 1992
---- ---- ---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
FIXED CHARGES
Total interest charges ......................... $ 47,451 $ 44,377 $ 37,340 $ 35,287 $ 33,011
Interest component of rentals .................. 690 672 808 970 1,070
Pretax preferred stock dividend
requirements .................................. 10,681 11,216 11,700 10,648 9,574
-------- -------- -------- -------- --------
TOTAL FIXED CHARGES ............................ $ 58,822 $ 56,265 $ 49,848 $ 46,905 $ 43,655
======== ======== ======== ======== ========
EARNINGS
Net income for common stock .................... $ 81,348 $ 72,897 $ 61,645 $ 51,705 $ 49,153
Fixed charges, as shown ........................ 58,822 56,265 49,848 46,905 43,655
Income taxes (see note below) .................. 55,888 50,198 43,588 36,897 23,843
Allowance for borrowed funds used
during construction ........................... (5,862) (5,112) (4,043) (3,869) (2,095)
-------- -------- -------- -------- --------
EARNINGS AVAILABLE FOR FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS ................. $190,196 $174,248 $151,038 $131,638 $114,556
======== ======== ======== ======== ========
RATIO OF EARNINGS TO FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS ................. 3.23 3.10 3.03 2.81 2.62
======== ======== ======== ======== ========
NOTE:
Income taxes is comprised of the following
Income tax expense relating to
operating income for regulatory
purposes ..................................... $ 56,170 $ 50,719 $ 43,820 $ 37,007 $ 26,254
Income tax benefit relating to
nonoperating loss ............................ (282) (521) (232) (110) (2,411)
-------- -------- -------- -------- --------
$ 55,888 $ 50,198 $ 43,588 $ 36,897 $ 23,843
======== ======== ======== ======== ========
</TABLE>
<PAGE>
EXHIBIT 23(a)
The Board of Directors
Hawaiian Electric Company, Inc.:
We consent to incorporation by reference in the Registration Statement on Form
S-3 of Hawaiian Electric Company, Inc. of our report dated January 24, 1997
(except as to paragraphs 10, 11 and 14 of note 11 of the notes to the
consolidated financial statements, which are as of March 10, 1997), relating to
the consolidated balance sheets and consolidated statements of capitalization of
Hawaiian Electric Company, Inc. and subsidiaries as of December 31, 1996 and
1995, and the related consolidated statements of income, retained earnings and
cash flows for each of the years in the three-year period ended December 31,
1996. We also consent to the reference to our firm under the heading "Experts"
in the prospectus.
In addition, we consent to incorporation by reference in the Registration
Statement on Form S-3 of our reports dated January 25, 1996, relating to the
consolidated balance sheets and consolidated statements of capitalization of
Hawaiian Electric Company, Inc. and subsidiaries as of December 31, 1995 and
1994, and the related consolidated statements of income, retained earnings and
cash flows, and relating to the financial statement schedule of Hawaiian
Electric Company, Inc., for each of the years in the three year period ended
December 31, 1995, which reports are incorporated by reference and included,
respectively, in the Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, as amended by Form 10-K/A dated April 30, 1996, of Hawaiian
Electric Company, Inc.
/s/KPMG Peat Marwick LLP
Honolulu, Hawaii
March 13, 1997
<PAGE>
Exhibit 25 (a)
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
HAWAIIAN ELECTRIC COMPANY, INC.
(Exact name of obligor as specified in its charter)
Hawaii 99-0040500
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
900 Richards Street
Honolulu, Hawaii 96813
(Address of principal executive offices) (Zip code)
______________________
Junior Subordinated Deferrable Interest Debentures
(Title of the indenture securities)
================================================================================
<PAGE>
CONFORMED COPY
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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29
UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed
with Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1
filed with Registration Statement No. 33-21672 and Exhibit 1 to Form T-
1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a
corporation organized and existing under the laws of the State of New York, 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 12th day of March, 1997.
THE BANK OF NEW YORK
By: /S/MARY LAGUMINA
-------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
-3-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin...................... $ 4,404,522
Interest-bearing balances.............. 732,833
Securities:
Held-to-maturity securities............ 789,964
Available-for-sale securities.......... 2,005,509
Federal funds sold in domestic offices
of the bank:
Federal funds sold....................... 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ....................28,728,602
LESS: Allowance for loan and
lease losses .................584,525
LESS: Allocated transfer risk
reserve...........................429
Loans and leases, net of unearned
income, allowance, and reserve 28,143,648
Assets held in trading accounts.......... 1,004,242
Premises and fixed assets (including
capitalized leases).................... 605,668
Other real estate owned.................. 41,238
Investments in unconsolidated
subsidiaries and associated
companies.............................. 205,031
Customers' liability to this bank on
acceptances outstanding................ 949,154
Intangible assets........................ 490,524
Other assets............................. 1,305,839
-----------
Total assets............................. $44,043,010
===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices.................... $20,441,318
Noninterest-bearing ..........8,158,472
Interest-bearing ............12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs....... 11,710,903
Noninterest-bearing .............46,182
Interest-bearing ...........11,664,721
Federal funds purchased in
domestic offices of the
bank:
Federal funds purchased................ 1,565,288
Demand notes issued to the U.S.
Treasury............................... 293,186
Trading liabilities...................... 826,856
Other borrowed money:
With original maturity of one year
or less.............................. 2,103,443
With original maturity of more than
one year............................. 20,766
Bank's liability on acceptances exe-
cuted and outstanding.................. 951,116
Subordinated notes and debentures........ 1,020,400
Other liabilities........................ 1,522,884
-----------
Total liabilities........................ 40,456,160
-----------
EQUITY CAPITAL
Common stock............................. 942,284
Surplus.................................. 525,666
Undivided profits and capital
reserves............................... 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities............................. (2,073)
Cumulative foreign currency transla-
tion adjustments....................... (8,403)
-----------
Total equity capital..................... 3,586,850
-----------
Total liabilities and equity
capital............................ $44,043,010
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this
<PAGE>
Report of Condition and 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 issued by the Board of Governors of the Federal Reserve System and
is true and correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 25 (b)
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) [__]
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
HAWAIIAN ELECTRIC COMPANY, INC.
(Exact name of obligor as specified in its charter)
Hawaii 99-0040500
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
900 Richards Street
Honolulu, Hawaii 96813
(Address of principal executive offices) (Zip code)
----------------------
Guarantee of Debentures of
Maui Electric Company, Limited
(Title of the indenture securities)
================================================================================
-2-
<PAGE>
CONFORMED COPY
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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16.LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a-29
UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a
corporation organized and existing under the laws of the State of New York, 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 12th day of March, 1997.
THE BANK OF NEW YORK
By: /S/MARY LAGUMINA
-------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
-4-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin...................... $ 4,404,522
Interest-bearing balances.............. 732,833
Securities:
Held-to-maturity securities............ 789,964
Available-for-sale securities.......... 2,005,509
Federal funds sold in domestic offices
of the bank:
Federal funds sold....................... 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ....................28,728,602
LESS: Allowance for loan and
lease losses .................584,525
LESS: Allocated transfer risk
reserve...........................429
Loans and leases, net of unearned
income, allowance, and reserve 28,143,648
Assets held in trading accounts.......... 1,004,242
Premises and fixed assets (including
capitalized leases).................... 605,668
Other real estate owned.................. 41,238
Investments in unconsolidated
subsidiaries and associated
companies.............................. 205,031
Customers' liability to this bank on
acceptances outstanding................ 949,154
Intangible assets........................ 490,524
Other assets............................. 1,305,839
-----------
Total assets............................. $44,043,010
===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices.................... $20,441,318
Noninterest-bearing ..........8,158,472
Interest-bearing ............12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs....... 11,710,903
Noninterest-bearing .............46,182
Interest-bearing ...........11,664,721
Federal funds purchased in
domestic offices of the
bank:
Federal funds purchased................ 1,565,288
Demand notes issued to the U.S.
Treasury............................... 293,186
Trading liabilities...................... 826,856
Other borrowed money:
With original maturity of one year
or less.............................. 2,103,443
With original maturity of more than
one year............................. 20,766
Bank's liability on acceptances exe-
cuted and outstanding.................. 951,116
Subordinated notes and debentures........ 1,020,400
Other liabilities........................ 1,522,884
-----------
Total liabilities........................ 40,456,160
-----------
EQUITY CAPITAL
Common stock............................. 942,284
Surplus.................................. 525,666
Undivided profits and capital
reserves............................... 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities............................. (2,073)
Cumulative foreign currency transla-
tion adjustments....................... (8,403)
-----------
Total equity capital..................... 3,586,850
-----------
Total liabilities and equity
capital............................ $44,043,010
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this
<PAGE>
Report of Condition and 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 issued by the Board of Governors of the Federal Reserve System and
is true and correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 25 (c)
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
HAWAIIAN ELECTRIC COMPANY, INC.
(Exact name of obligor as specified in its charter)
Hawaii 99-0040500
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
900 Richards Street
Honolulu, Hawaii 96813
(Address of principal executive offices) (Zip code)
______________________
Guarantee of Debentures of
Hawaii Electric Light Company, Inc.
(Title of the indenture securities)
================================================================================
<PAGE>
CONFORMED COPY
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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7a-29
UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a
corporation organized and existing under the laws of the State of New York, 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 12th day of March, 1997.
THE BANK OF NEW YORK
By: /S/MARY LAGUMINA
-------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
-3-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin...................... $ 4,404,522
Interest-bearing balances.............. 732,833
Securities:
Held-to-maturity securities............ 789,964
Available-for-sale securities.......... 2,005,509
Federal funds sold in domestic offices
of the bank:
Federal funds sold....................... 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ....................28,728,602
LESS: Allowance for loan and
lease losses .................584,525
LESS: Allocated transfer risk
reserve...........................429
Loans and leases, net of unearned
income, allowance, and reserve 28,143,648
Assets held in trading accounts.......... 1,004,242
Premises and fixed assets (including
capitalized leases).................... 605,668
Other real estate owned.................. 41,238
Investments in unconsolidated
subsidiaries and associated
companies.............................. 205,031
Customers' liability to this bank on
acceptances outstanding................ 949,154
Intangible assets........................ 490,524
Other assets............................. 1,305,839
-----------
Total assets............................. $44,043,010
===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices.................... $20,441,318
Noninterest-bearing ..........8,158,472
Interest-bearing ............12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs....... 11,710,903
Noninterest-bearing .............46,182
Interest-bearing ...........11,664,721
Federal funds purchased in
domestic offices of the
bank:
Federal funds purchased................ 1,565,288
Demand notes issued to the U.S.
Treasury............................... 293,186
Trading liabilities...................... 826,856
Other borrowed money:
With original maturity of one year
or less.............................. 2,103,443
With original maturity of more than
one year............................. 20,766
Bank's liability on acceptances exe-
cuted and outstanding.................. 951,116
Subordinated notes and debentures........ 1,020,400
Other liabilities........................ 1,522,884
-----------
Total liabilities........................ 40,456,160
-----------
EQUITY CAPITAL
Common stock............................. 942,284
Surplus.................................. 525,666
Undivided profits and capital
reserves............................... 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities............................. (2,073)
Cumulative foreign currency transla-
tion adjustments....................... (8,403)
-----------
Total equity capital..................... 3,586,850
-----------
Total liabilities and equity
capital............................ $44,043,010
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this
<PAGE>
Report of Condition and 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 issued by the Board of Governors of the Federal Reserve System and
is true and correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 25 (d)
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
HAWAIIAN ELECTRIC COMPANY, INC.
(Exact name of obligor as specified in its charter)
Hawaii 99-0040500
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
900 Richards Street
Honolulu, Hawaii 96813
(Address of principal executive offices) (Zip code)
______________________
Guarantee of Trust Preferred Securities of
HECO Capital Trust I
(Title of the indenture securities)
================================================================================
<PAGE>
CONFORMED COPY
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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29
UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a
corporation organized and existing under the laws of the State of New York, 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 12th day of March, 1997.
THE BANK OF NEW YORK
By: /S/MARY LAGUMINA
--------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
-3-
<PAGE>
Exhibit 7
- --------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin...................... $ 4,404,522
Interest-bearing balances.............. 732,833
Securities:
Held-to-maturity securities............ 789,964
Available-for-sale securities.......... 2,005,509
Federal funds sold in domestic offices
of the bank:
Federal funds sold....................... 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ....................28,728,602
LESS: Allowance for loan and
lease losses .................584,525
LESS: Allocated transfer risk
reserve...........................429
Loans and leases, net of unearned
income, allowance, and reserve 28,143,648
Assets held in trading accounts.......... 1,004,242
Premises and fixed assets (including
capitalized leases).................... 605,668
Other real estate owned.................. 41,238
Investments in unconsolidated
subsidiaries and associated
companies.............................. 205,031
Customers' liability to this bank on
acceptances outstanding................ 949,154
Intangible assets........................ 490,524
Other assets............................. 1,305,839
-----------
Total assets............................. $44,043,010
===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices.................... $20,441,318
Noninterest-bearing ..........8,158,472
Interest-bearing ............12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs....... 11,710,903
Noninterest-bearing .............46,182
Interest-bearing ...........11,664,721
Federal funds purchased in
domestic offices of the
bank:
Federal funds purchased................ 1,565,288
Demand notes issued to the U.S.
Treasury............................... 293,186
Trading liabilities...................... 826,856
Other borrowed money:
With original maturity of one year
or less.............................. 2,103,443
With original maturity of more than
one year............................. 20,766
Bank's liability on acceptances exe-
cuted and outstanding.................. 951,116
Subordinated notes and debentures........ 1,020,400
Other liabilities........................ 1,522,884
-----------
Total liabilities........................ 40,456,160
-----------
EQUITY CAPITAL
Common stock............................. 942,284
Surplus.................................. 525,666
Undivided profits and capital
reserves............................... 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities............................. (2,073)
Cumulative foreign currency transla-
tion adjustments....................... (8,403)
-----------
Total equity capital..................... 3,586,850
-----------
Total liabilities and equity
capital............................ $44,043,010
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this
<PAGE>
Report of Condition and 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 issued by the Board of Governors of the Federal Reserve System and
is true and correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
- --------------------------------------------------------------------------------
<PAGE>
Exhibit 25 (e)
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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) |__|
----------------------
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
----------------------
HECO CAPITAL TRUST I
(Exact name of obligor as specified in its charter)
Delaware 52-6834193
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
c/o The Bank of New York
101 Barclay Street, 21st floor
New York, New York 10286
Attention: Corporate Trust Trustee Administration
(Address of principal executive offices) (Zip code)
______________________
Trust Preferred Securities
(Title of the indenture securities)
================================================================================
<PAGE>
CONFORMED COPY
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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
Name Address
- -----------------------------------------------------------------------------------
<S> <C>
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
</TABLE>
(b) WHETHER IT IS AUTHORIZED TO EXERCISE CORPORATE TRUST POWERS.
Yes.
2. AFFILIATIONS WITH OBLIGOR.
IF THE OBLIGOR IS AN AFFILIATE OF THE TRUSTEE, DESCRIBE EACH SUCH
AFFILIATION.
None.
16. LIST OF EXHIBITS.
EXHIBITS IDENTIFIED IN PARENTHESES BELOW, ON FILE WITH THE COMMISSION, ARE
INCORPORATED HEREIN BY REFERENCE AS AN EXHIBIT HERETO, PURSUANT TO RULE 7A-29
UNDER THE TRUST INDENTURE ACT OF 1939 (THE "ACT") AND RULE 24 OF THE
COMMISSION'S RULES OF PRACTICE.
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed
with Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed
with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York, a
corporation organized and existing under the laws of the State of New York, 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 12th day of March, 1997.
THE BANK OF NEW YORK
By: /S/MARY LAGUMINA
--------------------------
Name: MARY LAGUMINA
Title: ASSISTANT VICE PRESIDENT
-3-
<PAGE>
Exhibit 7
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Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1996, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
<TABLE>
<CAPTION>
Dollar Amounts
ASSETS in Thousands
<S> <C>
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin...................... $ 4,404,522
Interest-bearing balances.............. 732,833
Securities:
Held-to-maturity securities............ 789,964
Available-for-sale securities.......... 2,005,509
Federal funds sold in domestic offices
of the bank:
Federal funds sold....................... 3,364,838
Loans and lease financing
receivables:
Loans and leases, net of unearned
income ....................28,728,602
LESS: Allowance for loan and
lease losses .................584,525
LESS: Allocated transfer risk
reserve...........................429
Loans and leases, net of unearned
income, allowance, and reserve 28,143,648
Assets held in trading accounts.......... 1,004,242
Premises and fixed assets (including
capitalized leases).................... 605,668
Other real estate owned.................. 41,238
Investments in unconsolidated
subsidiaries and associated
companies.............................. 205,031
Customers' liability to this bank on
acceptances outstanding................ 949,154
Intangible assets........................ 490,524
Other assets............................. 1,305,839
-----------
Total assets............................. $44,043,010
===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices.................... $20,441,318
Noninterest-bearing ..........8,158,472
Interest-bearing ............12,282,846
In foreign offices, Edge and
Agreement subsidiaries, and IBFs....... 11,710,903
Noninterest-bearing .............46,182
Interest-bearing ...........11,664,721
Federal funds purchased in
domestic offices of the
bank:
Federal funds purchased................ 1,565,288
Demand notes issued to the U.S.
Treasury............................... 293,186
Trading liabilities...................... 826,856
Other borrowed money:
With original maturity of one year
or less.............................. 2,103,443
With original maturity of more than
one year............................. 20,766
Bank's liability on acceptances exe-
cuted and outstanding.................. 951,116
Subordinated notes and debentures........ 1,020,400
Other liabilities........................ 1,522,884
-----------
Total liabilities........................ 40,456,160
-----------
EQUITY CAPITAL
Common stock............................. 942,284
Surplus.................................. 525,666
Undivided profits and capital
reserves............................... 2,129,376
Net unrealized holding gains
(losses) on available-for-sale
securities............................. (2,073)
Cumulative foreign currency transla-
tion adjustments....................... (8,403)
-----------
Total equity capital..................... 3,586,850
-----------
Total liabilities and equity
capital............................ $44,043,010
===========
</TABLE>
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-
named bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this
<PAGE>
Report of Condition and 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 issued by the Board of Governors of the Federal Reserve System and
is true and correct.
J. Carter Bacot )
Thomas A. Renyi ) Directors
Alan R. Griffith )
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