As filed with the Securities and Exchange Commission on December 10, 2003
Registration No. 333-
333-
333-
333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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 incorporation or organization) |
(I.R.S. Employer Identification No.) |
900 Richards Street, Honolulu, Hawaii 96813 (808) 543-7771
(Address, including zip code, and telephone number, including area code, of principal executive offices)
MAUI ELECTRIC COMPANY, LIMITED
(Exact name of each registrant as specified In its charter or certificate of trust)
| Hawaii | 99-0047800 | |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
210 West Kamehameha Avenue, Kahului, Hawaii 96732 (808) 871-8461
(Address, including zip code, and telephone number, including area code, of principal executive offices)
HAWAII ELECTRIC LIGHT COMPANY, INC.
(Exact name of each registrant as specified in its charter or certificate of trust)
| Hawaii | 99-0041070 | |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
1200 Kilauea Avenue, Hilo, Hawaii 96720 (808) 935-1171
(Address, including zip code, and telephone number, including area code, of principal executive offices)
HECO CAPITAL TRUST III
(Exact name of registrant as specified in its charter or certificate of trust)
| Delaware | 20-0423831 | |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
c/o The Bank of New York, 101 Barclay Street, 8W, 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)
RICHARD A. VON GNECHTEN
Financial Vice President
Hawaiian Electric Company, Inc.
900 Richards Street, Honolulu, Hawaii 96813 (808) 543-7500
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies to:
| DAVID J. REBER, ESQ. | JEFFREY J. DELANEY, ESQ. | |
| Goodsill Anderson Quinn & Stifel LLP | Pillsbury Winthrop LLP | |
| 1099 Alakea Street, Honolulu, HI 96813 | One Battery Park Plaza, New York, NY 10004 | |
| (808) 547-5600 | (212) 858-1000 |
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, 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.
CALCULATION OF REGISTRATION FEE
| Title of Each Class of Securities to be Registered |
Amount to be Registered |
Proposed
Per Unit(1)(2) |
Proposed
Maximum Aggregate Offering Price(1)(2) |
Amount of
Registration Fee |
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Cumulative Quarterly Income Preferred Securities of HECO Capital Trust III (“QUIPS”) |
(3) | (3) | (3) | ||||||||
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|
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HECO, MECO and HELCO Junior Subordinated Deferrable Interest Debentures (“QUIDS”) |
(3)(4) | (3)(4) | (3)(4) | ||||||||
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HECO Guarantee with respect to the QUIPS |
(5) | (5) | (5) | ||||||||
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HECO Guarantees of MECO and HELCO QUIDS |
(5) | (5) | (5) | ||||||||
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Total |
$ | 100,000,000(3) | 100% | $ | 100,000,000(3) | $ | 8,090 | ||||
| (1) | Estimated solely for the purpose of calculating the registration fee. |
| (2) | Exclusive of accrued distributions and interest (if any). |
| (3) | In no event will the aggregate initial public offering price of the securities issued under this Registration Statement exceed $100,000,000, exclusive of accrued distributions and interest (if any). Junior Subordinated Deferrable Interest Debentures (the “QUIDS”) will be issued and sold by Hawaiian Electric Company, Inc. (“HECO”), Maui Electric Company, Limited (“MECO”) and Hawaii Electric Light Company, Inc. (“HELCO”) to HECO Capital Trust III (the “Trust”) in an aggregate principal amount equal to the aggregate stated liquidation preference of the QUIPS and Common Securities to be issued and sold by the Trust. HECO QUIDS (including HECO QUIDS subsequently issued to the Trust under certain circumstances in exchange for MECO and HELCO 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 its assets. |
| (4) | The 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. |
The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale
Subject to Completion. Dated December 10, 2003.
4,000,000 Preferred Securities
HECO Capital Trust III
% Cumulative Quarterly Income Preferred Securities,
Series 2004 (QUIPS SM )*
(Liquidation Preference $25 per QUIPS)
Fully and unconditionally guaranteed, as set forth herein, by
Hawaiian Electric Company, Inc.
The QUIPS offered by this prospectus are preferred undivided beneficial ownership interests in the assets of HECO Capital Trust III, a statutory trust created under the laws of the State of Delaware (the “Trust”). Hawaiian Electric Company, Inc. (“HECO”), a Hawaii corporation, will own all of the common undivided beneficial interests in the assets of the Trust (the “Common Securities”).
A brief description of the QUIPS can be found under “Prospectus Summary—The Offering” in this prospectus.
The Trust will sell the QUIPS to the underwriters and the Common Securities to HECO. The Trust will immediately use the proceeds of these sales to purchase Junior Subordinated Deferrable Interest Debentures, Series 2004 (the “QUIDS sm ”)* from HECO and its subsidiaries, Maui Electric Company, Limited (“MECO”) and Hawaii Electric Light Company, Inc. (“HELCO”). The QUIDS held by the Trust will have terms that are equivalent to the terms of the QUIPS. The QUIDS, together with the expense agreement and the subordinated guarantees of HECO described in this prospectus, will be the sole assets of the Trust. Payments under the QUIDS, HECO’s guarantees and the expense agreement will be the sole sources of funds for the Trust.
An application will be filed to list the QUIPS on the New York Stock Exchange, subject to official notice of issuance. HECO expects trading of the QUIPS on the New York Stock Exchange to begin within 30 days after they are first issued.
See “ Risk Factors ” beginning on page 7 to read about factors you should consider before buying the QUIPS.
Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
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Per QUIPS
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Total
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|||||
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Initial public offering price(1) |
$ | $ | ||||
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Underwriting commissions |
(2) | (2) | ||||
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Proceeds to the Trust |
$ | $ | ||||
| (1) | Plus accumulated distributions, if any, from the date of original issuance, which is expected to be , 2004. |
| (2) | HECO, MECO and HELCO will pay the underwriting commission of $ per QUIPS (or $ in the aggregate). |
The underwriters expect to deliver the QUIPS through the facilities of The Depository Trust Company against payment in New York, New York on January , 2004.
*QUIPS and QUIDS are servicemarks of Goldman, Sachs & Co.
| Goldman, Sachs & Co. | U.S. Bancorp Piper Jaffray |
Prospectus dated January , 2004 .
The following information should be read together with the information contained in other parts of this prospectus. It may not contain all the information that is important to you. In this prospectus, unless the context otherwise requires, we refer to Hawaiian Electric Company, Inc. (“HECO”) and to its electric utility subsidiaries, Maui Electric Company, Limited (“MECO”) and Hawaii Electric Light Company, Inc. (“HELCO”), collectively, as the “Companies” or “we” or “us.” You should carefully read this entire prospectus to understand fully the terms of the cumulative quarterly income preferred securities, which we refer to as the “QUIPS,” and the junior subordinated deferrable interest debentures of the Companies, which we refer to as the “QUIDS,” and to the related guarantees provided by HECO, as well as the tax and other considerations that are important to you in making a decision about whether to invest in the QUIPS. You should pay special attention to the “Risk Factors” section of this prospectus to determine whether an investment in the QUIPS is appropriate for you. You should also read the information that is “incorporated by reference” from documents filed by HECO with the Securities and Exchange Commission (the “SEC”). This prospectus may add to, update or change information in incorporated documents. If the information in this prospectus is inconsistent with the information in such incorporated documents, the information in this prospectus will apply and supersede that information in the incorporated documents, unless the incorporated documents are filed with the SEC after the date of this prospectus, in which case the information in the incorporated document will apply.
The Companies
HECO, MECO and HELCO, each a Hawaii corporation, 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 on December 31, 2002 estimated at 1,185,000, or 95 percent of the State’s population, and the Companies provide the only electric public utility service on the islands they serve. The utilities are regulated by the Hawaii Public Utilities Commission (the “PUC”). On , 200 , the PUC approved the issuances of the QUIPS and QUIDS. The further approval of the PUC will be required if the Substituted HECO QUIDS (as defined in this prospectus) are to be issued in the future.
The address of HECO’s principal executive offices is 900 Richards Street, Honolulu, Hawaii 96813 and its telephone number is (808) 543-7771.
HECO Capital Trust III
HECO Capital Trust III (which we refer to as “HECO Capital Trust III” or the “Trust’) is a statutory trust recently formed under Delaware law by five trustees and HECO. HECO Capital Trust III has been formed solely for the purposes of:
| • | issuing and selling the QUIPS to the public and issuing and selling all of the common undivided beneficial interests in the assets of the Trust (the “Common Securities”) to HECO; |
| • | using the proceeds from the sale of the QUIPS and the Common Securities to acquire QUIDS from the Companies; |
| • | paying distributions on the QUIPS from interest payments on the QUIDS; and |
| • | engaging in only those other activities necessary, convenient or incidental to these purposes, which would include, for example, registering the transfer of the QUIPS. |
Because HECO Capital Trust III is being established only for the purposes listed above, the QUIDS, the expense agreement (under which the Companies agree to provide funds to the Trust to pay amounts the Trust owes to persons other than holders of QUIPS) (the “Expense Agreement”) and the related HECO guarantees will be HECO Capital Trust III’s sole assets. Payments on the QUIDS will be HECO Capital Trust III’s sole source of income. HECO Capital Trust III will issue only one series of QUIPS.
1
The Offering
|
Title |
HECO Capital Trust III % Cumulative Quarterly Income Preferred Securities, Series 2004 (Liquidation Preference $25 per QUIPS). | |
|
Securities Offered |
4,000,000 QUIPS, in denominations of $25 each, with an aggregate liquidation preference of $100,000,000. Each QUIPS will represent a preferred undivided beneficial ownership interest in the assets of HECO Capital Trust III. Each QUIPS will entitle its holder to receive quarterly cash distributions as described below. | |
|
HECO Capital Trust III |
The issuer of the QUIPS is HECO Capital Trust III, a Delaware statutory trust, created for the sole purpose of issuing the QUIPS and the Common Securities and engaging in the other transactions described in this prospectus.
HECO Capital Trust III has five trustees. There are three administrative trustees, each of whom is an officer of HECO. The Bank of New York and The Bank of New York (Delaware) will act as the property trustee and the Delaware trustee of HECO Capital Trust III, respectively.
The QUIPS will be sold to the public and HECO will purchase and retain the Common Securities. HECO Capital Trust III will hold the QUIDS that it purchases from the Companies with the proceeds from the issuance of the QUIPS and the Common Securities. The Companies will pay interest on the QUIDS at the same rate and at the same times as HECO Capital Trust III makes payments on the QUIPS and the Common Securities. HECO Capital Trust III will use the payments it receives on the QUIDS to make the corresponding payments on the QUIPS and the Common Securities. |
|
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HECO Guarantees |
HECO will enter into a trust guarantee (the “Trust Guarantee”) under which it will guarantee, on a subordinated basis, payments made on the QUIPS to the extent described in this prospectus. HECO will also enter into subsidiary guarantees (the “Subsidiary Guarantees”) under which it will fully and unconditionally guarantee, on a subordinated basis, the obligations of MECO and HELCO under their QUIDS and under the Expense Agreement. See “Description of Trust Guarantee” and “Description of Subsidiary Guarantees and Expense Agreement.” | |
|
Distributions |
Holders of QUIPS will be entitled to receive quarterly cumulative cash distributions at an annual rate of % of the stated liquidation preference of $25 per QUIPS (the “Distributions”). Interest on the QUIDS will also accrue at an annual rate of %, and as a result Distributions on the QUIPS will accumulate, from the original date of issuance, and will be due to be paid quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, beginning March 31, 2004, unless they are deferred as described below. | |
2
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Distribution Deferral |
So long as there is no Debenture Event of Default (as defined in this prospectus) under its respective Indenture, each of the Companies may defer the quarterly interest payments on its QUIDS for up to 20 consecutive quarterly periods (each, an “Extension Period”). In other words, each of the Companies may declare at its discretion up to a five-year interest payment moratorium on its QUIDS and may choose to do that on more than one occasion. A deferral of interest payments cannot extend, however, beyond the Stated Maturity (as defined in this prospectus) of the QUIDS, nor can any of the Companies begin a new Extension Period until it has paid all accrued interest on the QUIDS from the previous Extension Period.
If any of the Companies defers interest payments on its QUIDS, HECO Capital Trust III will also defer Distributions on the QUIPS in an equal amount. 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. Any deferred interest on the QUIDS will accrue additional interest at an annual rate of %, and, as a result, any deferred Distributions will accumulate additional amounts at an annual rate of %, compounded quarterly from the relevant payment date. Once a Company has made all deferred interest payments on its QUIDS, with accrued interest, it can again defer interest payments on its QUIDS as described above, but not beyond the Stated Maturity of the QUIDS.
During any Extension Period, each of the deferring Companies (and, if such deferring Company is MECO or HELCO, HECO) will be subject to restrictions on specified activities. See “Description of QUIPS—Distributions” and “Description of QUIDS—Option to Extend Interest Payment Period.” |
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Tax Consequences of Distribution Deferral |
If any of the Companies defers payments of interest on its QUIDS, that Company’s QUIDS will be treated at that time as being retired and reissued with original issue discount for United States federal income tax purposes. This means that holders of the QUIPS will be required to include accrued interest income in respect of the deferred interest even though they will not be receiving cash Distributions on their QUIPS in respect of the deferred interest. These amounts will be included in the holders’ gross income for United States federal income tax purposes. See “Certain United States Federal Income Tax Consequences” for a more complete description.
None of the Companies has a current intention of exercising its right to defer payments of interest on its QUIDS. |
|
|
Redemption |
The QUIDS are scheduled to mature on January , 2034. HECO Capital Trust III will redeem all of the outstanding QUIPS when the QUIDS are repaid at maturity.
In addition, if any of the Companies redeem any QUIDS before their Stated Maturity, HECO Capital Trust III will use the cash it |
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3
| receives on the redemption of the QUIDS to redeem, on a proportionate basis, the QUIPS and the Common Securities. Each of the Companies can redeem the QUIDS before their Stated Maturity at 100% of their principal amount plus accrued and unpaid interest in whole or in part on one or more occasions any time on or after January , 2009, or in whole at any time following the occurrence of certain events (“Special Events”) relating to taxation or the Investment Company Act of 1940. These circumstances are more fully described below under “Description of QUIPS—Redemption or Exchange.” | ||
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Liquidation Amount |
If the QUIPS are redeemed by HECO Capital Trust III, holders will be entitled to receive the stated liquidation preference of $25 per QUIPS plus any accumulated and unpaid Distributions thereon to the date of redemption (the “QUIPS Redemption Price”), subject to the rights of any creditors of HECO Capital Trust III. | |
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Dissolution of HECO Capital Trust III and Distribution of Distributable HECO QUIDS |
If HECO elects to dissolve HECO Capital Trust III, which could occur at any time, in HECO’s sole discretion, upon 30 days’ prior written notice to the holders of the QUIPS, or if HECO Capital Trust III dissolves because of certain specified events, such as bankruptcy, dissolution or liquidation of HECO, HECO Capital Trust III, subject to obtaining the approval of the PUC and to the rights of any creditors of HECO Capital Trust III, will distribute the Distributable HECO QUIDS (as defined below) to holders of the QUIPS and the Common Securities on a proportionate basis. The “Distributable HECO QUIDS” will consist of the HECO QUIDS sold to the Trust as part of this offering together with additional HECO QUIDS, which are referred to in this prospectus as “Substituted HECO QUIDS,” which are QUIDS that would be issued to HECO Capital Trust III by HECO, provided that PUC approval was first obtained, in exchange for MECO QUIDS and HELCO QUIDS in like principal amounts. If the Distributable HECO QUIDS are distributed, HECO will use commercially reasonable efforts to list the Distributable HECO QUIDS on the New York Stock Exchange or any other exchange on which the QUIPS are then listed. |
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Tax Consequences of HECO Election To Dissolve HECO Capital Trust III |
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 United States Federal Income Tax Consequences—Distribution of QUIDS to Holders of QUIPS.” In addition, the distribution of the |
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4
5
| future liabilities of HECO. These obligations will effectively be subordinated to all existing and future liabilities of HECO’s subsidiaries, including MECO and HELCO. The obligations of MECO and HELCO under the MECO QUIDS and the HELCO QUIDS, respectively, will be subordinate and junior to their respective existing and future Senior Indebtedness. | ||
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Use of Proceeds |
The Trust will invest all of the proceeds from the sale of the QUIPS and the Common Securities in the QUIDS. The Companies will use the proceeds of the QUIDS, together with any necessary additional funds to be provided by the Companies, to redeem the junior subordinated deferrable interest debentures that they issued to HECO Capital Trust I and HECO Capital Trust II in 1997 and 1998, respectively, and those trusts will in turn redeem their respective outstanding trust preferred and common securities. Pending such use, the Companies may temporarily invest the proceeds of the QUIDS as described under “Use of Proceeds.” | |
|
Listing of the QUIPS |
An application will be filed to list the QUIPS on the New York Stock Exchange, subject to official notice of issuance. HECO expects trading of the QUIPS on the New York Stock Exchange to begin within 30 days after they are first issued. However, the listing of the QUIPS will not necessarily ensure that an active trading market will be available for the QUIPS or that beneficial owners will be able to sell the QUIPS at the price they originally paid for them. | |
|
Form of the QUIPS |
The QUIPS will be represented by one or more global securities that will be deposited with and registered in the name of The Depository Trust Company, New York, New York, or its nominee. This means that purchasers will not receive a certificate for their QUIPS and the QUIPS will not be registered in their name. See “Description of QUIPS—Book-Entry Issuance.” | |
6
An investment in the QUIPS involves a number of risks, some of which relate to the Companies and others of which relate to the QUIPS and the QUIDS. You should carefully consider the following information, together with the other information in this prospectus and in the documents that are incorporated by reference in this prospectus, about risks concerning the Companies, the QUIPS and the QUIDS before buying any QUIPS.
Risks Relating to the Companies
Actions of the PUC are largely outside the control of the Companies and could result in rate reductions or unanticipated delay or expense in connection with the construction of new projects.
The rates that we are allowed to charge for our services are one of the most important items influencing our financial condition, results of operations and liquidity. The PUC has broad discretion over the rates that the electric utilities charge their customers. After not initiating a rate case since the rate case filed in December 1993 using a 1995 test year, HECO has committed to the PUC that it will commence a rate case using a 2005 test year. Any adverse decision by the PUC concerning the level or method of determining electric utility rates, the returns on equity or on rate base the PUC finds to be reasonable, the potential consequences of exceeding such returns or other matters, or any prolonged delay in rendering a decision in a rate or other proceeding, could have a material adverse effect on HECO’s consolidated financial condition, results of operations and liquidity.
Many public utility projects require PUC approval and various permits (e.g., environmental and land use permits) from other governmental agencies. Difficulties in obtaining, or the inability to obtain, the necessary approvals or permits, any adverse decision or policy made or adopted, or any prolonged delay in rendering a decision by an agency, can result in significantly increased project costs or even cancellation of projects. If a project does not proceed, or if the PUC disallows cost recovery for the project, the project costs may need to be written off in amounts that could result in significant reductions in HECO’s consolidated net income. Two major capital improvement projects have encountered substantial opposition. The Keahole power plant project, which has been seriously delayed, involves plans of HELCO to install combustion turbines and a heat steam recovery generator, then to convert the units to a dual-train combined cycle unit at its Keahole plant on the island of Hawaii. The East Oahu Transmission Project involves HECO’s plans to expand its current transmission system on the island of Oahu to enhance reliability.
As of September 30, 2003, HELCO’s costs incurred in its efforts to put the combustion turbines into service and to support existing units (excluding certain costs the PUC has previously permitted to be transferred to plant-in-service for pre-air permit facilities) amounted to approximately $84 million. Substantial additional capital costs, currently estimated to be approximately $15 million, are expected to be incurred to complete installation of the two combustion turbines, including the costs necessary to satisfy the requirements relating to those turbines of a recent settlement agreement which, if all conditions to its implementation are satisfied, will allow the combustion turbines to be installed. The settlement agreement also requires HELCO to pay legal fees and other costs of $3.1 million, which were expensed in November 2003, and to incur additional capital costs relating to noise mitigation, visual mitigation and pollution control on other existing units and on the heat steam recovery generator when it is installed. The costs of the heat steam recovery generator, if all necessary permits are obtained and it is installed, will also be higher than originally planned by reason of the change in schedule in its installation.
HECO’s accumulated costs related to the transmission line project amounted to approximately $19 million as of September 30, 2003, and, if its recently revised plans for the project are approved by the PUC, the capital costs of the two phases of the proposed project, including costs incurred to date, are estimated to be between approximately $55 million and $60 million.
7
The Companies are subject to risks associated with the Hawaii economy, volatile U.S. capital markets and changes in the interest rate environment that could result in declines in electric utility kilowatthour sales and restrictions on our ability to borrow money.
Because our core business is providing electric public utility services in Hawaii, our operating results are significantly influenced by Hawaii’s economy, which in turn is influenced by economic conditions in the mainland U.S. (particularly California) and Asia (particularly Japan) as a result of the impact of those conditions on tourism, which comprises a significant portion of Hawaii’s economy. A decline in the Hawaii economy, or the U.S. or Asian economies, could lead to a decline in our kilowatthour sales and an increase in uncollected billings and have other adverse effects on our business.
Changes in the U.S. capital markets can also have significant effects on the Companies. For example, our pension income or expense is affected by the market performance of the assets in the master pension trust maintained for our pension plans, and by the discount rate we use to determine the service and interest cost components of our net periodic pension cost (returns).
We are exposed to interest rate risk primarily due to our periodic borrowing requirements. Interest rates are sensitive to many factors, including general economic conditions and the policies of government and regulatory authorities. We cannot predict future changes in interest rates, nor be certain that interest rate risk management strategies we have implemented will be successful in managing interest rate risk.
After the September 11, 2001 terrorist attacks on the U.S., the war in Iraq, the ongoing war on terrorism by the U.S. and the bankruptcies or reported financial difficulties of several major U.S. companies, conditions in the financial markets have become increasingly volatile and uncertain, even for financially healthy companies. These events and related future events could constrain the availability of capital to the Companies, which are capital intensive. If our ability to access capital becomes significantly constrained, our interest costs could increase substantially and, under extreme circumstances, we could be forced to defer our interest payments on the QUIDS or default on our debt obligations, including the QUIDS and the Subsidiary Guarantees which would result in the Trust lacking funds for making payments on the QUIPS.
If Standard & Poor’s or Moody’s Investors Service were to downgrade HECO’s long-term debt ratings, its ability to borrow could be constrained and its future borrowing costs would likely increase with resulting reductions in HECO’s consolidated net income in future periods. Further, if HECO’s ratings were downgraded, HECO might not be able to sell commercial paper under current market conditions and might be required to draw on more expensive bank lines of credit or to defer capital or other expenditures.
The Companies could be required to recognize a substantial additional minimum liability for pension and other postretirement benefits.
Due to the sharp decline in U.S. equity markets from the third quarter of 2000 to the first quarter of 2003, the market value of assets held in trust to satisfy our retirement benefit plan obligations has decreased significantly. For 2002, 2001 and 2000, the realized and unrealized net losses on our retirement benefit plan assets were $106 million, $91 million and $30 million, respectively. For the first ten months of 2003, our retirement benefit plan assets generated a total return slightly above 18% and above the 9% return assumption, resulting in realized and unrealized net gains of approximately $106 million.
Depending on the investment experience for the full year of 2003 and the status of interest rates, the Companies, like many sponsors of defined benefit pension plans, could be required to recognize
8
an additional minimum liability as prescribed by Statement of Financial Accounting Standards (“SFAS”) No. 87, “Employers’ Accounting for Pensions” at December 31, 2003. The liability would largely be recorded as a reduction to stockholder’s equity through a non-cash charge to accumulated other comprehensive income (“AOCI”), and would not affect net income for 2003. The additional minimum liability would also result in the removal of the prepaid pension asset ($70 million as of December 31, 2002) from our consolidated balance sheet.
The recognition of additional minimum liability is triggered when a plan’s accumulated benefit obligation (“ABO”) exceeds plan assets, in which case the charge to AOCI is calculated as the sum of the unfunded ABO and the prepaid pension asset. However, when a plan’s assets exceed the ABO, the additional minimum liability calculations would not apply, and the Company would continue to report the prepaid pension asset (with the usual annual adjustments). Currently, plan assets and ABO are very close in magnitude. Consequently, small changes in assets and/or the discount rate used to measure ABO could trigger an additional minimum liability which, in turn, could significantly affect the Company’s balance sheet.
The amount of additional minimum liability and charge to AOCI, if any, to be recorded at December 31, 2003 could be material and will depend upon a number of factors, including the year- end discount rate assumption, asset returns experienced in 2003, any changes to actuarial assumptions or plan provisions, and contributions made by the Companies to the plans during 2003. Although not required, the Companies expect to make cash contributions to the retirement benefit plans of at least $20 million in 2003, of which $15 million has been contributed as of October 31, 2003. In addition, retirement benefits expense and cash funding requirements could increase in future years depending on the performance of the U.S. equity markets and trends in interest rates. Retirement benefit expenses based on net periodic pension and other postretirement benefit costs that are related to utility operations have been an allowable expense for rate-making, and higher retirement benefit expenses, along with other factors, may affect the need to request an electric rate increase.
Based on the market value of the retirement benefit plans’ assets as of October 31, 2003 of $711 million and the 1983 Group Annuity Mortality Table and assuming no further asset appreciation or depreciation through the remainder of 2003, the expected long-term return on plan assets of 9% in future years, a range of 5.75% to 6.75% for the discount rate, and no further changes in assumptions or retirement benefit provisions, consolidated HECO’s AOCI balance (net of tax benefits) related to the minimum pension liability at December 31, 2003 and retirement benefits expense (net of tax benefits) for 2004 are projected to be as follows:
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Discount Rate
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5.75%
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6.75%
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| ($ in millions) | |||||||
|
AOCI balance (net of tax benefits) |
$ | (73 | ) | $ | -- | ||
|
Retirement benefits expense (net of tax benefits) |
10 | 5 | |||||
The Companies benchmark their discount rate assumption to the Moody’s 20-year AA Corporate Bond Composite Index. Based on the forward curve as of October 31, 2003, the discount rate at December 31, 2003 is expected to be between 6.0% and 6.5%. Assuming a 6.0% or a 6.5% discount rate, the estimated consolidated HECO AOCI balance (net of tax benefits) at December 31, 2003 would be $(61) million or $(0.2) million, respectively. Because the AOCI is triggered for each plan when the plan’s ABO exceeds plan assets, the AOCI for interim discount rates is not a straight-line interpolation between the AOCI balances at 6.0% and 6.5%.
The Companies’ consolidated retirement benefits expenses (net of tax benefits) are estimated to be $8 million for 2003 compared to consolidated retirement benefits income (net of taxes) of $6 million for 2002.
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If the Companies are required to record substantially greater charges to AOCI in the future than the charges that might be required under the assumptions described above, consolidated HECO’s financial ratios may deteriorate, which could result in security ratings downgrades and difficulty (or greater expense) in obtaining future financing. In addition, there may be possible financial covenant violations (although there are no advances currently outstanding under any credit facility subject to financial covenants) as certain of HECO’s bank lines of credit require that it maintain a minimum ratio of consolidated common equity to consolidated capitalization of 35% and a consolidated net worth (defined as consolidated common stock equity), exclusive of intangible assets, of at least $825 million.
The Companies are subject to the risks associated with the geographic concentration of our business that could result in service interruptions.
Our business is concentrated on the individual islands we serve in the State of Hawaii. Our operations are more vulnerable to service interruptions than are many U.S. mainland utilities because none of our systems are interconnected. Service interruptions, including in particular extended interruptions that could result from a natural disaster or terrorist activity, could adversely impact the kilowatthour sales of some or all of the Companies.
Increasing competition and technological advances could cause the Companies to lose customers or render our operations obsolete.
The generation sector of the electric utility industry is becoming increasingly competitive in Hawaii. Independent power producers, including alternate energy providers, and customer self-generation, with or without cogeneration, continue to be competitive factors. In addition, new technological developments, such as the commercial development of fuel cells or distributed generation, may render our operations less competitive or obsolete.
In connection with its closing in October 2003 of a competition docket that it had initiated in 1996, the PUC opened new investigative dockets on distributed generation (“DG”) and competitive bidding. The PUC intends in the DG docket to determine the potential benefits and impact of DG, including combined heat and power (“CHP”) systems, on Hawaii’s electric distribution systems and markets and to develop policies and a framework for DG projects in Hawaii. The PUC intends in the docket to address issues caused by DG projects relating to interconnection matters, ownership and operation of projects (including by electric utilities), rate design and effects on the integrated resource planning process. The docket will also address issues raised by an informal complaint filed in July 2003 by three vendors of CHP services that relate to a limited number of proposals we have made, which are subject to PUC approval, to install and operate CHP systems for customers. The competitive bidding docket is intended to evaluate competitive bidding as a mechanism for acquiring or building new electric generating capacity.
We are unable to predict the ultimate outcome of these investigations (including with respect to the July 2003 complaint) or of attempts that might be made by other parties to seek legislative or regulatory action on their competition proposals.
The Companies could suffer losses that are uninsured due to a lack of insurance coverage or limitations on the insurance coverage we do have.
In the ordinary course of business, we purchase insurance coverages (e.g., property and liability coverages) to protect against loss of or damage to our properties and against claims made by third-parties and employees for property damage or personal injuries. However, the protection provided by such insurance is limited in significant respects and, in some instances, there is no coverage. Certain of the insurance has substantial deductibles or has limits on the maximum amounts that may be recovered. For example, our overhead and underground transmission and distribution systems (with
10
the exception of substation buildings and contents) have an estimated replacement cost of approximately $2 billion and are not insured against loss or damage because the amount of transmission and distribution system insurance available is limited and the premiums are cost prohibitive. Similarly, we have no business interruption insurance as the premiums for such insurance would be cost prohibitive, particularly since our systems are not interconnected to other systems. If a hurricane or other uninsured catastrophic natural disaster should occur, and the PUC does not allow the affected electric utility to recover from ratepayers restoration costs and revenues lost from business interruption, the lost revenues and repair expenses could result in a significant decrease in HECO’s consolidated net income or in significant net losses for the affected periods. Events like the September 11, 2001 terrorist attacks have resulted generally in a decreased availability of insurance and higher deductibles, higher premiums and more restrictive policy terms.
Increased federal and state environmental regulation will require an increasing commitment of resources and funds and could result in construction delays or penalties and fines for non-compliance.
We are subject to federal and state environmental laws and regulations relating to air quality, water quality, waste management, natural resources and health and safety, which regulate the operation of existing facilities, the construction and operation of new facilities and the proper cleanup and disposal of hazardous waste and toxic substances. Compliance with these legal requirements requires the Companies to commit significant resources and funds toward environmental monitoring, installation of pollution control equipment and payment of emission fees. These laws and regulations, among other things, require that we obtain certain environmental permits in order to construct or operate certain facilities, and obtaining such permits can entail significant expense and cause substantial construction delays. Also, these laws and regulations may be amended from time to time, including amendments that increase the burden and expense of compliance. For example, emission and/or discharge limits may be tightened, more extensive permitting requirements may be imposed and additional substances may become regulated.
If we fail to comply with environmental laws and regulations, even if caused by factors beyond our control, that failure may result in civil or criminal penalties and fines. For example, HECO is a named party in an ongoing environmental investigation to determine the nature and extent of actual or potential release of hazardous substances, oil, pollutants or contaminants at or near Honolulu Harbor. In 2001, HECO expensed $1.1 million as management’s preliminary estimate of costs for continuing investigative work, remedial activities and monitoring at the Iwilei unit of the site involved in this investigation (but not including its Honolulu Power Plant and other sites) through December 2004, but this cost estimate may be subject to significant change and additional material investigative and remedial costs, including work at other sites, may be incurred. As another example, on September 5, 2003, MECO received a notice alleging violations of the Hawaii Department of Health’s air pollution control rules relating to opacity for two generating units at MECO’s Maalaea power plant between February 1999 and June 2000, seeking immediate corrective action and assessing a penalty, which is not tax deductible, of approximately $1.6 million. MECO has requested a hearing in this matter.
The Companies could be subject to the risk of uninsured losses in excess of our accruals for litigation matters.
The Companies are involved in routine litigation in the ordinary course of their business, most of which is covered by insurance (subject to policy limits and deductibles). However, other litigation may arise that is not routine or involves claims that may not be covered by insurance. For example, HECO is a defendant in a suit, brought as a purported qui tam and class action, which claims that the State of Hawaii and HECO’s other customers have been overcharged for electricity as a result of allegedly excessive prices charged under a power purchase agreement between defendants HECO and AES
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Hawaii, Inc. The complaint asserts that HECO’s payments to AES Hawaii, Inc. for power have been “excessive” by over $1 billion since September 1992, and that approval of the power purchase agreement by the PUC in 1989 was wrongfully obtained through alleged misrepresentations or material omissions by the defendants of the estimated future costs under the power purchase agreement compared to the costs that would have been incurred if HECO-owned units had been constructed instead. Although a final judgment dismissing this complaint with prejudice was entered in HECO’s favor on September 17, 2003, one of the plaintiffs has filed a notice of appeal.
Because of the uncertainties associated with litigation, there is a risk that litigation against the Companies, even if vigorously defended, could result in costs of defense and judgment or settlement amounts not covered by insurance and in excess of accruals established in the Companies’ financial statements.
Changes in accounting principles and estimates could affect the reported amounts of the Companies’ assets and liabilities or revenues and expenses.
The Companies’ financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. Changes in these principles from time to time could materially affect HECO’s consolidated results of operations. Further, in preparing HECO’s consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Actual results could differ significantly from those estimates. Material estimates that are particularly susceptible to significant change include the amounts reported for regulatory assets, pension and other postretirement benefit obligations, current and deferred taxes, contingencies and litigation.
Our financial statements reflect assets and costs based on cost-based rate-making regulations. Continued accounting in this manner requires that certain criteria relating to the recoverability of such costs through rates be met. If events or circumstances should change so that the criteria are no longer satisfied, our regulatory assets (amounting to $105.6 million as of September 30, 2003) may need to be charged to expense.
Electric utility operations are significantly influenced by weather conditions.
The Companies’ results of operations can be affected by changes in the weather. Weather conditions directly influence the demand for electricity. In addition, severe weather can be destructive, causing outages, property damage and requiring us to incur additional expenses.
Our utility operations depend heavily on third party suppliers of fuel oil and purchased power.
We rely on fuel oil suppliers and shippers and independent power producers to deliver fuel oil and power, respectively, in accordance with contractual agreements. Approximately 78% of the net energy generated or purchased by HECO and its subsidiaries for the first nine months of 2003 was generated from the burning of oil, and purchases of power by the Companies provided about 39% of their total net energy generated and purchased for the same period. Failure or delay by oil suppliers and shippers to provide fuel pursuant to existing contracts, or failure by a major independent power producer to deliver the firm capacity anticipated in its power purchase agreement, could disrupt our ability to deliver electricity and require us to incur additional expenses to meet the needs of our customers. In addition, as these contractual agreements end, we may not be able to purchase fuel and power on terms equivalent to the current contractual agreements.
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Electric generating facilities are subject to operational risks that could result in unscheduled plant outages, unanticipated operation and maintenance expenses and increased power purchase costs.
Operation of electric generating facilities involves certain risks which can adversely affect energy output and efficiency levels. Included among these risks are increased prices for fuel and fuel transportation as existing contracts expire (particularly if the PUC were to no longer permit the electric utilities to pass such price increases through to customers through their energy cost adjustment clauses), facility shutdowns or power interruptions due to insufficient reserve margins or a breakdown or failure of equipment or processes or interruptions in fuel supply, inability to negotiate satisfactory collective bargaining agreements when existing agreements expire or other labor disputes, inability to comply with regulatory or permit requirements, disruptions in delivery of electricity, operator error and catastrophic events such as fires, explosions, floods or other similar occurrences affecting our electric generating facilities.
The Companies may be adversely affected by new legislation.
Congress and the Hawaii Legislature periodically consider legislation that could have positive or negative effects on the Companies and our customers. For example, earlier drafts of the congressional energy bill included measures that could have increased the domestic supply of oil and support for energy conservation programs and mandated the use of renewables by utilities. The 2001 Hawaii Legislature passed a law establishing “renewable portfolio standard” goals for the Companies, on a consolidated basis, of 7% by December 31, 2003, 8% by December 31, 2005 and 9% by December 31, 2010. It will be difficult for the Companies to increase their renewables percentage to these levels, and we cannot predict the consequences of failure to do so. The 2003 Hawaii Legislature considered measures that would undertake a comprehensive audit of the state’s electric utility regulatory policies, energy policies and support for reducing Hawaii’s dependence on imported petroleum for electrical generation, and a measure to remove a cap on the amount of net energy metering we would be required to make available to eligible customers. We cannot predict the likelihood that these or other measures will be enacted into law in the future or their potential effect on us.
Risks Relating to the QUIPS and the QUIDS
Because the Trust will rely on the payments it receives on the QUIDS to fund all payments on the QUIPS, and because the Trust may distribute Distributable HECO QUIDS in exchange for the QUIPS, you are making an investment decision with regard to the Distributable HECO QUIDS as well as the QUIPS. You should carefully review the information in this prospectus about both of these securities.
Obligations under the Trust Guarantee, the QUIDS and the Subsidiary Guarantees will be deeply subordinated.
The obligations of each Company under its QUIDS and under the Expense Agreement, and of HECO under the Trust Guarantee, are unsecured and rank junior in right of payment to all Senior Indebtedness of such Company. The obligations of HECO under the Subsidiary Guarantees are also unsecured and rank junior in right of payment to all other existing and future liabilities of HECO and rank equally with any guarantee by HECO of any securities similar to the MECO QUIDS and HELCO QUIDS issued by any subsidiary of HECO. This means, among other things, that each Company cannot make any payments of principal (including redemption payments) or interest on its QUIDS, or in the case of HECO on its guarantees, if that Company defaults on its Senior Indebtedness. In the event of the bankruptcy, liquidation or dissolution of any Company, that Company’s assets would be available to pay obligations under that Company’s QUIDS only after all payments had been made on that Company’s Senior Indebtedness. At September 30, 2003, the principal portion of the Senior
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Indebtedness of HECO (exclusive of contingent amounts under HECO’s guarantees of the obligations of its subsidiaries), MECO and HELCO was approximately $434.2 million, $143.7 million and $120.9 million, respectively (or $698.8 million in the aggregate).
HECO receives interest and dividends from MECO and HELCO. Accordingly, the HECO QUIDS and the HECO 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 Indebtedness of such subsidiaries, was equal to approximately $264.6 million in the aggregate at September 30, 2003). Holders of QUIDS should thus look only to the assets of HECO for payments on the HECO QUIDS and HECO’s guarantees.
The Indentures (as defined in this prospectus) for the QUIDS, the Trust Agreement (as defined in this prospectus) and the HECO guarantees do not limit the amount of secured or unsecured debt, including Senior Indebtedness, that may be incurred by any of the Companies. Also, the provisions of the Trust Agreement, the Indentures and the HECO 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, 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 and Expense Agreement.”
The Companies may incur substantial Senior Indebtedness to fund their capital and other expenditures and holders of the QUIPS are subject to the risks associated with such debt.
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, which in each case could be senior to the QUIPS and the QUIDS, could result in a downgrading of HECO’s credit rating and have an adverse effect upon the market value of the QUIPS and the QUIDS.
If the Companies do not make payments on the QUIDS, the Trust will not be able to pay Distributions and other payments on the QUIPS and the Trust Guarantee will not apply.
The Trust’s ability to make timely Distribution and redemption payments on the QUIPS is completely dependent upon each Company making timely payments on its QUIDS. If any Company defaults on its QUIDS (or HECO defaults on its obligations under the Subsidiary Guarantees), the Trust will lack funds for making payments on the QUIPS. If this happens, holders of QUIPS will not be able to rely on the Trust Guarantee for payment of such amounts because the Trust Guarantee only guarantees that HECO will make Distribution and redemption payments on the QUIPS if the Trust has the funds to do so itself but does not. Instead, you or the Property Trustee (as defined in this prospectus) will have to bring a legal action against the Companies to enforce the Property Trustee’s rights under the Indentures relating to the QUIDS, including under the Subsidiary Guarantees.
Distribution payments on the QUIPS could be deferred for substantial periods, but holders would continue to recognize income for tax purposes.
As long as no event of default is continuing with respect to its QUIDS, each of the Companies has the right under the Indenture for its QUIDS to begin an Extension Period, during which it will defer interest payments on its QUIDS and the Trust will defer payments of Distributions on the QUIPS in a corresponding amount. Each Extension Period may last for up to 20 consecutive quarters (but not beyond the Stated Maturity) for those QUIDS. There is no particular limit on the number of Extension Periods that a Company may begin if no event of default is continuing with respect to its QUIDS.
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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 amounts not deferred. See “Description of QUIPS—Distributions” and “Description of QUIDS—Option to Extend Interest Payment Period.”
If an Extension Period occurs, each holder of QUIPS (even if it uses the cash method of accounting) will be required to accrue income (in the form of original issue discount (“OID”) for United States federal income tax purposes) in respect of its proportionate share of the deferred interest on the QUIDS of the deferring Company. As a result, you would be required to include such income in gross income for United States federal income tax purposes before you actually receive any cash attributable to that income. In addition, you would not receive the cash related to such income from the Trust if you sold the QUIPS prior to the record date for any Distribution Date (as defined in this prospectus) on which such deferred Distribution is paid, even if you held the QUIPS on the date that the payments were normally made. However, accrued OID would be added to your adjusted tax basis in your QUIPS but may not be reflected in the amount you realized on the sale. To the extent the amount realized was less than your adjusted tax basis, you would recognize a capital loss for United States federal income tax purposes. The deductibility of capital losses is subject to limitations. See “Certain United States Federal Income Tax Consequences—Stated Interest and Original Issue Discount” and “—Sales or Redemption of QUIPS.”
The QUIPS may be redeemed prior to maturity, including if certain Special Events occur.
The QUIDS may be redeemed in whole or in part on one or more occasions on or after January , 2009. In addition, upon the occurrence and continuation of either a Tax Event or an Investment Company Event, the Companies, at the direction of HECO, have the right to redeem the QUIDS in whole (but not in part) within 90 days following the occurrence of such event. If the QUIDS are redeemed, the QUIPS must be redeemed. Thus, it is possible that the QUIPS could also be redeemed before January , 2009. “Tax Event” refers to certain changes in the current tax treatment of the interest on the QUIDS or the QUIPS trust structure and “Investment Company Event” refers to changes in regulation of investment companies from which the QUIPS trust structure is currently exempt. Each of these terms is described below under “Description of QUIPS” and some of the possible tax consequences to you are described below under “Certain United States Federal Income Tax Consequences.”
The redemption price for the QUIDS would be 100% of the principal amount being redeemed plus accrued and unpaid interest thereon to the redemption date. Under current United States federal income tax law, a redemption of the QUIPS would constitute a taxable event to the holders. In addition, based on interest rates and market conditions at the time of redemption, holders may not be able to reinvest the money that they receive in a redemption at a rate that is equal to or higher than the rate of return on the QUIPS.
HECO could cause the Trust to distribute the Distributable HECO QUIDS to the holders of the QUIPS at any time, with adverse tax consequences.
HECO has the right, at any time, in its sole discretion, upon 30 days’ prior written notice to the holders of the QUIPS, but subject to obtaining prior approval from the PUC, to direct the Property Trustee to dissolve the Trust. If such action is taken, HECO would issue the Substituted HECO QUIDS to the Trust in exchange for the MECO QUIDS and the HELCO QUIDS and then cause HECO QUIDS and the Substituted HECO QUIDS (which we refer to together in this prospectus as the “Distributable HECO QUIDS”) to be distributed to the holders of QUIPS in liquidation of their interests in the Trust. For purposes of current United States federal income tax law, and assuming (as expected) that the Trust will not be classified as an association taxable as a corporation, the distribution of the Distributable HECO QUIDS upon the dissolution of the Trust would not be a taxable exchange to
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holders of the QUIPS. However, the exchange of the MECO QUIDS and the HELCO QUIDS for the Substituted HECO QUIDS would likely be treated as a taxable exchange to holders of the QUIPS if the 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 this taxable exchange, you would recognize gain or loss as described under “Certain United States Federal Income Tax Consequences—Distribution of QUIDS to Holders of QUIPS.” In addition, the distribution of the Distributable HECO QUIDS could be taxable to holders of QUIPS if the Trust were characterized for United States federal income tax purposes as an association taxable as a corporation at the time of dissolution, if a Tax Event occurred and the Trust became taxable on income received or accrued on the QUIDS, or upon the occurrence of certain other circumstances. See “Certain United States Federal Income Tax Consequences—Distribution of QUIDS to Holders of QUIPS.”
HECO may shorten or extend the Stated Maturity of the QUIDS.
If certain conditions are met, HECO will have the right to either shorten or extend the Stated Maturity of all the QUIDS—and therefore change the mandatory redemption date for the QUIPS—to as early as January , 2009, or as late as January , 2052. Consequently, the QUIPS may be repaid after you have held them only five years or you may have to wait nineteen years beyond the initial Stated Maturity before you are entitled to have your QUIPS repaid.
General market conditions, deferral and extension rights and the tax treatment of the QUIPS could adversely affect market prices for the QUIPS.
There can be no assurance about 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 purchases, whether in this offering or in the secondary market, or the Distributable HECO QUIDS that a holder of QUIPS receives on dissolution of the Trust, may trade at a discount to the price that the investor paid for the QUIPS. In addition, upon 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, you would be required for United States federal income tax purposes to include OID in income on an economic accrual basis with respect to such Substituted HECO QUIDS if the Substituted HECO QUIDS are treated as having been issued with OID (even it you use the cash method of accounting).
Because of the rights of the Companies to defer interest payments on the QUIDS and to shorten or extend the Stated Maturity on the QUIDS, the market price of the QUIPS may be more volatile than the market prices of similar securities that are not subject to these rights. Moreover, any exercise of these rights could cause the market price of the QUIPS to decline. Accordingly, the QUIPS that an investor purchases whether in this offering or in the secondary market, or the Distributable HECO QUIDS that a holder of QUIPS receives on dissolution of the Trust, may trade at a discount to the price that the investor paid for the QUIPS. Furthermore, a holder that disposes of any QUIPS or QUIDS during an Extension Period, when trading prices are likely to be adversely affected by the deferral, might not receive the same return on its investment as a holder that holds its QUIPS until the Extension Period ends.
The market price of the QUIPS may not fully reflect accrued interest.
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
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equal to the accrued but unpaid interest on the 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 United States Federal Income Tax Consequences—Sales or Redemption of QUIPS.”
Holders of QUIPS will have limited voting rights.
In general, holders of QUIPS will have limited voting rights relating only to the modification of the Trust Agreement (which establishes the terms and conditions of the QUIPS), the exercise of the Trust’s rights as the holder of the QUIDS, and the dissolution, winding-up or liquidation of the Trust other than pursuant to the terms of the Trust Agreement. 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. The Administrative Trustees, who initially are officers of HECO, and HECO may amend the Trust Agreement without the consent of holders of QUIPS to ensure that (i) the Trust will be classified for United States federal income tax purposes as a grantor trust, (ii) the QUIDS will be treated as indebtedness of the Companies and (iii) the Trust will not be required to register as an “investment company” under the Investment Company Act of 1940, 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.”
There has been no prior market for the QUIPS.
The QUIPS constitute a new issue of securities with no established trading market. Although HECO expects that the QUIPS will be listed on the New York Stock Exchange (and HECO expects trading of the QUIPS to begin within 30 days after they are first issued), a listing does not guarantee that a trading market for the QUIPS will develop or, if a trading market for the QUIPS does develop, the depth of that market and the ability of holders to easily sell their QUIPS. Although we have agreed to use our best efforts to list the Distributable HECO QUIDS on the New York Stock Exchange or any other exchange on which the QUIPS are then listed, we cannot assure you that the New York Stock Exchange will approve the Distributable HECO QUIDS for listing or that a trading market will exist for the Distributable HECO QUIDS.
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HECO Capital Trust III is a statutory trust created under the Delaware Statutory Trust Act, as amended (the “Trust Act”), pursuant to the trust agreement executed by HECO, as Depositor, The Bank of New York, as property trustee (the “Property Trustee”), The Bank of New York (Delaware), as the Delaware trustee, and the three Administrative Trustees named therein (collectively, the “Trustees”), and by the filing of a certificate of trust with the Delaware Secretary of State on November 20, 2003. 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 is a part filed by the Companies and the Trust with the SEC. The Trust’s business and affairs are conducted by the Trustees. The Bank of New York, as Property Trustee, will act as sole trustee under the Trust Agreement for purposes of compliance with the Trust Indenture Act of 1939. The Bank of New York will also act as trustee for purposes of the Trust Guarantee (the “Trust Guarantee Trustee”) and the Indentures (the “Debenture Trustee”). See “Description of QUIDS,” “Description of Trust Guarantee” and “Description of Subsidiary Guarantees and Expense Agreement.” 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 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. The Companies 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, 8W, New York, New York 10286, Attention: Corporate Trust Trustee Administration. Inquiries concerning the Trust may also be directed to HECO, P.O. Box 2750, Honolulu, Hawaii 96840, Attention: Treasurer.
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 the QUIPS and the Common Securities to acquire QUIDS issued by the Companies, (iii) making Distributions and other payments on the QUIPS and the Common Securities, (iv) maintaining the status of the Trust as a grantor trust for United States federal income tax purposes and (v) engaging in only those other activities necessary, convenient or incidental thereto. Accordingly, the QUIDS and the Subsidiary Guarantees, together with the Expense Agreement, will be the sole assets of the Trust, and payments under the QUIDS and the Subsidiary Guarantees will be the sole revenues of the Trust out of which the Distributions may be made. We have agreed in the Expense Agreement to provide funds to the Trust to pay any amounts the Trust owes to persons other than holders of the QUIPS.
All of the Common Securities will be owned by HECO. The Common Securities will rank equally, and payments will be made thereon pro rata with the QUIPS, except that upon the occurrence and continuance of an Event of Default 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 preference of not less than 3% of the total capital of the Trust. The Trust has a term of approximately 52 years, but may dissolve earlier as provided in the Trust Agreement.
No separate financial statements of MECO, HELCO or the Trust have been included in this prospectus in accordance with the provisions of subsections (b) and (c) of Rule 3-10 of SEC Regulation S-X. HECO includes consolidating financial information concerning MECO and HELCO in
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the footnotes to its consolidated financial statements, and certain of such information is set forth in this prospectus under “Selected Consolidated Financial Information.” HECO will treat the Trust in accordance with Rule 3-10(b) of SEC Regulation S-X and will include an appropriate footnote pertaining to the QUIPS and the Trust in its financial statements. See “Accounting Treatment.”
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 Hawaiian Electric Industries, Inc., 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 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, and its telephone number is (808) 871-8461. 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, and its telephone number is (808) 969-1171.
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 on December 31, 2002 estimated at 1,185,000, or approximately 95 percent of the State’s total population, and a service area of approximately 5,766 square miles. 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, 2000, 2001 and 2002 and the related electric sales revenues by Company for each of the years then ended (dollars in thousands) :
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2000
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2001
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2002
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Accounts |
Electric sales
revenues |
Customer
accounts |
Electric sales
revenues |
Customer
accounts |
Electric sales
revenues |
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|
HECO |
278,260 | $ | 880,663 | 280,911 | $ | 882,308 | 283,161 | $ | 865,608 | ||||||
|
MECO |
57,601 | 192,823 | 58,840 | 203,847 | 59,983 | 191,029 | |||||||||
|
HELCO |
63,778 | 192,174 | 65,241 | 193,209 | 66,411 | 191,589 | |||||||||
|
|
|
|
|
|
|
|
|
|
|||||||
| 399,639 | $ | 1,265,660 | 404,992 | $ | 1,279,364 | 409,555 | $ | 1,248,226 | |||||||
|
|
|
|
|
|
|
|
|
|
|||||||
Revenues from the sale of electricity in 2002 were from the following types of customers in the proportions shown:
|
HECO
|
MECO
|
HELCO
|
Total
|
|||||||||
|
Residential |
32 | % | 36 | % | 41 | % | 34 | % | ||||
|
Commercial |
32 | 35 | 41 | 34 | ||||||||
|
Large light and power |
35 | 29 | 18 | 31 | ||||||||
|
Other |
1 | — | — | 1 | ||||||||
|
|
|
|
|
|
|
|
|
|||||
| 100 | % | 100 | % | 100 | % | 100 | % | |||||
|
|
|
|
|
|
|
|
|
19
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, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures about Market Risk” included in the documents incorporated by reference in this prospectus. The consolidated Income Statement and Operating Data for each of the years in the three-year period ended December 31, 2002 are derived from, and are qualified by reference to, the audited consolidated financial statements included in the documents incorporated by reference in this prospectus. The consolidated Income Statement and Operating Data for the nine-month periods ended September 30, 2002 and 2003, and the Capitalization Data as of September 30, 2003, are derived from unaudited consolidated financial statements incorporated by reference in this prospectus, which, in the opinion of management, include all material adjustments necessary for a fair presentation of HECO’s consolidated financial position as of September 30, 2003 and results of operations for the nine-month periods ended September 30, 2002 and 2003. The results of operations for the nine-month period ended September 30, 2003 may not necessarily be indicative of the results to be expected for the full calendar year. The historical results are not necessarily indicative of the results of operations to be expected in the future.
|
Years Ended December 31,
|
Nine Months Ended
September 30, |
|||||||||||||||
|
2000
|
2001
|
2002
|
2002
|
2003
|
||||||||||||
|
Income Statement Data: |
||||||||||||||||
|
(dollars in thousands) |
||||||||||||||||
|
Operating Revenues |
$ | 1,270,635 | $ | 1,284,312 | $ | 1,252,929 | $ | 916,402 | $ | 1,039,781 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Operating Expenses |
||||||||||||||||
|
Fuel Oil |
362,905 | 346,728 | 310,595 | 218,901 | 294,303 | |||||||||||
|
Purchased Power |
311,207 | 337,844 | 326,455 | 240,744 | 273,161 | |||||||||||
|
Other Operating Expenses |
463,362 | 464,408 | 480,722 | 353,242 | 379,645 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Total Operating Expenses |
1,137,474 | 1,148,980 | 1,117,772 | 812,887 | 947,109 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Operating Income |
$ | 133,161 | $ | 135,332 | $ | 135,157 | $ | 103,515 | $ | 92,672 | ||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Allowance for Equity Funds Used During Construction |
$ | 5,380 | $ | 4,239 | $ | 3,954 | $ | 2,977 | $ | 3,075 | ||||||
|
Income Before Interest and Other Charges (1) |
$ | 143,096 | $ | 142,768 | $ | 142,252 | $ | 108,927 | $ | 96,494 | ||||||
|
Allowance for Borrowed Funds Used During Construction |
$ | 2,922 | $ | 2,258 | $ | 1,855 | $ | 1,392 | $ | 1,385 | ||||||
|
Income Before Preferred Stock Dividends of HECO (2) |
$ | 88,366 | $ | 89,380 | $ | 91,285 | $ | 70,629 | $ | 57,382 | ||||||
|
Net Income for Common Stock |
$ | 87,286 | $ | 88,300 | $ | 90,205 | $ | 69,819 | $ | 56,572 | ||||||
|
Operating Data: |
||||||||||||||||
|
Average Fuel Oil Cost Per Barrel |
$ | 33.44 | $ | 33.49 | $ | 29.10 | $ | 27.52 | $ | 36.75 | ||||||
|
Kilowatthour Sales (Millions) |
9,272 | 9,370 | 9,544 | 7,117 | 7,269 | |||||||||||
|
As of September 30, 2003 |
||||||||||||||||
|
Capitalization Data: |
||||||||||||||||
|
(dollars in thousands) |
||||||||||||||||
|
Long-Term Debt, Net |
$ | 698,790 | 39 | % | ||||||||||||
|
HECO-Obligated Mandatorily Redeemable Trust Preferred Securities of Subsidiary Trusts (3) |
100,000 | 6 | ||||||||||||||
|
Preferred Stock Without Mandatory Redemption Requirements |
34,293 | 2 | ||||||||||||||
|
Common Stock Equity |
937,367 | 53 | ||||||||||||||
|
|
|
|
|
|
||||||||||||
|
Total Capitalization |
$ | 1,770,450 | 100 | % | ||||||||||||
|
|
|
|
|
|
||||||||||||
| (1) | Income Before Interest and Other Charges includes Operating Income plus the Allowance for Equity Funds Used During Construction and nonoperating income. |
20
| (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, preferred stock dividends of HELCO and MECO and distributions on the preferred securities of HECO Capital Trust I and HECO Capital Trust II. |
| (3) | The $100 million total liquidation preference of trust preferred securities will only be affected temporarily by the issuance and sale of the QUIPS offered by this prospectus because the QUIPS proceeds to be received by the Companies in exchange for their QUIDS will be applied approximately 30 days after the sale of the QUIPS offered by this prospectus to redeem a like amount of junior subordinated deferrable interest debentures of the Companies and the related trust preferred securities issued by HECO Capital Trust I and HECO Capital Trust II in 1997 and 1998, respectively. See “Use of Proceeds” and “Accounting Treatment.” |
The following table summarizes certain financial information for the Companies on a consolidated basis (“HECO Consolidated”) and for MECO and HELCO, individually. None of the information in the table is audited, except that the financial information for HECO Consolidated as of December 31, 2002 is derived from audited financial statements.
|
HECO Consolidated
|
MECO
|
HELCO
|
||||||||||||||||
|
December 31,
2002 |
September 30,
2003 |
December 31,
2002 |
September 30,
2003 |
December 31,
2002 |
September 30, 2003 |
|||||||||||||
|
Balance Sheet Data: |
||||||||||||||||||
|
(in thousands) |
||||||||||||||||||
|
Current Assets |
$ | 281,859 | $ | 315,497 | $ | 64,723 | $ | 74,757 | $ | 40,246 | $ | 42,941 | ||||||
|
Noncurrent Assets |
2,154,527 | 2,152,697 | 387,124 | 379,694 | 428,735 | 432,232 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
| $ | 2,436,386 | $ | 2,468,194 | $ | 451,847 | $ | 454,451 | $ | 468.981 | $ | 475,173 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Common Stock Equity |
$ | 923,256 | $ | 937,367 | $ | 181,373 | $ | 184,725 | $ | 171,404 | $ | 176,007 | ||||||
|
Preferred Stock Without Mandatory Redemption Requirements |
34,293 | 34,293 | 5,000 | 5,000 | 7,000 | 7,000 | ||||||||||||
|
HECO-Obligated Mandatorily Redeemable Trust Preferred Securities of Subsidiary Trusts |
100,000 | 100,000 | — | — | — | — | ||||||||||||
|
Current Liabilities |
184,277 | 202,162 | 30,879 | 38,798 | 45,537 | 41,016 | ||||||||||||
|
Noncurrent Liabilities |
1,194,560 | 1,194,372 | 234,595 | 225,928 | 245,040 | 251,150 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
| $ | 2,436,386 | $ | 2,468,194 | $ | 451,847 | $ | 454,451 | $ | 468,981 | $ | 475,173 | |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
|
Nine Months Ended
September 30, |
Nine Months Ended
September 30, |
Nine Months Ended
September 30, |
||||||||||||||||
|
2002
|
2003
|
2002
|
2003
|
2002
|
2003
|
|||||||||||||
|
Income Statement Data: |
||||||||||||||||||
|
(in thousands) |
||||||||||||||||||
|
Operating Revenues |
$ | 916,402 | $ | 1,039,781 | $ | 141,509 | $ | 159,674 | $ | 140,631 | $ | 157,791 | ||||||
|
Operating Income |
$ | 103,515 | $ | 92,672 | $ | 22,153 | $ | 21,885 | $ | 18,643 | $ | 16,798 | ||||||
|
Net Income for Common Stock |
$ | 69,819 | $ | 56,572 | $ | 14,169 | $ | 12,588 | $ | 11,588 | $ | 9,722 | ||||||
21
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. Gross capital expenditures requiring the use of cash totaled approximately $114.6 million in 2002, of which $71.3 million was attributable to HECO, $15.7 million to MECO and $27.6 million to HELCO. Approximately 64% of the 2002 gross capital expenditures was for transmission and distribution projects and approximately 36% was for generation and general plant projects. Cash contributions in aid of construction received in 2002 totaled $11.0 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 2003 through 2007, is approximately $0.7 billion, of which $70.2 million has been spent through September 30, 2003. Approximately 53% of gross capital expenditures forecast for this period, including AFUDC and third-party contributions in aid of construction, is for transmission and distribution projects, with the remaining 47% 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 and changes in expectations concerning the construction and ownership of future generating units, the availability of generating sites and transmission and distribution corridors, the ability to obtain adequate and timely rate increases, escalation in construction costs, the impacts of demand-side management programs, the effects of opposition to proposed construction projects and requirements of environmental and other regulatory and permitting authorities.
Financing Requirements
The Companies’ consolidated financing requirements for the years 2003 through 2007, including for net capital expenditures and long-term debt repayments (exclusive of reductions in levels of short-term borrowings), are currently estimated to total $0.7 billion. HECO’s consolidated internal sources (primarily consolidated cash flows from operations comprised mainly of net income, adjusted for noncash income and expense items such as depreciation, amortization and deferred taxes, and changes in working capital), after the payment of common stock and preferred stock dividends, are currently expected to provide sufficient cash to meet consolidated financing requirements and to reduce the level of borrowings. Debt or equity financing, or both, may be required, however, to fund unanticipated expenditures not included in the 2003 through 2007 forecast, such as increases in the costs of or an acceleration of the construction of capital projects, unbudgeted acquisitions or investments in new businesses and significant increases in retirement benefit funding requirements.
The Companies participate in pension and other postretirement benefit plans. Funding for the pension plans is based upon actuarially determined contributions that take into account the amount deductible for income tax purposes and the minimum contribution required under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). Although the Companies are not required to make any contributions to the pension plans in 2003 to meet minimum funding requirements pursuant to ERISA, the Companies intend to make cash contributions to the retirement benefit plans of at least $20 million in 2003, of which $15 million have been made as of October 31, 2003. With respect to the postretirement benefits plans, the Company’s policy is to comply with directives from the PUC to fund the costs. These costs are ultimately collected in rates billed to
22
customers. Due to the sharp declines in U.S. equity markets beginning in 2000, the value of a significant portion of the assets held in the plans’ trusts to satisfy the obligations of the pension and other postretirement plans has decreased significantly. As a result, additional contributions to the plans may be required, or may be made even if not required, in 2004 and future years. The $0.7 billion forecast of financing requirements for the period 2003 through 2007 does not include any such contributions, including the $15 million of contributions that have been made as of October 31, 2003.
The PUC must approve issuances of long-term debt and equity for HECO, MECO and HELCO and an application has been filed requesting that the PUC approve 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 will also be required before the Substituted HECO QUIDS may be issued to effect an exchange of Substituted HECO QUIDS for HELCO QUIDS and MECO QUIDS in connection with a liquidation of the Trust and a distribution to holders of the QUIPS of the Distributable HECO QUIDS.
23
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:
|
Years Ended December 31,
|
Nine Months Ended September 30, |
|||||||||||||
|
1998
|
1999
|
2000
|
2001
|
2002
|
2002
|
2003
|
||||||||
|
Ratio of Earnings to Fixed Charges |
3.33 | 3.09 | 3.39 | 3.51 | 3.71 | 3.80 | 3.23 | |||||||
|
Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends |
3.07 | 3.00 | 3.31 | 3.41 | 3.60 | 3.69 | 3.15 | |||||||
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, the estimated interest component of rentals and the preferred securities distribution requirements of HECO Capital Trust I and HECO Capital Trust II. In computing the Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends, earnings represent Net Income for Common Stock, and pre-tax preferred stock dividend requirements of HECO are added to fixed charges.
24
WHERE YOU CAN FIND MORE INFORMATION
The Companies and the Trust have filed a registration statement with the SEC. This prospectus is part of the registration statement, but the registration statement also contains additional information and exhibits. HECO also files annual, quarterly and current reports and other information with the SEC. You may read and copy the registration statement and any document that HECO files at the SEC’s public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. You can call the SEC’s toll-free telephone number at 1-800-SEC-0330 for further information on the public reference room. The SEC maintains a web site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding companies (such as HECO) that file documents with the SEC electronically. The documents can be found by searching the EDGAR Archives at the SEC’s web site. HECO’s SEC filings, and other information on the Companies, may also be obtained on the Internet at http://www.hei.com , the web site for Hawaiian Electric Industries, Inc., the parent company of HECO, but information contained on this web site does not constitute part of this prospectus.
The SEC allows HECO to “incorporate by reference” the information that it files with the SEC, which means that HECO can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus and should be read with the same care. Later information that HECO files with the SEC will automatically update and supersede information in this prospectus or an earlier filed document. HECO has filed with the SEC (File No. 1-4955) and incorporates by reference the documents below:
| • | Annual Report on Form 10-K for the year ended December 31, 2002. |
| • | Quarterly Reports on Form 10-Q for the quarters ended March 31, 2003, June 30, 2003 and September 30, 2003. |
| • | Current Reports on Form 8-K filed April 22, 2003, May 6, 2003, July 10, 2003, July 22, 2003, August 29, 2003, September 15, 2003, October 27, 2003, November 12, 2003, November 25, 2003 and December 10, 2003. |
| • | Any future filings made by HECO with the SEC under Sections 13(a), 13(c), 14 and 15 of the Securities Exchange Act of 1934 (the “Exchange Act”) if the filings are made prior to the time that all of the QUIPS are sold in this offering. |
You may request a free copy of these filings by writing or telephoning us at the following address:
Hawaiian Electric Company, Inc.
Attn: Treasurer
P.O. Box 2750
Honolulu, Hawaii 96840
Telephone: 808-543-7893
You should read and rely only on the information incorporated by reference or provided in this prospectus or any supplement. HECO has not, and the underwriters have not, authorized any other person to provide you with different information. HECO, the Trust and the underwriters are not making an offer of these securities in any jurisdiction where the offer is not permitted. You should assume that the information appearing in this prospectus, in any supplement to this prospectus or in the documents incorporated by reference is accurate only as of the date of those documents. The business, financial condition, results of operations and prospects of the Companies may have changed since those dates.
25
This prospectus, which includes the documents incorporated by reference, contains “forward-looking statements” as that term is defined in the Private Securities Litigation Reform Act of 1995. The safe harbor provisions of the Exchange Act and the Securities Act of 1933 apply to forward-looking statements made by the Companies. Forward-looking statements, which include statements that are predictive in nature, depend upon or refer to future events or conditions, and usually include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “predicts,” “estimates” or similar expressions. In addition, any statements concerning future financial performance (including future revenues, earnings or losses or growth rates), ongoing business strategies or prospects and possible future actions, which may be provided by management, are also forward-looking statements.
Forward-looking statements are based on current expectations and projections abut future events and are subject to risks and uncertainties about HECO and its subsidiaries, the performance of the industry in which they do business and economic and market factors, among other things. These factors include the risks and uncertainties identified in this prospectus and in the incorporated documents. Forward-looking statements are not guarantees of future performance and the actual results that the Companies achieve may differ materially. In addition, forward-looking statements speak only as of the date of the document in which they are made and, except for its ongoing obligations to disclose material information under the federal securities laws, HECO assumes no obligation to update these statements.
All of the proceeds from the sale of QUIPS and the Common Securities will be invested by the Trust in the QUIDS. All of the proceeds from the sale to the Trust of the QUIDS, together with any necessary additional funds to be provided by the Companies, will be used by the Companies to redeem the junior subordinated deferrable interest debentures that they issued to HECO Capital Trust I and HECO Capital Trust II in 1997 and 1998, respectively, which will in turn result in the redemption of the outstanding trust preferred securities and common securities of HECO Capital Trust I and HECO Capital Trust II and the termination of such trusts. Such redemptions are expected to be completed approximately 30 days after completion of the sale of the QUIPS, in each case, at a redemption price of 100% of the stated liquidation preference thereof plus accumulated and unpaid distributions thereon to the date of redemption. All or a portion of the proceeds from the sale of the QUIDS may be invested temporarily, until their application to effect such redemptions, in commercial paper, repurchase agreements, United States treasury securities, United States federal agency securities, certificates of deposit, money market funds, time deposits or Euro dollar deposits, or a combination of such short-term investments. The stated annual interest/distribution rates of the junior subordinated deferrable interest debentures/trust preferred securities to be redeemed are 8.05% for the securities issued in 1997 and 7.30% for the securities issued in 1998.
26
Historically, HECO has included the financial statements of trusts similar to the Trust (i.e., HECO Capital Trust I and HECO Capital Trust II) in its consolidated financial statements, with the quarterly income preferred securities issued by those trusts being classified in HECO’s consolidated balance sheet under the heading “HECO-obligated mandatorily redeemable trust preferred securities of subsidiary trusts holding solely HECO and HECO-guaranteed debentures.” However, in January 2003, the Financial Accounting Standards Board issued Interpretation (FIN) No. 46, “Consolidation of Variable Interest Entities,” which addresses the consolidation of variable interest entities such as the Trust. FIN No. 46 will be applied no later than the end of the first interim or annual reporting period ending after December 15, 2003. Management has not yet determined the impact, if any, of adoption of FIN No. 46, and whether or not the Trust’s financial statements will be consolidated with HECO’s financial statements.
In the event of consolidation of the Trust, the financial statements of HECO for these periods will include, in accordance with Rule 3-10(b) of Regulation S-X, a footnote which will describe the QUIPS and the QUIDS and will state that the Trust is a 100%-owned finance subsidiary of HECO and that the Guarantees, taken together with HECO’s obligations under its QUIDS and its obligations under the Trust Agreement and the Expense Agreement, provide a full and unconditional guarantee, on a subordinated basis, of amounts due on the QUIPS. The footnote will also state that, so long as the QUIPS are outstanding, HECO is not entitled to receive any funds from the Trust other than pro rata distributions on the Common Securities, and that, in certain circumstances, its right to receive such distributions is subordinate to the right of the holders of the QUIPS to receive distributions on the QUIPS. The footnote will also state that, in the event of a default by HECO in the performance of its obligations under the HECO QUIDS or under its Guarantees, or in the event HECO, MECO or HELCO elect to defer payment of interest on any of their respective QUIDS, then HECO will be subject to a number of restrictions, including a prohibition on the payment of dividends on its common stock.
The financial statements of HELCO and MECO will continue to be consolidated into HECO’s financial statements. HECO’s financial statements will also continue to include, in accordance with Rule 3-10(c) of Regulation S-X, a footnote providing consolidating financial information, with separate columns for (i) HECO, (ii) HELCO, (iii) MECO, (iv) any other subsidiaries of HECO on a combined basis, (v) consolidating adjustments and (vi) total consolidated amounts, but may omit item (iv) so long as HECO’s subsidiaries other than HELCO and MECO are minor subsidiaries.
27
The QUIPS will be created pursuant to the terms of the Trust Agreement. The following is a summary of certain of the terms and provisions of the QUIPS and the Trust Agreement. This summary is not a complete description of all of the terms and provisions of the QUIPS and the Trust Agreement. For more information, we refer you to the form of the Trust Agreement, which 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 Trust will issue the QUIPS and the Common Securities. The QUIPS will rank equally, 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, HECO’s Subsidiary Guarantees and the Expense Agreement 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 the 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 per QUIPS, payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year. Distributions will accumulate from the original issue date. The first Distribution payment date for the QUIPS will be March 31, 2004. 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 such period. If any date on which Distributions are payable on the QUIPS is not a Business Day, payment of the Distributions payable on such date will be made either (a) on the next day that is a Business Day (and without any additional Distributions or other payment in respect of any such delay) or (b) if such next Business Day is in the next calendar year, 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 (under the Trust Agreement) or the Debenture Trustee (under the Indentures) is closed for business.
So long as no Debenture 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 QUIDS at any time for a period (including extensions) not exceeding 20 consecutive quarters with respect to each Extension Period. However, no Extension Period may extend beyond the Stated Maturity of the QUIDS. If there is a deferral, quarterly Distributions on the QUIPS in a corresponding amount will be deferred by the Trust during the 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
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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, either directly or indirectly through a subsidiary, (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 equally 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 equally 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, including HECO Capital Trust III) 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 United States 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. 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 the Subsidiary Guarantees. See “Description of QUIDS.” To the extent the Companies do not make interest payments on the QUIDS and HECO does not make payments under the Subsidiary Guarantees, 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 below 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-only 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-only 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 below under “—Payment and Paying Agency.”
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Redemption or Exchange
Mandatory Redemption . Upon the repayment or redemption, in whole or in part, of any QUIDS, whether at Stated 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 “QUIPS 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 January , 2009, 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. 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 and subject to the further conditions described below under “Description of QUIDS—Redemption,” at the QUIDS Redemption Price.
Special Event Redemption or Distribution of QUIDS . If a Special Event shall occur and be continuing, 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 the Common Securities in whole (but not in part) at the QUIPS Redemption Price, within 90 days following the occurrence of such event.
In addition, subject to obtaining prior approval from the PUC, HECO may at any time, whether or not a Special Event has occurred, upon 30 days’ prior written notice to the holders of the QUIPS, direct the Property Trustee in writing 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 a Like Amount of Distributable HECO QUIDS to be distributed by the Trust to the holders of the QUIPS and the 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 below under “Certain United States Federal Income Tax Consequences—Distribution of QUIDS to Holders of QUIPS.” In addition, the distribution of the Distributable HECO QUIDS could be a taxable exchange to holders of the QUIPS 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 it there is a change in law or legal interpretation, or upon the occurrence of certain other circumstances. See “Certain United States Federal Income Tax Consequences—Distribution of QUIDS to Holders of QUIPS.”
If HECO does not elect either to redeem the QUIDS or to dissolve the Trust and distribute the Distributable HECO QUIDS in exchange for the QUIPS as described above, the QUIPS will remain outstanding and, in the event a Tax Event has occurred and is continuing, Additional Sums may be payable by the Companies on the QUIDS.
“Additional Sums” means the additional amounts necessary in order that 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.
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“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 the Common Securities, QUIPS and Common Securities having an aggregate liquidation preference equal to the aggregate principal amount of QUIDS to be contemporaneously repaid or redeemed in accordance with the Indentures and the proceeds of which will be used to pay the QUIPS 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 and liquidation of the Trust, Distributable HECO QUIDS having an aggregate principal amount equal to the aggregate liquidation preference of the QUIPS and the Common Securities of the holders to whom such QUIDS are distributed. “Liquidation preference” means the stated liquidation preference of $25 per QUIPS or $25 per 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 (as defined below), 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 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) The Depository Trust Company (“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 occurs. 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.
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Redemption Procedures
QUIPS redeemed on each Redemption Date shall be redeemed at the QUIPS Redemption Price with the applicable proceeds from the contemporaneous repayment or redemption of the QUIDS. Redemptions of the QUIPS shall be made and the QUIPS 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, by action of the Property Trustee, 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, and provided that the necessary funds are available, the Property Trustee will deposit irrevocably with DTC funds sufficient to pay the QUIPS Redemption Price and will give DTC irrevocable instructions and authority to pay the QUIPS Redemption Price to the holders of such QUIPS. See “—Book-Entry Issuance.” If such QUIPS are not in book-entry-only form, the Trust, provided that the necessary funds are available, will irrevocably deposit with the paying agent for the QUIPS funds sufficient to pay the QUIPS Redemption Price and will give such paying agent irrevocable instructions and authority to pay the QUIPS 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 as they appear on the Securities Register for the 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 QUIPS Redemption Price, but without interest on such QUIPS 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 QUIPS 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 next 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 QUIPS 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 QUIPS Redemption Price is actually paid, in which case the actual payment date will be the date fixed for redemption for purposes of calculating the QUIPS Redemption Price.
Any notice of redemption of QUIPS may state that such redemption shall be conditional upon the receipt by the Property Trustee not later than the close of business on the Business Day next preceding the Redemption Date of moneys sufficient to pay in full the QUIPS Redemption Price of such QUIPS. If the redemption notice states that it is conditional and such moneys shall not be so received by the close of business on the Business Day next preceding the Redemption Date, such notice of redemption shall be of no force and effect, the Property Trustee shall not redeem such QUIPS and the Property Trustee shall give notice to the registered owners of the QUIPS, in the manner in which the notice of redemption was given, that such moneys were not so received and that such redemption did not occur. In such event, the Property Trustee shall promptly return QUIPS which it has received to the registered owners thereof.
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.
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Payment of the QUIPS 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, as long as the QUIPS remain in book-entry form, 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 the Common Securities issued by the Trust are to be redeemed on a Redemption Date, then the aggregate liquidation preference of such QUIPS and the Common Securities to be redeemed shall be allocated among the QUIPS and the 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 the 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 the Common Securities. However, 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 QUIPS Redemption Price the full amount of the QUIPS 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 QUIPS 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 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 for the benefit of the holders of the QUIPS and not for the benefit of HECO, as holder of the Common Securities, and only the holders of the QUIPS will have the right to direct the Property Trustee to act for their benefit.
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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 of a 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) upon 30 days’ prior written notice to the holders of the QUIPS, the written direction of HECO to the Property Trustee to dissolve the Trust and cause the distribution of a Like Amount of Distributable HECO QUIDS to the holders of the QUIPS and the Common Securities (which direction is wholly optional and within the discretion of HECO) (see “—Redemption or Exchange—Special Event Redemption or Distribution of QUIDS”); (iii) the redemption of all of the QUIPS and the 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 the Common Securities a Like Amount of 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 the
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performance of which or the breach of which is covered by 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 any person (including any of the Companies) 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, to the fullest extent permitted by law, 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 suit (a “Direct Action”) directly 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 a 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
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time by the holders of a majority in liquidation preference of the outstanding QUIPS. In no event will 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’s property may at the time be located, HECO, as Depositor, and the Administrative Trustees shall have power to appoint one or more persons approved by the Property Trustee 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. If HECO does not join in such appointment within 15 days after the receipt by it of a request to do so, or 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, without the execution or filing of any paper or any further act on the part of any of the parties to 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 if (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 with respect to Distributions and payments upon liquidation, redemption and otherwise, (ii) HECO expressly appoints a trustee of such successor entity possessing 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
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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, HECO has received an opinion of counsel to the Trust experienced in such matters 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 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 all holders 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, 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 described below and under “Description of Trust Guarantee—Amendments and Assignment,” and except as otherwise required by law, the Trust Agreement or 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 Administrative Trustees, without the consent of the holders of the QUIPS, (a) 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, provided that any such amendment does not adversely affect the interests of any holder of QUIPS or Common Securities, or (b) 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 QUIDS will be treated as indebtedness of the Companies or to ensure that the Trust will not be required to register as an “investment company” under the Investment Company Act of 1940. Any such amendment of the 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 Administrative Trustees and HECO with the consent of holders representing not less than a majority (based upon liquidation preference) of the outstanding QUIPS and Common Securities. Without the consent of each affected holder of QUIPS and Common Securities, however, the Trust Agreement may not be amended to (i) change the amount, timing or currency of any Distribution or Liquidation Distribution on the QUIPS or Common Securities or otherwise adversely affect the amount of any Distribution or Liquidation Distribution required to be made in respect of the QUIPS or Common Securities as of a specified date, (ii) change the redemption provisions of the QUIPS or Common 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
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QUIPS. No amendment of the Trust Agreement may 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 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 of 1940.
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 the QUIDS shall be due and payable or (iv) consent to any amendment, modification or termination of the applicable Indenture, where such consent shall be required, without, in each case, obtaining the prior written consent of the holders of a majority in aggregate liquidation preference of the outstanding QUIPS; provided, however, that where such 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 written consent of each holder of the outstanding QUIPS. The Trustees shall not revoke any action previously authorized or approved by a vote of the holders of the QUIPS, except by a subsequent vote of the holders of the QUIPS. The Property Trustee shall notify all holders of the QUIPS of any notice of default with respect to the QUIDS. In addition to obtaining the consent of the holders of the QUIPS, prior to taking any of the foregoing actions, the Trustees shall, at the expense of HECO, 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.
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 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.
When holders of QUIPS are entitled to vote or consent under any of the circumstances described above, all 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 the Property Trustee may choose any co-paying agent 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 that is acceptable to the Property Trustee and HECO (which shall be a bank or trust company having a combined capital and surplus of at least $50,000,000) 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, provided that such resignation with respect to the sole Paying Agent shall not become effective until the appointment of a successor.
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Book-Entry Issuance
DTC will act as securities depository 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 or its custodian.
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 a wholly-owned subsidiary of The Depository Trust & Clearing Corporation (“DTCC”). DTCC, in turn, is owned by a number of Direct Participants of DTC and members of the National Securities Clearing Corporation, Government Securities Clearing Corporation, MBS Clearing Corporation, and Emerging Markets Clearing Corporation (each of which is also a subsidiary of DTCC), as well as by the New York Stock Exchange, Inc., 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, trust companies and clearing corporations 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 SEC. More information about DTC can be found at http://www.dtcc.com.
Purchases of QUIPS under 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 the global certificate representing the QUIPS.
To facilitate subsequent transfers, all QUIPS deposited by Direct Participants with DTC (or its custodian) are registered in the name of DTC’s partnership nominee, Cede & Co., or such other name as may be requested by an authorized representative of DTC. The deposit of the QUIPS with DTC and their registration in the name of Cede & Co. or such other DTC nominee do not effect any change in beneficial ownership. 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.
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
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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. 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).
Distribution payments on the QUIPS will be made by the Property Trustee to Cede & Co. or such other nominee as may be requested by an authorized representative of 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, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of such Participant and not of DTC (nor its nominee), 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 depository 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 depository). 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 either such event, definitive certificates representing the QUIPS will be printed and delivered.
The Companies, the Trust and the underwriters will have no responsibilities or obligations to any Participant or to any Beneficial Owner with respect to (i) the accuracy of any records maintained by DTC, its nominee or any Participant, (ii) the payment by DTC or any Participant of any amount with respect to the QUIPS, (iii) any notice which is permitted or required to be given to Participants or Beneficial Owners or (iv) any consent given or other action taken by DTC or its nominee as registered owner of the QUIPS.
The information in this section concerning DTC and DTC’s book-entry system has been obtained from sources (including DTC) that the Trust, the Companies and the underwriters believe to be accurate, but the Trust, the Companies and the underwriters 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.
Transfers of QUIPS will be registered upon payment by the transferee of any tax or other governmental charges that may be imposed in connection with any transfer or exchange, but without
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charge by or on behalf of the Trust. 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.
Miscellaneous
The Administrative Trustees and HECO, as Depositor, 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 of 1940, 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 of 1940 and to ensure that the QUIDS will be treated as indebtedness of the Companies. See “—Voting Rights; Amendment of the Trust Agreement.”
Holders of the QUIPS have no preemptive or similar rights to subscribe for the beneficial or equity interests of the Trust or of any of the Companies.
The Trust may not borrow money or issue debt or mortgage or pledge any of its assets.
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The QUIDS of each of the Companies are to be issued under its Junior Indenture as supplemented from time to time (as so supplemented, the “HECO Indenture,” the “MECO Indenture” and the “HELCO Indenture,” and, collectively, the “Indentures”), between each such Company and The Bank of New York, as 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 except for the provisions providing for the exchange of Substituted HECO QUIDS for the MECO QUIDS and HELCO QUIDS and as otherwise described below, the provisions of the Indentures are substantially similar. The following is a summary of certain of the terms and provisions of the QUIDS and the Indentures. This summary is not a complete description of all the terms and provisions of the QUIDS and the Indentures. For more information, we refer you to the forms of Indentures, which have been filed as exhibits 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 purchase the QUIDS with the proceeds from the sale of the QUIPS and the Common Securities. 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, 2004, to the person in whose name each of the QUIDS is registered, subject to certain exceptions, at the close of business on the Business Day before such Interest Payment Date, provided that if the QUIDS are issued in certificated form and not held by the Trust, the record date 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, the 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. If any date on which interest is payable on the QUIDS is not a Business Day, payment of the interest payable on such date will be made either (a) on the next day that is a Business Day (and without any interest or other payment in respect of any such delay), or (b) if such next Business Day is in the next calendar year, 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 applicable.
The QUIDS will be issued by each of the Companies under the applicable Indenture. The QUIDS will mature on January , 2034, 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 and, if issued, all of the Substituted HECO QUIDS) for one or more periods, but in no event to a date earlier than January , 2009 or to a date later than January , 2053, 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 QUIPS, or if the Distributable HECO QUIDS have been distributed to the holders of the QUIPS, the
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Distributable HECO 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 be junior to all Senior Indebtedness of the respective issuing Company and will rank equally with any other series of junior subordinated deferrable interest debentures issued by that Company, including (until their respective planned redemptions as described under “Use of Proceeds”) the two series of junior subordinated deferrable interest debentures, each in an aggregate principal amount of $50 million, issued by the Companies in 1997 and 1998. 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, each of the Companies will pay as Additional Sums 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.
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 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.
Payment and Paying Agents
During the period that QUIDS are not held by a depository or the Trust, payment of principal of and any interest on QUIDS at Stated Maturity or earlier redemption will be made at the office of the
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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 Stated Maturity or earlier redemption shall 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.
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 or interest on any QUIDS and remaining unclaimed for two years after such principal 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 and all liability of the Debenture Trustee or any Paying Agent with respect to such moneys shall thereupon cease.
Redemption
The QUIDS are redeemable prior to maturity (i) at the option of each of the respective Companies on or after January , 2009, 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. Any notice of redemption of QUIDS may state that such redemption shall be conditional upon the receipt by the Debenture Trustee not later than the close of business on the Business Day next preceding the Redemption Date of moneys sufficient to pay in full the QUIDS Redemption Price of such QUIDS. If the redemption notice states that it is conditional and such moneys shall not be so received by the close of business on the Business Day next preceding the Redemption Date, such notice of redemption shall be of no force and effect, such QUIDS shall not be redeemed and the Debenture Trustee shall give notice to the registered owners of the QUIDS, in the manner in which the notice of redemption was given, that such moneys were not so received and that such redemption did not occur. In such event, the Debenture Trustee shall promptly return QUIDS which it has received to the registered owners thereof. Unless there is a default in payment of the QUIDS 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 its 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
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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 United States 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, either directly or indirectly through a subsidiary, subject to certain exceptions, to declare or pay any cash distributions with respect to its capital stock or debt securities that rank equally 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, either directly or indirectly through a subsidiary, (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 equally 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 equally 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 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 any payment due 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
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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 interests 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 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 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.
Debenture Events of Default
Each Indenture provides that any one or more of the following 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 of such QUIDS when due whether at Stated 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
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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. However, if (a) 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 (b) 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 due and payable immediately and to enforce its other rights as a creditor with respect to such QUIDS.
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 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 a holder of QUIPS in connection with a Direct Action, the respective Company shall remain obligated to pay the principal of and 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 will 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 the 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
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transaction or in a series of transactions) to such Company, unless (i) if 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 the successor entity expressly assumes the 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 the Trust Guarantee and does not give rise to any breach or violation of the Trust Agreement or the Trust Guarantee, and (iv) certain other conditions specified 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 certain officers’ certificates and opinions of counsel), and such Company will be deemed to have satisfied and discharged such Indenture.
Distribution of QUIDS; Exchange of Substituted HECO QUIDS for MECO and HELCO QUIDS
If HECO elects in its sole discretion to dissolve the Trust, 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 (“Global QUIDS”) and DTC, or any successor depository for the QUIPS, will act as depository for such QUIDS. It is anticipated that the depository 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 depository arrangements, see “Description of QUIPS—Book-Entry Issuance.”
Global QUIDS shall be exchangeable for QUIDS registered in the names of persons other than DTC or its nominee only if (i) DTC 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 DTC ceases to be a clearing agency registered under the Exchange Act at a time when DTC 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 a Debenture Event of Default with respect to such Global QUIDS. Any Global QUIDS that are exchangeable pursuant to the preceding sentence shall be exchangeable for
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definitive certificates registered in such names as DTC shall direct. It is expected that such instructions will be based upon directions received by DTC 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.
In order to effect a distribution of Distributable HECO 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 to all Senior Indebtedness 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 Indebtedness of each such Company will first be entitled to receive payment in full of principal of and interest, if any, on such Senior Indebtedness 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 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 Indebtedness 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 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 Indebtedness of such Company, or an event of default with respect to any such Senior Indebtedness resulting in the acceleration of the maturity thereof, or if any judicial proceeding shall be pending with respect to any such default.
“Indebtedness” 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 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 Indebtedness” 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
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or for reorganization relating to such 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 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 Indebtedness which is equal with, or subordinated to, the QUIDS; provided, however, that Senior Indebtedness shall not be deemed to include (i) any Indebtedness 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 Indebtedness of such Company to any of its subsidiaries, (iii) Indebtedness 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. In addition, HECO receives interest and dividends from its subsidiaries. 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 and interest thereon.
The Indentures place no limitation on the amount of additional Senior Indebtedness 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 Indebtedness.
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 of 1939. 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 upon the issuance by the Trust of its QUIPS for the benefit of the holders of the QUIPS. The Bank of New York will act as the Trust Guarantee Trustee under the Trust Guarantee for purposes of compliance with the Trust Indenture Act of 1939 and the Trust Guarantee will be qualified as an indenture under the Trust Indenture Act of 1939. The following is a summary of certain of the terms and provisions of the Trust Guarantee. This summary is not a complete description of all of the terms and provisions of the Trust Guarantee. For more information, we refer you to the form of the Trust Guarantee, which 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 at such time, (ii) the QUIPS Redemption Price with respect to any QUIPS called for redemption, to the extent the Trust has funds on hand available 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 to make these payments. The Trust Guarantee will rank subordinate and junior in right of payment to all Senior Indebtedness of HECO. See “—Status of the Trust Guarantee.” Certain of the operating assets of HECO and its consolidated subsidiaries are owned by MECO and HELCO. In addition, HECO receives interest and dividends from its subsidiaries. Accordingly, HECO’s obligations under the Trust Guarantee will be effectively subordinated to all existing and future liabilities of HECO’s subsidiaries, and claimants should look only to the assets of HECO for payments thereunder.
Status of the Trust Guarantee
The Trust Guarantee will constitute an unsecured obligation of HECO and will rank junior in right of payment to all Senior Indebtedness of HECO.
The Trust Guarantee will rank equally with the guarantees issued with respect to trust preferred securities issued by HECO Capital Trust I and HECO Capital Trust II in 1997 and 1998, respectively, until such trust preferred securities are redeemed as described under “Use of Proceeds,” and 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
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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 Indebtedness 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 Indebtedness.
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 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 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 a 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 QUIPS Redemption Price, upon full payment of the amounts payable upon liquidation of the 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.
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DESCRIPTION OF SUBSIDIARY GUARANTEES AND EXPENSE AGREEMENT
The Subsidiary Guarantees of HECO will be included in the respective Indentures of MECO and HELCO. Each of the Companies will also execute and deliver the Expense Agreement. The following is a summary of certain of the terms and provisions of the Subsidiary Guarantees and the Expense Agreement. The summary is not a complete description of all of the terms and provisions of the Subsidiary Guarantees and the Expense Agreement. For more information, we refer you to the applicable portions of the forms of the subsidiary Junior Indenture and the Expense Agreement, each of which has been filed as an exhibit to the registration statement of which this prospectus forms a part.
The 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 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 junior to all other existing and future liabilities of HECO and will rank equally with any guarantee now or hereafter entered into by HECO in respect of any securities similar to the MECO QUIDS and HELCO QUIDS issued by any subsidiary 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 rank 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 QUIPS Redemption Price or 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.
The Expense Agreement
In the Expense Agreement that will be entered into by each of the Companies, the Companies will agree 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 will be obligated to contribute its share of any such payments pro rata based on the aggregate principal amount of its respective QUIDS, and HECO will fully, irrevocably and unconditionally agree 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.
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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 have sufficient funds to 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 and the Expense Agreement are subordinate and junior to all Senior Indebtedness of HECO and the obligations of HECO under the Subsidiary Guarantees are subordinate and junior to all existing and future liabilities of HECO (including Senior Indebtedness).
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 to be made 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 the 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 Indebtedness 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 Indebtedness 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 Indebtedness 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.
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Limited Purpose of Trust
The QUIPS evidence preferred undivided beneficial interests in the assets of the Trust, and the Trust exists for the sole purpose of issuing the QUIPS and the Common Securities and investing the proceeds thereof in QUIDS. A principal difference between the rights of a holder of QUIPS and a holder of QUIDS is that a holder of 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 Indebtedness 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.
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CERTAIN UNITED STATES 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 holder that acquires QUIPS on their original issue date at their original offering price, that holds the QUIPS as a capital asset for tax purposes and, except as otherwise expressly provided, 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, (iii) an estate the income of which is subject to United States federal income taxation 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 persons 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 (a “U.S. Holder”), nor does it address the tax consequences to (i) 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, dealers in securities or currencies and traders in securities that elect to use a mark-to-mark method of accounting, (ii) 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, or (iii) persons whose functional currency is not the United States dollar.
The statements of law and legal conclusions set forth in this summary constitute the opinion of Goodsill Anderson Quinn & Stifel LLP, counsel to the Companies and the Trust (“Tax Counsel”), which opinion is not binding on the Internal Revenue Service or the courts. This summary is based upon the Internal Revenue Code of 1986, as amended (the “Code”), its legislative history, Treasury regulations, Internal Revenue Service rulings and pronouncements and court 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. If such a change occurs and constitutes a Tax Event, HECO will be permitted to cause a redemption of the QUIPS. The authorities on which this summary is based are subject to various interpretations and no rulings have been or will be sought from the Internal Revenue Service with respect to any of the tax matters discussed in this prospectus. 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.
Please consult your own tax advisor as to the consequences of the purchase, ownership and disposition of QUIPS in light of your own particular circumstances under the Internal Revenue Code and the laws of any other taxing jurisdiction.
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 will be treated as owning an undivided beneficial interest in the QUIDS. Accordingly, each U.S. Holder will be required to include in its gross income its pro rata share of any interest or original issue discount (“OID”) paid or accrued with respect to the QUIDS whether or not the Trust actually distributes cash to holders. See “—Stated Interest and Original Issue Discount.”
Stated Interest and Original Issue Discount
Under applicable Treasury regulations, a “remote” contingency that stated interest will not be timely paid is ignored when determining whether a debt instrument is issued with OID. Under each of
56
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 believes 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 not be considered to be issued with OID at the time of their original issuance.
Under the regulations, if any Company elects an Extension Period, such Company’s QUIDS would at that time be treated as having been retired and reissued with OID. Consequently, U.S. 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. In such event, all of a U.S. Holder’s taxable interest income with respect to those QUIDS would be accounted for as OID on an economic accrual basis regardless of such holder’s method of tax accounting, and actual distributions of stated interest on those QUIDS would not be reported as taxable income. Consequently, a U.S. Holder would be required to include OID in gross income even though the Company would not make any actual cash payments on its QUIDS during the Extension Period. 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 U.S. Holder at the time it was paid or accrued in accordance with such U.S. Holder’s method of accounting for United States federal income tax purposes.
Because income on the QUIDS will constitute interest or OID, corporate U.S. Holders will not be entitled to dividends-received deductions with respect to any income taken into account with respect to the QUIPS. Moreover, the preferential tax rates applicable to corporate dividends will not apply to such interest or OID.
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 U.S. Holder’s pro rata share of MECO QUIDS and HELCO QUIDS. As a result, each U.S. Holder would recognize gain or loss in an amount equal to the difference between (i) the fair market value of such U.S. 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 U.S. Holder’s adjusted tax basis in its pro rata share of MECO QUIDS and HELCO QUIDS exchanged therefor. Tax Counsel is of the further opinion that, under current United States federal income tax law, the exchange would not be a taxable exchange with respect to a U.S. Holder’s pro rata share of HECO QUIDS and such U.S. 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 holders, each holder would receive directly its pro rata share thereof previously held indirectly through the Trust and, with respect to such holder’s pro rata share of HECO QUIDS (but not Substituted HECO QUIDS), would have a holding period and aggregate adjusted tax basis equal to the holding period and aggregate adjusted tax basis
57
such holder had in its pro rata share of HECO QUIDS before such distribution. Tax Counsel is of the opinion that, under current United States federal income tax law, the distribution of the Distributable HECO QUIDS upon the dissolution of the Trust would not be a taxable exchange to holders of the QUIPS. 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.”
Tax Counsel is of the opinion that, following such a distribution, a U.S. 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 U.S. 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 U.S. Holder in taxable years following the distribution, as well as the amount of any gain or loss recognized by a U.S. Holder upon a subsequent disposition of Distributable HECO QUIDS. It is not possible to predict the precise tax consequences to a U.S. Holder in this regard, and U.S. 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, U.S. Holders (even if they use the cash method of accounting for United States federal income tax purposes) will 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 U.S. 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) and the U.S. Holder’s adjusted tax basis in the QUIPS sold or redeemed. The tax basis of a holder in its QUIPS would be increased by any OID included in income and decreased by any payments of interest that had been deferred. Gain or loss recognized by a U.S. Holder on QUIPS held for more than one year will generally be taxable as long-term capital gain or loss. Long-term capital gain of a non-corporate U.S. Holder is generally taxed at a maximum rate of 15%.
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 U.S. 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 OID and, in the case of an accrual method taxpayer, accrued but unpaid interest on the QUIDS through the date of disposition. Such U.S. 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 U.S. Holder’s adjusted tax basis in the QUIPS (which will reflect any accrued OID). Subject to certain limited exceptions, capital losses cannot be applied to offset ordinary income for federal income tax purposes.
United States Alien Holders
For purposes of this discussion, a “United States Alien Holder” is a beneficial owner of QUIPS that is not a United States Person. Under present United States federal income tax laws: (i) payments by the Trust or any of its paying agents to any holder of QUIPS that is a United States Alien Holder will not
58
be subject to United States federal income or withholding tax, provided (a) the beneficial owner of the QUIPS does not actually or constructively own 10 percent or more of the total combined voting power of all classes of stock of HECO entitled to vote, (b) the beneficial owner of the QUIPS is not a controlled foreign corporation that is related to HECO through stock ownership, and (c) either (A) the beneficial owner of the QUIPS certifies to the issuer or its agent, under penalty of perjury, that it is not a United States Person and provides its name and address or (B) a securities clearing organization, bank or other financial institution that holds customers’ securities in the ordinary course of its trade or business (a “Financial Institution”), and holds the QUIPS in such capacity, certifies to the issuer or its agent, under penalty of perjury, that such statement has been received from the beneficial owner by it or by a Financial Institution between it and the beneficial owner and furnishes the Trust or its agent with a copy thereof; and (ii) a United States Alien Holder will generally not be subject to United States federal income or withholding tax on any gain realized upon the sale or other disposition of QUIPS, provided the gain is not effectively connected with the conduct of a trade or business in the United States by the United States Alien Holder and the United States Alien Holder is not an individual who has been present in the United States for 183 days or more during the year of the sale or other disposition.
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 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 1099INT or Form 1099OID and delivered by January 31 following each calendar year. “Backup” withholding at the applicable statutory rate will apply to payments of interest to non-exempt United States Persons unless the 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 under the backup withholding rules generally will be allowed as a refund or a credit against a holder’s United States federal income tax liability, provided the required information is furnished to the Internal Revenue Service.
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Each fiduciary of a pension, profit-sharing or other employee benefit plan subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) (each, an “ERISA Plan”), should consider the fiduciary standards of ERISA in the context of the ERISA Plan’s particular circumstances before authorizing an investment in the QUIPS. Accordingly, among other factors, the fiduciary should consider whether the investment would satisfy the prudence and diversification requirements of ERISA and would be consistent with the documents and instruments governing the ERISA Plan.
Section 406 of ERISA prohibits ERISA Plans, and Section 4975 of the Code prohibits other employee benefit plans that are not subject to ERISA but are subject to Section 4975 of the Code, such as individual retirement accounts and Keogh plans (together with ERISA Plans, “Plans”), from engaging in certain transactions involving “plan assets” with persons who are “parties in interest” under ERISA or “disqualified persons” under the Code (together, “Parties in Interest”) with respect to such Plan. A violation of these “prohibited transaction” rules may result in an excise tax or other liabilities under ERISA and/or Section 4975 of the Code for such persons, unless exemptive relief is available under an applicable statutory or administrative exemption.
Certain transactions involving the issuer could be deemed to constitute direct or indirect prohibited transactions under ERISA and Section 4975 of the Code with respect to a Plan if the QUIPS were acquired with “plan assets” of such Plan. For example, if HECO is a Party in Interest with respect to an investing Plan (either directly or by reason of its ownership of its subsidiaries), an indirect extension of credit prohibited by Section 406(a)(1)(B) of ERISA and Section 4975(c)(1)(B) of the Code between HECO and the investing Plan may be deemed to occur, unless exemptive relief were available under an applicable administrative exemption (see below).
The Department of Labor (“DOL”) has issued prohibited transaction class exemptions (“PTCEs”) that may provide exemptive relief for direct or indirect prohibited transactions resulting from the purchase or holding of the QUIPS, assuming that assets of the Trust were deemed to be “plan assets” of Plans investing in the Issuer. Those class exemptions include PTCE 96-23 (for certain transactions determined by in-house asset managers), PTCE 95-60 (for certain transactions involving insurance company general accounts), PTCE 91-38 (for certain transactions involving bank collective investment funds), PTCE 90-1 (for certain transactions involving insurance company pooled separate accounts), and PTCE 84-14 (for certain transactions determined by independent qualified asset managers).
Any purchaser or holder of the QUIPS or any interest therein will be deemed to have represented by its purchase and holding thereof that it either (a) is not a Plan and is not purchasing such securities on behalf of or with “plan assets” of any Plan or (b) is eligible for the exemptive relief available under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another DOL exemption with respect to such purchase or holding.
Due to the complexity of these rules and the penalties that may be imposed upon persons involved in non-exempt prohibited transactions, it is particularly important that fiduciaries of any Plan purchasing or holding the QUIPS, and each fiduciary for a governmental or church plan subject to rules similar to those imposed on Plans, consult with their legal counsel concerning an investment in the QUIPS and regarding the availability of possible exemptive relief under PTCE 96-23, 95-60, 91-38, 90-1 or 84-14 or another DOL exemption. In addition, each fiduciary for a governmental or church plan subject to rules similar to those imposed on Plans should consult with his or her legal counsel concerning the purchase or holding of the QUIPS under applicable state and/or local law.
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The Companies, the Trust and the underwriters for the offering named below have entered into an underwriting agreement with respect to the QUIPS. Subject to the terms and conditions of the underwriting agreement, each underwriter has severally agreed to purchase from HECO Capital Trust III the number of QUIPS indicated in the following table. Goldman, Sachs & Co. and U.S. Bancorp Piper Jaffray Inc. are the representatives of the underwriters.
|
Underwriters |
Number
of QUIPS |
|
|
Goldman, Sachs & Co. |
||
|
U.S. Bancorp Piper Jaffray Inc. |
||
|
|
||
|
Total |
4,000,000 | |
|
|
Because the Trust will invest the proceeds from the sale of the QUIPS in the QUIDS issued by the Companies, the underwriting agreement provides that the Companies will pay an underwriting commission of $ per QUIPS (or $ for all of the QUIPS) to the underwriters, as compensation.
QUIPS sold by the underwriters to the public will initially be offered at the initial public offering price set forth on the cover page of this prospectus. Any QUIPS sold by the underwriters to securities dealers may be sold at a discount of up to $ per QUIPS from the initial public offering price. Any such securities dealers may resell the QUIPS they purchase from the underwriters to other brokers and dealers at a discount of up to $ per QUIPS from the initial public offering price. If all the QUIPS are not sold at the initial public offering price, the underwriters may change the offering price and the other selling terms.
The Companies and the Trust have agreed with the underwriters to not offer, sell, contract to sell or otherwise dispose of any beneficial interests in the assets of the Trust, or any preferred securities or any other securities of the Trust or the Companies that 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 Goldman, Sachs & Co., except for the QUIPS offered in connection with this offering. This restriction will apply during the period beginning from the date of this prospectus 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.
Prior to this offering, there has been no public market for the QUIPS. An application will be filed to list the QUIPS on the New York Stock Exchange, subject to official notice of issuance, and HECO expects trading in the QUIPS on the New York Stock Exchange to begin within the 30-day period after the initial delivery of the QUIPS. In order to meet one of the requirements for listing the QUIPS, the underwriters will undertake to sell lots of 100 or more to a minimum of 400 beneficial owners.
The representatives of the underwriters have advised HECO that they intend to make a market in the QUIPS prior to the commencement of trading on the New York Stock Exchange. However, the representatives 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.
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In connection with the offering, the underwriters may purchase and sell the QUIPS in the open market. These transactions may include short sales, stabilizing transactions and purchases to cover positions created by short sales. Short sales involve the sale by the underwriters of a greater amount of QUIPS than is shown on the cover page of this prospectus. The underwriters may close out any short position by or purchasing QUIPS in the open market to reduce the short position. Stabilizing transactions consist of certain bids or purchases made for the purpose of preventing or retarding a decline in the market price of the QUIPS while the offering is in progress.
The underwriters also may impose a penalty bid. This may occur when a particular underwriter repays to the underwriters a portion of the underwriting commission because the underwriters have repurchased QUIPS sold by or for the account of that underwriter in stabilizing or short covering transactions.
These activities by the underwriters may stabilize, maintain or otherwise affect the market price of the QUIPS. As a result, the price of the QUIPS may be higher than the price that would otherwise prevail in the open market. If these activities are commenced, they 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.
The Companies estimate that their share of the total expenses of the offering, excluding underwriting discounts and commissions, will be approximately $ .
The Companies and the Trust have agreed to indemnify the several underwriters against certain liabilities, including liabilities under the Securities Act of 1933.
Certain of the underwriters and their respective affiliates have, from time to time, performed, and may in the future perform, various financial advisory and investment banking services for HECO and its affiliates, for which they have received or will receive customary fees and commissions.
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Certain matters of Delaware law relating to the validity of the QUIPS, the validity of the Trust Agreement and the creation of the Trust will be passed upon by Richards, Layton & Finger, P.A., special Delaware counsel to the Companies and the Trust. The validity of the Trust Guarantee, the Subsidiary Guarantees and the QUIDS will be passed upon for the Companies by Goodsill Anderson Quinn & Stifel LLP, Honolulu, Hawaii, and for the underwriters by Pillsbury Winthrop LLP, 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 LLP.
The consolidated financial statements of HECO and its subsidiaries as of December 31, 2002 and 2001, and for each of the years in the three-year period ended December 31, 2002, which consolidated financial statements have been incorporated by reference in HECO’s Annual Report on Form 10-K for the year ended December 31, 2002, have been incorporated by reference herein and in the registration statement of which this prospectus is a part in reliance upon the report of KPMG LLP, independent certified public accountants, incorporated by reference herein, and upon the authority of said firm as experts in accounting and auditing.
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No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the securities offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.
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Page
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| 1 | ||
| 7 | ||
| 18 | ||
| 19 | ||
| 20 | ||
| 22 | ||
|
Ratios of Earnings to Fixed Charges and to Combined Fixed Charges and Preferred Stock Dividends |
24 | |
| 25 | ||
| 26 | ||
| 26 | ||
| 27 | ||
| 28 | ||
| 42 | ||
| 51 | ||
| 53 | ||
| 54 | ||
| 56 | ||
| 60 | ||
| 61 | ||
| 63 | ||
| 63 |
4,000,000 Preferred Securities
HECO Capital Trust III
% Cumulative Quarterly
Income Preferred Securities,
Series 2004 (QUIPS SM )
(Liquidation Preference $25 per QUIPS)
Fully and unconditionally guaranteed,
as set forth herein, by
Hawaiian Electric Company, Inc.
PROSPECTUS
Goldman, Sachs & Co.
U.S. Bancorp Piper Jaffray
Representatives of the Underwriters
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:
|
Filing Fee for Registration Statement |
$ | 8,090 | |
|
Legal Fees and Expenses* |
175,000 | ||
|
Accounting Fees and Expenses* |
60,000 | ||
|
Blue Sky Fees and Expenses* |
5,000 | ||
|
Printing and Engraving Fees* |
65,000 | ||
|
Fees and Expenses of Registrars, Transfer Agents, Paying Agents and Trustees* |
15,000 | ||
|
Fees of rating agencies* |
100,000 | ||
|
Listing Fees* |
45,000 | ||
|
Miscellaneous* |
26,910 | ||
|
|
|
||
|
Total* |
$ | 500,000 | |
|
|
|
| * | Estimated |
Item 15. Indemnification of Directors and Officers.
The Articles of Incorporation of each of the Companies, as amended, provide that, subject to certain exceptions, the applicable Company 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 such Company, 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 such Company 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 the applicable Company, in which such person is adjudged to be liable for negligence or misconduct in the performance of that person’s duty to such Company, 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 each of the Companies. 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 414-242 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, some of whom are officers and directors of the Companies. The agreements provide for advancement of expenses and for mandatory indemnification to the fullest extent authorized or permitted by law, which could among other things protect the indemnified officers and directors of such Companies from certain liabilities under the Securities Act of 1933. Indemnification under the agreements may be provided
II-1
without a prior determination that in 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.
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.
| 1 |
Form of Underwriting Agreement for offering of QUIPS.* |
|
| 4(a) |
Certificate of Trust of HECO Capital Trust III.* |
|
| 4(b) |
Trust Agreement of HECO Capital Trust III.* |
|
| 4(c) |
Form of Amended and Restated Trust Agreement to be used in connection with the issuance of QUIPS by HECO Capital Trust III.* |
|
| 4(d) |
Form of HECO Junior Indenture with The Bank of New York, as Debenture Trustee, to be used in connection with the issuance of HECO QUIDS.* |
|
| 4(e) |
Form of QUIPS for issuance by HECO Capital Trust III (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 issuance of MECO QUIDS and HELCO QUIDS and related Subsidiary Guarantees (including the form of QUIDS for issuance by MECO and HELCO).* |
|
| 4(i) |
Form of Expense Agreement among HECO Capital Trust III, HECO, MECO and HELCO.* |
|
II-2
| 5(a) |
Opinion of Goodsill Anderson Quinn & Stifel LLP.* |
|
| 5(b) |
Opinion of Richards, Layton & Finger, P.A.* |
|
| 5(c) |
Opinion of Pillsbury Winthrop LLP.* |
|
| 8 |
Tax Opinion of Goodsill Anderson Quinn & Stifel LLP.* |
|
| 12(a) |
Computation of Ratio of Earnings to Fixed Charges.* |
|
| 12(b) |
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.* |
|
| 23(a) |
Consent of KPMG LLP.* |
|
| 23(b) |
Consent of Goodsill Anderson Quinn & Stifel LLP as to validity opinion (included in Exhibit 5(a)).* |
|
| 23(c) |
Consent of Richards, Layton & Finger, P.A. as to validity opinion (included in Exhibit 5(b)).* |
|
| 23(d) |
Consent of Pillsbury Winthrop LLP as to validity opinion (included in Exhibit 5(c)).* |
|
| 23(e) |
Consent of Goodsill Anderson Quinn & Stifel LLP as to opinion re tax matters (included in Exhibit 8).* |
|
| 24(a) |
Power of Attorney for HECO and HECO officers and directors.* |
|
| 24(b) |
Power of Attorney for HECO Capital Trust III (included in Exhibit 4(b)).* |
|
| 24(c) |
Power of Attorney for MECO and MECO officers and directors.* |
|
| 24(d) |
Power of Attorney for HELCO and HELCO officers and directors.* |
|
| 25(a) |
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 III.* |
|
| 25(b) |
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(c) |
Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Debenture Trustee under the HECO Junior Indenture.* |
|
| 25(d) |
Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Debenture Trustee under the MECO Junior Indenture and with respect to the related HECO Subsidiary Guarantee.* |
|
| 25(e) |
Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Debenture Trustee under the HELCO Junior Indenture and with respect to the related HECO Subsidiary Guarantee.* |
|
| * | 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.
II-3
(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-4
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 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 10th day of December, 2003.
| H AWAIIAN E LECTRIC C OMPANY , I NC . | ||
|
By: |
/s/ R ICHARD A. VON G NECHTEN |
|
| Richard A. von Gnechten | ||
| Financial Vice President | ||
Pursuant to the requirements of the Securities Act of 1933, this 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. M ICHAEL M AY * T. Michael May |
President & Chief Executive
|
December 10, 2003 | ||||
|
R ICHARD A. VON G NECHTEN * Richard A. von Gnechten |
Financial Vice President
|
December 10, 2003 | ||||
|
E RNEST T. S HIRAKI * Ernest T. Shiraki |
Controller
|
December 10, 2003 | ||||
|
R OBERT F. C LARKE * Robert F. Clarke |
Chairman of the Board of
|
December 10, 2003 | ||||
|
S HIRLEY J. D ANIEL * Shirley J. Daniel |
Director |
December 10, 2003 | ||||
|
D IANE J. P LOTTS * Diane J. Plotts |
Director |
December 10, 2003 | ||||
|
J AMES K. S COTT * James K. Scott |
Director |
December 10, 2003 | ||||
|
A NNE M. T AKABUKI * Anne M. Takabuki |
Director |
December 10, 2003 | ||||
|
B ARRY K. T ANIGUCHI * Barry K. Taniguchi |
Director |
December 10, 2003 | ||||
|
J EFFREY N. W ATANABE * Jeffrey N. Watanabe |
Director |
December 10, 2003 | ||||
|
*By /s/ R ICHARD A. VON G NECHTEN Richard A. von Gnechten |
||||||
| For himself and as Attorney-In-Fact for the above mentioned officers and directors | ||||||
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, HECO Capital Trust III has duly caused this 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 December 10, 2003.
| HECO C APITAL T RUST III | ||
|
By: |
Hawaiian Electric Company, Inc., as Depositor | |
|
By: |
/s/ R ICHARD A. VON G NECHTEN |
|
|
Richard A. von Gnechten Financial Vice President |
||
II-6
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Maui Electric Company, Limited has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City and County of Honolulu, State of Hawaii, on the 10th day of December, 2003.
| M AUI E LECTRIC C OMPANY , L IMITED | ||
|
By: |
/s/ R ICHARD A. VON G NECHTEN |
|
|
Richard A. von Gnechten Financial Vice President |
||
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in their capacities with Maui Electric Company, Limited and on the dates indicated.
|
Signature |
Title |
Date |
||||
|
E DWARD L. R EINHARDT * Edward L. Reinhardt |
President and Director
|
December 10, 2003 | ||||
|
R ICHARD A. VON G NECHTEN * Richard A. von Gnechten |
Financial Vice President
|
December 10, 2003 | ||||
|
T. M ICHAEL M AY * T. Michael May |
Chairman of the Board of
|
December 10, 2003 | ||||
|
R OBERT F. C LARKE * Robert F. Clarke |
Director |
December 10, 2003 | ||||
|
*By /s/ R ICHARD A. VON G NECHTEN |
||||||
| Richard A. von Gnechten | ||||||
| For himself and as Attorney-In-Fact for the above mentioned officers and directors | ||||||
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Hawaii Electric Light Company, Inc. has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, In the City and County of Honolulu, State of Hawaii, on the 10th day of December, 2003.
| H AWAII E LECTRIC L IGHT C OMPANY , I NC . | ||
|
By: |
/s/ R ICHARD A. VON G NECHTEN |
|
|
Richard A. von Gnechten Financial Vice President |
||
Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in their capacities with Hawaii Electric Light Company, Inc. and on the dates indicated.
|
Signature |
Title |
Date |
||||
|
W ARREN H. W. L EE * Warren H. W. Lee |
President and Director (Principal Executive Officer) |
December 10, 2003 | ||||
|
R ICHARD A. VON G NECHTEN * Richard A. von Gnechten |
Financial Vice President
|
December 10, 2003 | ||||
|
T. M ICHAEL M AY * T. Michael May |
Chairman of the Board of
|
December 10, 2003 | ||||
|
R OBERT F. C LARKE * Robert F. Clarke |
Director |
December 10, 2003 | ||||
|
*By /s/ R ICHARD A. VON G NECHTEN |
||||||
| Richard A. von Gnechten | ||||||
| For himself and as Attorney-in-Fact for the above mentioned officers and directors | ||||||
II-8
EXHIBIT INDEX
|
Exhibit
No. |
Description |
|
| 1 |
Form of Underwriting Agreement for offering of QUIPS.* |
|
| 4(a) |
Certificate of Trust of HECO Capital Trust III.* |
|
| 4(b) |
Trust Agreement of HECO Capital Trust III.* |
|
| 4(c) |
Form of Amended and Restated Trust Agreement to be used in connection with the issuance of QUIPS by HECO Capital Trust III.* |
|
| 4(d) |
Form of HECO Junior Indenture with The Bank of New York, as Debenture Trustee, to be used in connection with the issuance of HECO QUIDS.* |
|
| 4(e) |
Form of QUIPS for issuance by HECO Capital Trust III (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 issuance of MECO QUIDS and HELCO QUIDS and related Subsidiary Guarantee (including the form of QUIDS for issuance by MECO and HELCO).* |
|
| 4(i) |
Form of Expense Agreement among HECO Capital Trust III, HECO, MECO and HELCO.* |
|
| 5(a) |
Opinion of Goodsill Anderson Quinn & Stifel LLP.* |
|
| 5(b) |
Opinion of Richards, Layton & Finger, P.A.* |
|
| 5(c) |
Opinion of Pillsbury Winthrop LLP.* |
|
| 8 |
Tax Opinion of Goodsill Anderson Quinn & Stifel LLP.* |
|
| 12(a) |
Computation of Ratio of Earnings to Fixed Charges.* |
|
| 12(b) |
Computation of Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends.* |
|
| 23(a) |
Consent of KPMG LLP.* |
|
| 23(b) |
Consent of Goodsill Anderson Quinn & Stifel LLP as to validity opinion (included in Exhibit 5(a)).* |
|
| 23(c) |
Consent of Richards, Layton & Finger, P.A. as to validity opinion (included in Exhibit 5(b)).* |
|
| 23(d) |
Consent of Goodsill Anderson Quinn and Stifel as to validity opinion (included in Exhibit 8).* |
|
| 23(e) |
Consent of Goodsill Anderson Quinn & Stifel LLP as to opinion re tax matters (included in Exhibit 8).* |
|
| 24(a) |
Power of Attorney for HECO and HECO officers and directors.* |
|
| 24(b) |
Power of Attorney for HECO Capital Trust III (included in Exhibit 4(b)).* |
|
| 24(c) |
Power of Attorney for MECO and MECO officers and directors.* |
|
| 24(d) |
Power of Attorney for HELCO and HELCO officers and directors.* |
|
| 25(a) |
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 III.* |
|
| 25(b) |
Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Trust Guarantee Trustee under Trust Guarantee Agreement.* |
|
| 25(c) |
Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Debenture Trustee under the HECO Junior Indenture.* |
|
| 25(d) |
Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Debenture Trustee under the MECO Junior Indenture and with respect to the related HECO Subsidiary Guarantee.* |
|
| 25(e) |
Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of The Bank of New York, as Debenture Trustee under the HELCO Junior Indenture and with respect to the related HECO Subsidiary Guarantee.* |
|
| * | Filed with this Registration Statement. |
Exhibit 1
4,000,000 Preferred Securities
HECO C APITAL T RUST III
[ ]% Cumulative Quarterly Income Preferred Securities, Series 2004 (“QUIPS” SM )
(Liquidation Preference $25 per QUIPS)
fully and unconditionally guaranteed, as set forth herein, by
H AWAIIAN E LECTRIC C OMPANY , I NC .
UNDERWRITING AGREEMENT
, 2004
G OLDMAN , S ACHS & C O .
U.S. B ANCORP P IPER J AFFRAY I NC .
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 III (the “Trust”), a statutory trust created under the Statutory 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”), 4,000,000 of its [ ]% Cumulative Quarterly Income Preferred Securities, Series 2004 (liquidation preference $25 per preferred security), representing preferred undivided beneficial interests in the assets of the Trust (the “Trust Preferred Securities”), as follows:
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 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
| SM | QUIPS is a servicemark of Goldman, Sachs & Co. |
issue the HECO Debentures and the Guarantees (each as defined herein) to the Trust concurrently with the issue and sale of the Trust Preferred Securities as contemplated herein and (ii) guarantees the timely performance by each of the Trust and the Subsidiaries (as defined herein) of its obligations under this Section 1. Maui Electric Company, Limited (“MECO”), a corporation incorporated under the laws of the Territory of Hawaii, agrees to issue the MECO Debentures (as defined herein) to the Trust concurrently with the issue and sale of the Trust Preferred Securities as contemplated herein. Hawaii Electric Light Company, Inc. (“HELCO” and, together with MECO, the “Subsidiaries” and, with HECO and MECO, each a “Company” and, together, the “Companies”), a corporation incorporated under the laws of the Republic of Hawaii, agrees to issue the HELCO Debentures (as defined herein) to the Trust concurrently with the issue and sale of the Trust Preferred Securities as contemplated herein. The Trust agrees to purchase the Debentures (as defined herein) 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 Trust Guarantee Agreement dated as of January 1, 2004 between The Bank of New York, as trustee (the “Trust Guarantee Trustee”), and HECO (the “Trust Guarantee Agreement”). Under an Expense Agreement among the Companies and the Trust dated as of January [ ], 2004 (the “Expense Agreement”), the Companies will agree, for the benefit of each person or entity to whom the Trust becomes indebted or liable (other than the holders of the Trust Securities), to pay any indebtedness, 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) $63,092,800 principal amount of [ ]% Junior Subordinated Deferrable Interest Debentures, Series 2004 issued by HECO (the “HECO Debentures” and, together with the Substituted HECO Debentures (as defined herein) and the Guarantees, the “HECO Securities”), (ii) $20,000,000 principal amount of [ ]% Junior Subordinated Deferrable Interest Debentures, Series 2004 issued by MECO (the “MECO Debentures” and, together with the HELCO Debentures, the “Subsidiary Debentures”) and (iii) $20,000,000 principal amount of [ ] % Junior Subordinated Deferrable Interest Debentures, Series 2004 issued by HELCO (the “HELCO Debentures” and, together with the HECO Debentures and the MECO Debentures, the “Debentures”). The Debentures will mature on [ ], 2034; provided, however , that, at the option of HECO pursuant to the HECO Indenture (as defined herein), the date of maturity of the
2
Debentures, and any Substituted HECO Debentures, may be shortened to a date not earlier than [ ], 2009 or extended to a date not later than [ ], 2053. 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 January 1, 2004, between The Bank of New York, as trustee (the “Debenture Trustee”), and HECO (the “HECO Indenture”). The MECO Debentures will be issued pursuant to a Junior Indenture dated as of January 1, 2004, among the Debenture Trustee, MECO and HECO (the “MECO Indenture” and, together with the HELCO Indenture (as defined herein), the “Subsidiary Indentures”). The HELCO Debentures will be issued pursuant to a Junior Indenture dated as of January 1, 2004, among the Debenture Trustee, HELCO and HECO (the “HELCO Indenture” and, together with the HECO Indenture and the MECO 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, Series 2004 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 January 1, 2004 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 Companies and the Trust . Each of the Offerors jointly and severally, and each Subsidiary as to itself but as to neither the Offerors nor the other Subsidiary, represents and warrants to the several Underwriters, and covenants and agrees with the several Underwriters, that:
(a) HECO is duly organized and validly existing as a corporation in good standing under the laws 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, Renewable Hawaii, Inc., HECO Capital Trust I, HECO Capital Trust II and the Trust; each of MECO and HELCO is duly organized and validly existing as a corporation in good standing under the laws of Hawaii and has the necessary corporate power
3
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 this Underwriting Agreement, 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; 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 statutory 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 is 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 reasonably be expected to 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 or 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 properly treated as a grantor trust, and not an association taxable as a corporation, for United States federal income tax purposes.
(c) The Offerors and the Subsidiaries have filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (File Nos. 333-[ ], 333-[ ]-01, 333-[ ]-02 and 333-[ ]-03) 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 and the Subsidiaries 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 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 any
4
preliminary prospectus provided by the Offerors for use by the Underwriters in connection with the marketing of the Trust Preferred Securities on or prior to the date hereof. All references in this Underwriting Agreement to amendments or supplements to the Registration Statement or the Prospectus shall be deemed to mean and include the filing of any document that is or is deemed to be incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act after the date hereof and prior to the completion of the distribution of the Trust Preferred Securities.
(d) After the date hereof and during the time specified in Section 6(d) hereof, neither the Offerors nor the Subsidiaries will file any amendment to the Registration Statement or amendment or supplement to the Prospectus, without prior notice to the Underwriters and to Pillsbury Winthrop LLP, 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 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 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
5
from the Registration Statement or the Prospectus (i) 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 second paragraph under the table set forth under “Underwriting” in the Prospectus, the last sentence of the fourth paragraph under the table set forth under “Underwriting” in the Prospectus, the first sentence of the fifth paragraph under the table set forth under “Underwriting” in the Prospectus and the sixth, seventh and eighth paragraphs under the table set forth under “Underwriting” in the Prospectus (collectively, the “Underwriter Information”), (ii) under the caption “Description of the QUIPS—Book-Entry Issuance” and (iii) with respect to the statements of eligibility on Form T-1 filed as exhibits to the Registration Statement.
(f) The consolidated financial statements of the Companies incorporated by reference in the Prospectus present fairly in all material respects the financial position of the Companies as of the dates indicated and the results of their 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 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; 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 Companies and the Trust.
(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 terms, except as limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights and by general equitable principles (whether 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
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by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights and by general equitable principles (whether 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 and, on the Closing Date, will have been duly executed by at least two Administrative Trustees 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 Indenture has been duly qualified under the Trust Indenture Act, has been duly authorized by HECO (as guarantor with respect to the MECO Indenture and the HELCO Indenture) and, at the Closing Date, will have been duly executed and delivered by HECO and, assuming due authorization, execution and delivery of such Indenture 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, reorganization, moratorium and other similar laws affecting creditors’ rights and by general equitable principles (whether 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, reorganization, moratorium and other similar laws affecting creditors’ rights and by general equitable principles (whether 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, reorganization, moratorium and other similar laws affecting creditors’ rights and by general equitable principles (whether considered in a proceeding in equity or at law), and will be
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entitled to the benefits of the HECO 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, reorganization, moratorium and other similar laws affecting creditors’ rights and by general equitable principles (whether 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, reorganization, moratorium and other similar laws affecting creditors’ rights and by general equitable principles (whether 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 Company and, at the Closing Date, will have been duly executed and delivered by each Company and will constitute a valid and binding instrument of each Company, enforceable against such Company in accordance with its terms, except as limited by applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights and by general equitable principles (whether 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.
(r) T. Michael May, Richard A. von Gnechten and Lorie Ann Nagata, are 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 November 20, 2003, (the “Trust Certificate”) or the initial Trust Agreement dated as of November 20, 2003; the execution and delivery by the Companies and the Trust of, and the performance by the Companies and the Trust of their
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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 Companies 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 Company 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, each of the Companies possesses adequate franchises, licenses, permits, and other rights to conduct its 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 not reasonably be expected to have a material adverse effect on the consolidated financial condition or consolidated results of operations of the Companies taken as a whole.
(w) To the knowledge of each of the Companies and the Trust, 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 Companies or the Trust 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 Companies 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, 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 the 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, with no motion to reconsider or appeal from such order having been filed; 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, under blue sky or other state securities laws or as have been obtained pursuant to the Securities Act, the Exchange Act and the Trust Indenture Act.
(y) HECO is a holding company within the meaning of the Public Utility Holding Company Act of 1935, as amended (the “Holding Company Act”); however, by virtue of having filed appropriate applications under Section 3(a)(2) of the Holding Company Act,
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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 the Holding Company 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 interests of investors or consumers.
(z) HECO maintains (x) systems of internal accounting controls which are sufficient in all material respects to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and (y) disclosure controls and procedures (as defined in Rule 13a-14(c) under the Exchange Act).
Section 4. Offering . The Offerors are advised by the 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 a certificate or certificates representing 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 [ ], 2004, 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.”
A certificate or certificates representing the Trust Preferred Securities shall be in definitive form and registered in the name of Cede & Co., DTC’s nominee. 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.
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 Goldman, Sachs & Co., for the accounts of the several Underwriters.
Section 6. Covenants of the Companies and the Trust . Each of the Offerors jointly and severally, and each Subsidiary as to itself but as to neither the Offerors nor the other Subsidiary, covenants and agrees with the several Underwriters that:
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(a) Not later than the Closing Date, HECO will deliver to the Representatives a copy of the Registration Statement in the form that it (or the most recent post-effective amendment thereto) 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 any of the Companies or the Trust has received notice. Each of the Companies and the Trust 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 Companies or the Trust, or of which the Companies or the Trust are advised by the Representatives in writing, occurs 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 is 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 Trust and the Companies 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 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 Companies and the Trust 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 neither the Companies nor the Trust shall be required to
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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 Company’s and the Trust’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 certificate or certificates representing 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 is terminated in accordance with the provisions of Section 7 (other than by reason of the non-fulfillment of paragraph (l) thereof) or 8 hereof, the Companies and the Trust 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. Neither the Companies nor the Trust shall in any event be liable to the Underwriters for damages on account of loss of anticipated profits.
(h) Neither any of the Companies nor the Trust will offer, sell, contract to sell or otherwise dispose of any beneficial interests in the assets of the Trust, or any preferred securities or any other securities of the Trust or the Companies 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 Companies or the Trust, except for the Securities, without the prior written consent of Goldman, Sachs & Co. until the earlier to occur of (i) 30 days after the 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 Trust and the Companies 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.
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Section 7. Conditions of Underwriters’ Obligations . The obligations of the several 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 Companies and the Trust and of any certificates furnished by the Companies and the Trust on the Closing Date and to the following additional 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 Companies, the Trust 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, A Limited Liability Law Partnership LLP, counsel for the Companies and the Trust, 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 as corporations in good standing under the laws of the State of Hawaii and have the corporate power and authority to carry on the business 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) the Companies 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 the Companies 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 the Companies taken as a whole (it being understood that, for purposes of this paragraph, “material” shall mean having a financial effect on HECO in excess of $15,000,000);
(iv) HECO is the record holder of all outstanding common stock of the Subsidiaries, free and clear of any perfected encumbrance or security interest;
(v) the PUC has issued an order approving the issuance of the HECO Securities (but not the Substituted HECO Debentures) by HECO and of the Subsidiary
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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 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, 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 have been obtained under the Securities Act, the Exchange Act and the Trust Indenture Act;
(vi) HECO is a holding company within the meaning of the Holding Company Act; however, by virtue of having filed appropriate applications under Section 3(a)(2) of the Holding Company 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 the Holding Company 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 interests 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 filed with 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, to the best of such counsel’s knowledge, the Registration Statement has become, and on the Closing Date is, effective under the Securities Act and 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 filed with 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;
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(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 and the Trust Guarantee Agreement and the Expense Agreement, and the statements under “Hawaiian Electric Company, Inc. and Subsidiaries” relating to the Companies 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 Subsidiaries; 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 HECO 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 Indenture has been duly authorized by all necessary corporate action of HECO and duly executed and delivered by HECO (as guarantor with respect to the MECO Indenture and the HELCO Indenture) 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 such Subsidiary 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;
(xvi) the HECO Debentures have been duly authorized by all necessary corporate action of HECO 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 the HECO 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,
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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 such Subsidiary and 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, and will be entitled to the benefits of the applicable Subsidiary Indenture;
(xix) the Expense Agreement has been duly authorized by all necessary corporate action of each Company and duly executed and delivered by each Company and constitutes a valid and binding instrument of each Company, enforceable against such Company in accordance with its terms;
(xx) the execution and delivery by each Company and the Trust 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 Company or the Trust, as the case may be, 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 Company 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 Company or contravene or conflict with any order, rule or regulation known to such counsel as applicable to such Company 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 Company or the Trust or any of its properties, or any statute or constitutional provision of the State of Hawaii applicable to such Company or the Trust, except that such counsel need not express an opinion with respect to state securities or blue sky laws; and
(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 United States 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 all material respects.
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
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counsel may rely, as to matters of fact, upon representations and warranties of the Companies and the Trust contained in this Underwriting Agreement and certificates and representations of officers and employees of the Companies and Administrative Trustees of the Trust (provided that copies of such certificates will be furnished upon request 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 Companies in such litigation or proceedings (provided that copies of such opinions and information will be furnished upon request to Counsel for the Underwriters), (F) 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 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, (G) such counsel may state, with respect to the matters set forth in paragraph (ix) above, that they have not independently verified, assume no responsibility for, and assume the accuracy, completeness or fairness of the statements in the Registration Statement or 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, (H) such counsel may limit the matters set forth in paragraphs (xiii) through (xix) above by the application of applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights and of general equitable principles (whether considered in a proceeding in equity or at law), (I) such counsel may state that, whenever such opinion is qualified by the phrases “known to such counsel,” “to the best of our knowledge,” “to our knowledge” or “nothing has come to our attention,” or other phrases of similar import, such phrases are intended to mean the actual knowledge of information by the lawyers in such counsel’s firm who have been principally involved in drafting the Registration Statement and the Prospectus and supervising the issuance, sale and delivery of the Trust Preferred Securities and preparing the pertinent documents and the lawyers having significant responsibility for the client relationship with the Companies 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 (J) such counsel may include therein such other customary qualifications 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 statutory trust under the Delaware 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 statutory trust have been made;
(ii) under the Trust Agreement and the Delaware Act, the Trust has the requisite trust power and authority (A) to own property and to conduct its business, all as
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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 the rights and remedies of creditors generally, principles of equity, including applicable law relating to fiduciary duties (regardless of whether considered and applied 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 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 Delaware Act, the issuance of the Trust Securities is not subject to preemptive or other similar 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 Delaware Act, the issuance and sale by the Trust of the Trust Securities and the execution and delivery by the Trust of this
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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 the Trust, and, upon the due execution and delivery of this Underwriting Agreement by HECO as depositor under the Trust Agreement and the certificate or certificates for the Trust Preferred Securities by more than one Administrative Trustee on behalf of the Trust, and the authentication 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 each of the Companies of this Underwriting Agreement, the description of the Securities, the validity of the Indentures, the HECO Securities and the Subsidiary Debentures, 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 LLP, independent certified public accountants of the Companies (the “Accountants”), dated the date hereof, to the effect that:
(i) The Accountants are independent certified public accountants with respect to the Companies 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 and 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 consolidated audited financial statements of the Companies for the periods specified in such letter, as indicated in their reports thereon, copies of which have been furnished to the Representatives;
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(iii) 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 the Companies, inspection of the minute books of the Companies since the date of the latest audited financial statements included or incorporated by reference in the Prospectus, inquiries of officials of the Companies 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 of HECO 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 Securities Act, the Exchange Act as it applies to Form 10-Q and the related rules and regulations of the Commission thereunder or any material modifications should be made to such unaudited financial statements for them to be in conformity with generally accepted accounting principles;
(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) at the date of the latest available financial statements of HECO and 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 the Companies 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
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(E) for the period from the date of the latest financial statements included or incorporated by reference in the Prospectus to the date of the latest available financial statements of HECO and to the specified date referred to in paragraph (D) above there were any decreases in consolidated revenues, consolidated operating income 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
(iv) 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 (ii) and (iii) 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 the Companies 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, percentages and financial information with the accounting records of the Companies 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 of each Company, dated the Closing Date and signed by the Chairman of the Board of Directors, the President, the Financial Vice President, any other Vice President, the Treasurer or an Assistant Treasurer of such Company, (i) as to the accuracy of the representations and warranties of such Company contained herein, (ii) as to the performance and compliance by such Company with all agreements and conditions in this Underwriting Agreement to be performed or complied with by such Company at or prior to the Closing Date, (iii) as to the matters set forth in Sections 7(a), 7(b) and 7(m)(i) hereof and (iv) to the effect that, since the respective dates as of which information is given in the Prospectus, there has not been any change in the capital stock or long-term debt of such Company 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 such Company, otherwise than as set forth or contemplated in the Prospectus.
(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
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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 and (ii) specimens of the Debentures and of certificates for the Trust Common Securities.
(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 or a material disruption has occurred in commercial banking or securities settlement or clearance services in the United States; (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 other national or international calamity or emergency or any material adverse change in the existing financial, political or economic conditions in the United States or elsewhere that, in the judgment of the 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) None of the Companies 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 date hereof, there shall not have been any change in the capital stock or long-term debt of the Companies 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 the Companies, 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.
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(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 Services 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) the 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 Companies and the Trust 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 on or prior to the Closing Date 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.
Section 8. Condition to the Obligations of the Offerors . The obligations of the Companies and the Trust 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 Companies and the Trust 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
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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 it 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 neither any Company nor the Trust shall 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 neither the Companies nor the Trust shall 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 Companies and the Trust have established that a copy of the Prospectus was not 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 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 Companies and the Trust, their respective directors and officers who signed the Registration Statement and each person, if any, who controls any of the Companies or the Trust within the meaning of Section 15 of the Securities Act from and against any and all losses, claims, damages or liabilities to which the Companies or the Trust 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 it 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 the Companies and the Trust for any legal or
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other expenses reasonably incurred by the Companies and the Trust 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) hereof of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under Section 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 Section 9(a) or 9(b). In case any such action is brought against any such indemnified party and it notifies such indemnifying party of the commencement thereof, such indemnifying party shall be entitled to participate therein and, to the extent that it wishes, 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 prior 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.
(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 the Companies and the Trust 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 the Companies and the Trust 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 the Companies and the Trust 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
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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 the Companies or the Trust 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. The Companies, the Trust 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) referred 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 Section 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 any of the Companies or the Trust within the meaning of Section 15 of the Securities Act and each officer or director of such Company or the Trust 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.
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 Companies and the Trust 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 any of the Companies or the Trust 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 defaults 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
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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 they have 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 Companies and the Trust 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.
(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 do 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 Companies and the Trust 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 Companies and the Trust, 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. If any part of this Underwriting Agreement for any
27
reason is 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 Companies or the Trust, shall be mailed or delivered to them c/o HECO, P.O. Box 2750, Honolulu, Hawaii 96840-0001, Attention: Financial Vice President.
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, each of the Companies 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 the Companies and the Trust for examination upon request, but without warranty on the part of the Representatives as to the authority of the signers thereof.
28
|
Very truly yours,
H AWAIIAN E LECTRIC C OMPANY , I NC . |
||
| By: | ||
|
|
||
|
Name: Title: |
||
| By: | ||
|
|
||
|
Name: Title: |
||
|
M AUI E LECTRIC C OMPANY , L IMITED |
||
| By: | ||
|
|
||
|
Name: Title: |
||
| By: | ||
|
|
||
|
Name: Title: |
||
|
H AWAII E LECTRIC L IGHT C OMPANY , I NC . |
||
| By: | ||
|
|
||
|
Name: Title: |
||
| By: | ||
|
|
||
|
Name: Title: |
||
|
HECO C APITAL T RUST III
By: H AWAIIAN E LECTRIC C OMPANY , I NC ., as Depositor |
||
| By: | ||
|
|
||
|
Name: Title: |
||
29
Accepted as of the date first above written:
G OLDMAN , S ACHS & C O .
U.S. B ANCORP P IPER J AFFRAY I NC .
As representatives of the other several
Underwriters named in Schedule I hereto
|
By: G OLDMAN , S ACHS & C O . |
||
|
|
||
|
(Goldman, Sachs & Co.) |
30
SCHEDULE I
HECO Capital Trust III
[ ]% Cumulative Quarterly Income Preferred Securities, Series 2004
|
Underwriter |
Number of
Trust Preferred Securities |
|
|
Goldman, Sachs & Co. |
||
|
U.S. Bancorp Piper Jaffray Inc. |
||
|
|
||
|
Total |
4,000,000 | |
|
|
||
31
Exhibit 4(a)
CERTIFICATE OF TRUST
OF
HECO CAPITAL TRUST III
THIS Certificate of Trust of HECO Capital Trust III (the “Trust”), dated as of November 20, 2003, is being duly executed and filed on behalf of the Trust by the undersigned, as trustees, to form a statutory trust under the Delaware Statutory Trust Act (12 Del. C. § 3801 et seq .) (the “Act”).
1. Name . The name of the statutory trust formed by this Certificate of Trust is HECO Capital Trust III.
2. Delaware Trustee . The name and business address of the trustee of the Trust 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 duly executed this Certificate of Trust in accordance with Section 3811(a)(1) of the Act 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/ Stacey B. Poindexter Name: Stacey B. Poindexter Title: Assistant Treasurer
THE BANK OF NEW YORK (DELAWARE), not in its individual capacity but solely as trustee of the Trust
By: /s/ James Longshaw Name: James Longshaw Title: Senior Vice President |
/s/ T. Michael May T. MICHAEL MAY, not in his individual capacity, but solely as trustee of the Trust
/s/ Richard A. von Gnechten RICHARD A. VON GNECHTEN, not in his individual capacity, but solely as trustee of the Trust
/s/ Lorie Ann Nagata LORIE ANN NAGATA, not in her individual capacity, but solely as trustee of the Trust |
Exhibit 4(b)
TRUST AGREEMENT
OF
HECO CAPITAL TRUST III
THIS TRUST AGREEMENT is made as of November 20, 2003 (the “Trust Agreement”), by and among Hawaiian Electric Company, Inc., a Hawaii corporation, as Depositor (the “Depositor”), The Bank of New York, a New York banking corporation, as trustee (the “Property Trustee”), The Bank of New York (Delaware), a Delaware banking corporation, as trustee (the “Delaware Trustee”), and T. Michael May, Richard A. von Gnechten and Lorie Ann Nagata, acting hereunder not individually but in their capacity as trustees (collectively, together with the Property Trustee and the Delaware Trustee, the “Trustees”). The Depositor and the Trustees hereby agree as follows:
1. The trust created hereby shall be known as “HECO Capital Trust III” (the “Trust”), in which name the Trustees or the Depositor, to the extent provided herein, may conduct the business of the Trust, make and execute contracts, and sue and be sued.
2. The Depositor hereby assigns, transfers, conveys and sets over to the Trust the sum of $25. Such amount shall constitute the initial trust estate. It is the intention of the parties hereto that the Trust created hereby constitute a statutory trust under Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. § 3801, et seq. (the “Statutory Trust Act”), and that this document constitute the governing instrument of the Trust. The Trustees are hereby authorized and directed to execute and file a certificate of trust with the Delaware Secretary of State in such form as the Trustees may approve.
3. The Depositor and the Trustees will enter into an amended and restated Trust Agreement or Declaration satisfactory to each such party and substantially in the form to be included as an exhibit to the Registration Statement on Form S-3 (the “1933 Act Registration Statement”) referred to below, or in such other form as the Trustees and the Depositor may approve, to provide for the contemplated operation of the Trust created hereby and the issuance of the Preferred Securities and Common Securities referred to therein. Prior to the execution and delivery of such amended and restated Trust Agreement or Declaration, the Trustees shall not have any duty or obligation hereunder or with respect of the trust estate, except as otherwise required by applicable law or as may be necessary to obtain prior to such execution and delivery any licenses, consents or approvals required by applicable law or otherwise. Notwithstanding the foregoing, the Trustees may take all actions deemed proper as are necessary to effect the transactions contemplated herein.
4. The Depositor, as the sponsor of the Trust, is hereby authorized (i) to file with the Securities and Exchange Commission (the “Commission”) and to execute, in the case of the 1933 Act Registration Statement and 1934 Act Registration Statement (as herein defined), on behalf of the Trust, (a) the 1933 Act Registration Statement, including pre-effective or post-effective amendments to such Registration Statement, relating to the registration under the Securities Act of 1933, as amended (the “1933 Act”), of the Preferred Securities of the Trust, (b) any preliminary prospectus or prospectus supplement thereto relating to the Preferred Securities
required to be filed under the 1933 Act, and (c) a Registration Statement on Form 8-A or other appropriate form (the “1934 Act Registration Statement”) (including all pre-effective and post-effective amendments thereto) relating to the registration of the Preferred Securities of the Trust under the Securities Exchange Act of 1934, as amended; (ii) to file with the New York Stock Exchange or other exchange, and execute on behalf of the Trust a listing application and all other applications, statements, certificates, agreements and other instruments as shall be necessary or desirable to cause the Preferred Securities to be listed on the New York Stock Exchange or such other exchange; (iii) to file and execute on behalf of the Trust such applications, reports, surety bonds, irrevocable consents, appointments of attorney for service of process and other papers and documents as shall be necessary or desirable to register the Preferred Securities under the securities or “Blue Sky” laws of such jurisdictions as the Depositor, on behalf of the Trust, may deem necessary or desirable; and (iv) to execute, deliver and perform on behalf of the Trust an underwriting agreement with the Depositor and the underwriter or underwriters of the Preferred Securities of the Trust. In the event that any filing referred to in clauses (i)-(iii) above is required by the rules and regulations of the Commission, the New York Stock Exchange or other exchange, or state securities or Blue Sky laws to be executed on behalf of the Trust by the Trustees, the Trustees, in their capacities as trustees of the Trust, are hereby authorized and directed to join in any such filing and to execute on behalf of the Trust any and all of the foregoing, it being understood that the Trustees, in their capacities as trustees of the Trust, shall not be required to join any such filing or execute on behalf of the Trust any such document unless required by the rules and regulations of the Commission, the New York Stock Exchange or other exchange, or state securities or Blue Sky laws. In connection with all of the foregoing, the Trustees, solely in their capacities as trustees of the Trust, and the Depositor hereby constitute and appoint any one or more of T. Michael May, Richard A. von Gnechten, Lorie Ann Nagata, David J. Reber and Gregory R. Kim, with power in any one of them to act singly, as his, her or its, as the case may be, true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for the Depositor or in the Depositor’s name, place and stead, in any and all capacities, to sign any and all amendments (including all pre-effective and post-effective amendments) to the 1933 Act Registration Statement and the 1934 Act Registration Statement and to file the same, with all exhibits thereto, and any other documents in connection therewith, with the Commission, granting unto said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as the Depositor might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent or his respective substitute or substitutes, shall do or cause to be done by virtue hereof.
5. This Trust Agreement may be executed in one or more counterparts.
6. The number of trustees of the Trust initially shall be five (5) and thereafter the number of trustees of the Trust shall be such number as shall be fixed from time to time by a written instrument signed by the Depositor which may increase or decrease the number of trustees of the Trust; provided, however, that to the extent required by the Statutory Trust Act, one trustee of the Trust shall either be a natural person which is a resident of the State of Delaware or, if not a natural person, an entity which has its principal place of business in the State of Delaware. The Delaware Trustee represents and warrants that it has and will retain its principal place of business in the State of Delaware. Subject to the foregoing, the Depositor is entitled to appoint or remove without cause any trustee of the Trust at any time. Any trustee of the Trust may resign upon thirty days’ prior notice to the Depositor.
7. This Trust Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware (without regard to conflict of laws principles).
[signature page follows]
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to be duly executed as of the day and year first above written.
|
HAWAIIAN ELECTRIC COMPANY, INC., as Depositor |
||
|
By: /s/ Richard A. von Gnechten Name: Richard A. von Gnechten Title: Financial Vice President |
/s/ T. Michael May T. MICHAEL MAY, not in his individual capacity, but solely as trustee of the Trust |
|
|
By: /s/ Lorie Ann Nagata Name: Lorie Ann Nagata Title: Treasurer |
/s/ Richard A. Von Gnechten RICHARD A. VON GNECHTEN, not in his individual capacity, but solely as trustee of the Trust |
|
|
THE BANK OF NEW YORK, not in its individual capacity but solely as trustee of the Trust
By: /s/ Stacey B. Poindexter Name: Stacey B. Poindexter Title: Assistant Treasurer |
/s/ Lorie Ann Nagata LORIE ANN NAGATA, not in her individual capacity, but solely as trustee of the Trust |
|
|
THE BANK OF NEW YORK (DELAWARE), not in its individual capacity but solely as trustee of the Trust |
||
|
By: /s/ James Longshaw Name: James Longshaw Title: Senior Vice President |
||
Exhibit 4(c)
Amended and Restated
Trust Agreement for HECO Capital Trust III
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
January 1, 2004
HECO Capital Trust III
Certain Sections of this Trust Agreement relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939
|
Trust Indenture Act Section |
Trust Agreement Section |
|||||
|
§ 310 |
(a)(1) |
7.07 | ||||
|
(a)(2) |
7.07 | |||||
|
(a)(3) |
7.09 | |||||
|
(a)(4) |
2.07(a)(ii) | |||||
|
(b) |
7.08 | |||||
|
§ 311 |
(a) |
7.13 | ||||
|
(b) |
7.13 | |||||
|
§ 312 |
(a) |
5.07 | ||||
|
(b) |
5.07 | |||||
|
(c) |
5.07 | |||||
|
§ 313 |
(a) |
7.14 | ||||
|
(b) |
7.14 | |||||
|
(c) |
7.14 | |||||
|
(d) |
7.14 | |||||
|
§ 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 | |||||
|
§ 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 | |||||
|
§ 316 |
(a) |
Not Applicable | ||||
|
(a)(1)(A) |
Not Applicable | |||||
|
(a)(1)(B) |
Not Applicable | |||||
|
(a)(2) |
Not Applicable | |||||
|
(b) |
Not Applicable | |||||
|
(c) |
Not Applicable | |||||
|
§ 317 |
(a)(1) |
Not Applicable | ||||
|
(a)(2) |
Not Applicable | |||||
|
(b) |
5.09 | |||||
|
§ 318 |
(a) |
10.10 | ||||
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed to be a part of the Trust Agreement.
TABLE OF CONTENTS
|
ARTICLE 1 DEFINED TERMS |
1 | |||
|
SECTION 1.01 |
Definitions. | 1 | ||
|
ARTICLE 2 CONTINUATION OF THE TRUST |
12 | |||
|
SECTION 2.01 |
Name. | 12 | ||
|
SECTION 2.02 |
Office of the Delaware Trustee; Principal Place of Business. | 12 | ||
|
SECTION 2.03 |
Initial Contribution of Trust Property; Expenses of the Trust. | 12 | ||
|
SECTION 2.04 |
Issuance of the Trust Securities. | 13 | ||
|
SECTION 2.05 |
Purchase and Exchange of Debentures. | 13 | ||
|
SECTION 2.06 |
Declaration of Trust. | 14 | ||
|
SECTION 2.07 |
Authorization to Enter into Certain Transactions. | 14 | ||
|
SECTION 2.08 |
Assets of Trust. | 19 | ||
|
SECTION 2.09 |
Title to Trust Property. | 19 | ||
|
ARTICLE 3 PAYMENT ACCOUNT |
19 | |||
|
SECTION 3.01 |
Payment Account. | 19 | ||
|
ARTICLE 4 DISTRIBUTIONS; REDEMPTION |
19 | |||
|
SECTION 4.01 |
Distributions. | 19 | ||
|
SECTION 4.02 |
Redemption. | 21 | ||
|
SECTION 4.03 |
Subordination of Trust Common Securities. | 23 | ||
|
SECTION 4.04 |
Payment Procedures. | 23 | ||
|
SECTION 4.05 |
Tax Returns and Reports. | 24 | ||
|
SECTION 4.06 |
Payments under Indentures. | 24 | ||
|
SECTION 4.07 |
Payments of Taxes, Duties, Etc. of the Trust. | 24 | ||
|
ARTICLE 5 TRUST SECURITIES CERTIFICATES |
25 | |||
|
SECTION 5.01 |
Initial Ownership. | 25 | ||
|
SECTION 5.02 |
The Trust Securities Certificates. | 25 | ||
|
SECTION 5.03 |
Execution and Delivery of Trust Securities Certificates. | 25 | ||
|
SECTION 5.04 |
Registration of Transfer and Exchange of Trust Preferred Securities Certificates. | 25 | ||
|
SECTION 5.05 |
Mutilated, Destroyed, Lost or Stolen Trust Securities Certificates. | 26 | ||
|
SECTION 5.06 |
Persons Deemed Securityholders. | 27 | ||
|
SECTION 5.07 |
Access to List of Securityholders’ Names and Addresses. | 27 | ||
i
|
SECTION 5.08 |
Maintenance of Office or Agency. | 27 | ||
|
SECTION 5.09 |
Appointment of Paying Agent. | 27 | ||
|
SECTION 5.10 |
No Transfer of Trust Common Securities by Depositor. | 28 | ||
|
SECTION 5.11 |
Book-Entry Trust Preferred Securities Certificates; Trust Common Securities Certificate. | 28 | ||
|
SECTION 5.12 |
Definitive Trust Preferred Securities Certificates. | 29 | ||
|
SECTION 5.13 |
Rights of Securityholders. | 30 | ||
|
ARTICLE 6 ACTS OF SECURITYHOLDERS; MEETINGS; VOTING |
30 | |||
|
SECTION 6.01 |
Limitations on Voting Rights. | 30 | ||
|
SECTION 6.02 |
Notice of Meetings. | 31 | ||
|
SECTION 6.03 |
Meetings of Trust Preferred Security Holders. | 31 | ||
|
SECTION 6.04 |
Voting Rights. | 31 | ||
|
SECTION 6.05 |
Proxies, etc. | 32 | ||
|
SECTION 6.06 |
Securityholder Action by Written Consent. | 32 | ||
|
SECTION 6.07 |
Record Date for Voting and Other Purposes. | 32 | ||
|
SECTION 6.08 |
Acts of Securityholders. | 32 | ||
|
SECTION 6.09 |
Inspection of Records. | 33 | ||
|
ARTICLE 7 THE TRUSTEES |
34 | |||
|
SECTION 7.01 |
Certain Duties and Responsibilities. | 34 | ||
|
SECTION 7.02 |
Notice of Defaults; Direct Action by Securityholders. | 35 | ||
|
SECTION 7.03 |
Certain Rights of Property Trustee. | 35 | ||
|
SECTION 7.04 |
Not Responsible for Recitals or Issuance of Securities. | 36 | ||
|
SECTION 7.05 |
May Hold Securities. | 37 | ||
|
SECTION 7.06 |
Compensation; Indemnity; Fees. | 37 | ||
|
SECTION 7.07 |
Certain Trustees Required; Eligibility of Trustees. | 38 | ||
|
SECTION 7.08 |
Conflicting Interests. | 38 | ||
|
SECTION 7.09 |
Co-Trustees and Separate Trustee. | 38 | ||
|
SECTION 7.10 |
Resignation and Removal; Appointment of Successor. | 40 | ||
|
SECTION 7.11 |
Acceptance of Appointment by Successor. | 41 | ||
|
SECTION 7.12 |
Merger, Conversion, Consolidation or Succession to Business. | 42 | ||
|
SECTION 7.13 |
Preferential Collection of Claims Against Depositor or Trust. | 42 | ||
|
SECTION 7.14 |
Reports by Property Trustee. | 42 | ||
ii
|
SECTION 7.15 |
Reports to the Property Trustee. | 42 | ||
|
SECTION 7.16 |
Evidence of Compliance with Conditions Precedent. | 43 | ||
|
SECTION 7.17 |
Statements Required in Officer’s Certificate and Opinion of Counsel. | 43 | ||
|
SECTION 7.18 |
Number of Administrative Trustees. | 43 | ||
|
SECTION 7.19 |
Delegation of Power. | 44 | ||
|
SECTION 7.20 |
Voting. | 44 | ||
| ARTICLE 8 DISSOLUTION AND LIQUIDATION | 44 | |||
|
SECTION 8.01 |
Dissolution Upon Expiration Date. | 44 | ||
|
SECTION 8.02 |
Early Dissolution. | 44 | ||
|
SECTION 8.03 |
Termination of Obligations. | 45 | ||
|
SECTION 8.04 |
Dissolution and Liquidation. | 45 | ||
| ARTICLE 9 MERGERS, ETC. | 46 | |||
|
SECTION 9.01 |
Mergers, Consolidations, Conversions, Amalgamations or Replacements of the Trust. | 46 | ||
| ARTICLE 10 MISCELLANEOUS PROVISIONS | 47 | |||
|
SECTION 10.01 |
Limitation of Rights of Securityholders. | 47 | ||
|
SECTION 10.02 |
Amendment. | 48 | ||
|
SECTION 10.03 |
Severability. | 49 | ||
|
SECTION 10.04 |
Governing Law. | 49 | ||
|
SECTION 10.05 |
Successors and Assigns. | 49 | ||
|
SECTION 10.06 |
Headings. | 49 | ||
|
SECTION 10.07 |
Reports, Notices and Demands. | 50 | ||
|
SECTION 10.08 |
Agreement Not to Petition. | 50 | ||
|
SECTION 10.09 |
Trust Indenture Act; Conflict with Trust Indenture Act. | 50 | ||
|
SECTION 10.10 |
Acceptance of Terms of Trust Agreement, Guarantees and Indentures. | 51 | ||
|
EXHIBIT A |
A-1 | |||
|
EXHIBIT B |
B-1 | |||
|
EXHIBIT C |
C-1 | |||
iii
AMENDED AND RESTATED TRUST AGREEMENT of HECO Capital Trust III (the “Trust”), dated as of January 1, 2004, 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, Richard A. von Gnechten and Lorie Ann Nagata, 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 statutory trust pursuant to the Delaware Statutory Trust Act by entering into a Trust Agreement, dated as of November 20, 2003 (the “Original Trust Agreement”), and by executing and filing with the Secretary of State of the State of Delaware a Certificate of Trust on November 20, 2003, 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:
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 any of the following events:
(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:
2
(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 or state law for the relief of debtors.
“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 duly 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 duly established thereby has delegated its authority, and in each case, delivered to the Trustees.
“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, (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 the 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, 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.
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“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 Barclay Street, 8W, New York, New York 10286, Attention: Corporate Trust Trustee Administration.
“Creditor” has the meaning specified in Section 2.03.
“Custodian” means any receiver, trustee, assignee, liquidator, sequestrator, custodian or similar official under any Bankruptcy Law.
“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 Statutory 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.
“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.
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“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 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 Trust 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 covered by 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 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” means the [ ]% Junior Subordinated Deferrable Interest Debentures, Series 2004 of the Depositor issued pursuant to the HECO Junior Indenture.
“HECO Junior Indenture” means the Junior Indenture, dated as of January 1, 2004, 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 2004 of HELCO issued pursuant to the HELCO Junior Indenture.
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“HELCO Junior Indenture” means the Junior Indenture, dated as of January 1, 2004, 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 Statutory 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.
“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 or repaid 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 Holders 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).
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“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.
“Maturity Date of the Debentures” means January , 2034, as such date may be shortened or extended in accordance with the provisions of the Indentures.
“MECO” means Maui Electric Company, Limited.
“MECO Debentures” means the [ ]% Junior Subordinated Deferrable Interest Debentures, Series 2004 of MECO issued pursuant to the MECO Junior Indenture.
“MECO Junior Indenture” means the Junior Indenture, dated as of January 1, 2004, between MECO and the Debenture Trustee, as trustee thereunder, as amended or supplemented from time to time.
“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:
(A) Trust Securities theretofore cancelled by the Administrative Trustees or delivered to the Administrative Trustees for cancellation;
(B) 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
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Securities are to be redeemed, either irrevocable notice of such redemption has been duly given pursuant to this Trust Agreement or, if notice conditioned on the deposit of the Redemption Price shall have been given, such condition shall have been satisfied;
(C) 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
(D) 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.
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“PUC” means the Public Utilities Commission of the State of Hawaii.
“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.
“Representatives” means Goldman, Sachs & Co. and U.S. Bancorp Piper Jaffray Inc., as representatives of the several underwriters named in Schedule I to the Underwriting Agreement (the “Underwriters”).
“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 Statutory 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, on a subordinated basis, 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 2004 of the Depositor issuable pursuant to the HECO Junior Indenture in any Debenture Exchange, in an aggregate principal amount of up to $40,000,000, 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
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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 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 statutory 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 B.
“Trust Guarantee” means the Trust Guarantee Agreement executed and delivered by the Depositor to The Bank of New 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.
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“Trust Preferred Security” means a [ ]% Cumulative Quarterly Income Preferred Security, Series 2004 (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 C.
“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 terms 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 [ ], 2004, among the Trust, the Companies and the Representatives.
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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 III” 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, 8W, 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 $25, 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.
(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.
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(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 Representatives pursuant to Section 5 of the Underwriting Agreement a Book-Entry Trust Preferred Securities Certificate or Certificates, registered in the name of the nominee of the Depository, representing 4,000,000 Trust Preferred Securities having an aggregate Liquidation Preference of $100,000,000, against payment by the Representatives, on behalf of the Underwriters, and receipt by the Property Trustee of the aggregate purchase price of such Trust Preferred Securities of $100,000,000. 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 123,712 Trust Common Securities having an aggregate Liquidation Preference of $3,092,800, against payment by the Depositor and receipt by the Property Trustee of the purchase price of such Trust Common Securities of $3,092,800.
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 $63,092,800 aggregate principal amount of HECO Debentures from HECO, $20,000,000 aggregate principal amount of MECO Debentures from MECO and $20,000,000 aggregate principal amount of HELCO Debentures from HELCO, all 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 $63,092,800, $20,000,000 and $20,000,000 to the Depositor, MECO and HELCO, respectively, or an aggregate of $103,092,800, 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 ten 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
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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 Debenture Exchange and the issuance of the Substituted HECO Debentures 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 Debentures 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 exchange 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 make Distributions and other payments on the Trust Securities, (iii) to maintain the status of the Trust as a grantor trust for United States federal income tax purposes, and (iv) 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 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 Statutory 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
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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;
(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;
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(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 trust under the laws of the State of Delaware and of each other jurisdiction in which such existence is necessary to 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 Statutory 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 are 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:
(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;
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(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, so long as the Property Trustee is acting as Paying Agent, whether solely or with any co-paying agent;
(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).
(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.
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(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;
(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)
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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.
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 January , 2004 and, except during an Extension Period for the Debentures pursuant to the applicable Indenture, shall be payable quarterly in arrears on
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March 31, June 30, September 30 and December 31 of each year, commencing on March 31, 2004. 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 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 day that is 15 days prior to the relevant Distribution Date, whether or not a Business Day.
(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.
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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) Any notice of redemption may state that such redemption shall be conditional upon the receipt by the Property Trustee not later than the close of business on the Business Day next preceding the Redemption Date of moneys sufficient to pay in full the Redemption Price. If the redemption notice states that it is conditional and such moneys shall not be so received by the close of business on the Business Day next preceding the Redemption Date (i) such notice of redemption shall be of no force and effect, (ii) the Property Trustee shall not redeem such Trust Securities, and (iii) the Property Trustee shall give notice, in the manner in which the notice of redemption was given, that such moneys were not so received and that such redemption did not occur. In such event, the Property Trustee shall promptly return Trust Securities which it has received to the registered owners thereof.
(d) 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 Debenture Redemption Date or the Maturity Date of the Debentures, as the case may be. 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.
(e) If the Trust, by action of the Property Trustee, gives a notice of redemption in respect of any Trust Preferred Securities, then, by 12:00 noon, New York time, on the
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Redemption Date, subject to Section 4.02(c), the Property Trustee will, to the extent funds are available therefor, (1) 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 or (2) if the Trust Preferred Securities are not in book-entry-only form, deposit irrevocably with the Paying Agent funds sufficient to pay the applicable Redemption Price and will give the Paying Agent irrevocable instructions and authority to pay the applicable Redemption Price to the Holders thereof 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.
(f) 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 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.
(g) 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
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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 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 Trust 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 for the benefit of the Holders of the Trust Preferred Securities and not the Holders 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 for their benefit.
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
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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.
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 applicable Internal Revenue Service Form 1099, 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.
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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 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 or facsimile 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 the initial Securities Registrar; any successor Securities Registrar shall be appointed by the Administrative Trustees.
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(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 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.
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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 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
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chosen by the Property Trustee and approved by 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 approved 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 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, except for transfers permitted by Article 5 of the HECO Junior Indenture. The Administrative Trustees shall cause each Trust Common Securities Certificate issued to the Depositor to contain a legend stating “THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE EXTENT PROVIDED IN THE TRUST AGREEMENT (AS DEFINED BELOW)”. 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 Securities Beneficial Owner will receive a Definitive Trust Preferred Securities Certificate representing such Trust Preferred Securities
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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 Securities Certificates have been issued to the Trust Preferred Securities Beneficial Owners pursuant to Section 5.12:
(1) the provisions of this Section 5.11(b) shall be in full force and effect;
(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 Securities 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 Securities Beneficial Owners shall be exercised only through the Depository and shall be limited to those established by law and agreements between such Trust Preferred Securities 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 Securities 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 Securities 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 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
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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.
(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 written consent of the Holders of 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
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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 a Majority in Liquidation Preference of the Outstanding Trust Preferred Securities.
SECTION 6.02 Notice of Meetings .
Notice of all meetings of the Trust Preferred Security Holders, stating the time, place and purpose of the meeting, shall be given by the Property Trustee pursuant to Section 10.07 to each Trust Preferred Security Holder 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 Trust Preferred Security Holders .
(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 Trust Preferred Security Holders to vote on any matters as to which the Trust Preferred Security Holders are entitled to vote.
(b) Holders of 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.
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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 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 prior notice and 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. Prompt notice of the taking of any action by written consent shall be provided to the Holders who did not consent to the taking of such action.
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 who are entitled to vote by written consent, or for the purpose of any other action, the Administrative Trustees may from time to time fix as a record date for the determination of the identity of the Securityholders for such purposes, (i) in the case of a meeting, a date not more than 90 days prior to the date of the meeting of Securityholders, or (ii) in the case of a written consent, a date that shall not precede the date upon which the action fixing the record date is adopted by the Administrative Trustees and which date shall not be more than 10 days after the date upon which the action fixing the record date is adopted by the Administrative Trustees.
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
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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.
(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 Statutory 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.
(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.
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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 10.07, 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, to the fullest extent permitted by law, 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 of interest on or principal of the HECO Debentures equal to the aggregate Liquidation Preference of the Trust Preferred Securities of 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 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 to such Holder of the interest on or principal of the MECO Debentures or the HELCO Debentures, as the case may be, equal to the aggregate Liquidation Preference of the Trust Preferred Securities of such Holder, 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;
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(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 Trust Preferred Security Holders 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 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;
(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.
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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.
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 grossly negligent action, its own grossly negligent failure to act or its own willful misconduct (or, in the case of the Property Trustee, any such expense, disbursement or advance as may be attributable its own negligent action, its own negligent failure to act or its own willful misconduct); 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 willful misconduct (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.
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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.
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 two 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 the 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, 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 cotrustee, 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
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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 rights, powers, duties and obligations shall be exercised and performed by such cotrustee 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.
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(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 a 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 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.
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(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 10.07 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.
(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 as cotrustees 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 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).
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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.
SECTION 7.18 Number of Administrative Trustees .
(a) The initial number of Administrative Trustees shall be three, provided that the Holder of all of the Trust Common Securities by written instrument may, subject to the requirements of Section 7.07(b), increase and/or 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 or Trustees 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.
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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.
ARTICLE 8
DISSOLUTION AND LIQUIDATION
SECTION 8.01 Dissolution Upon Expiration Date .
Unless earlier dissolved, the Trust shall automatically dissolve on December 31, 2056 (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 30 days’ prior written notice to the Holders of the Trust Preferred Securities, the delivery of 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.
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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.
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 Administrative Trustees and the Property Trustee as expeditiously as they 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 for
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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 $25 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.
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
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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 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, 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.
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SECTION 10.02 Amendment .
(a) This Trust Agreement may be amended from time to time by the Administrative 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, to ensure that the Debentures will be treated as indebtedness of the Companies or to ensure that the Trust will not be required to register as an 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 Administrative Trustees and the Depositor with the consent of Holders of 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.
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(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.
(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 7.01) 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, 8W, 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 III 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 10.08, 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 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 estopped 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 10.08 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.
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(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.
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HAWAIIAN ELECTRIC COMPANY, INC., |
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as Depositor |
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By: |
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Richard A. von Gnechten |
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Financial Vice President |
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By: |
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Lorie Ann Nagata |
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Treasurer |
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THE BANK OF NEW YORK, |
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as Property Trustee |
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By: |
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Name: |
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Title: |
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THE BANK OF NEW YORK (DELAWARE), |
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as Delaware Trustee |
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By: |
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Name: |
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Title: |
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T. MICHAEL MAY, |
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as Administrative Trustee
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RICHARD A. VON GNECHTEN, |
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as Administrative Trustee
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LORIE ANN NAGATA, |
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as Administrative Trustee |
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EXHIBIT A
CERTIFICATE OF TRUST
OF
HECO CAPITAL TRUST III
THIS Certificate of Trust of HECO Capital Trust III (the “Trust”), dated as of November 20, 2003, is being duly executed and filed on behalf of the Trust by the undersigned, as trustees, to form a statutory trust under the Delaware Statutory Trust Act (12 Del. C. § 3801, et seq .).
1. Name . The name of the statutory trust formed by this Certificate of Trust is HECO Capital Trust III.
2. Delaware Trustee . The name and business address of the trustee of the Trust 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 duly executed this Certificate of Trust in accordance with Section 3811(a)(1) of the Act as of the date first-above written.
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THE BANK OF NEW YORK,
not in its
individual capacity but solely as trustee of the Trust |
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| By: |
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Name: Title: |
T. MICHAEL MAY, not in his individual
capacity, but solely as trustee of the Trust |
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THE BANK OF NEW YORK (DELAWARE),
not in its individual capacity but solely as trustee of the Trust |
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| RICHARD A. VON GNECHTEN, not in his individual capacity, but solely as trustee of the Trust | ||||
| By: |
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| Name: | ||||
| Title: |
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| LORIE ANN NAGATA, not in her individual capacity, but solely as trustee of the Trust | ||||
A-1
EXHIBIT B
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE
EXTENT PROVIDED IN THE TRUST AGREEMENT (AS DEFINED BELOW)
|
CERTIFICATE NO. |
NO. OF TRUST COMMON SECURITIES |
|
| TC-1 | 123,712 |
CERTIFICATE EVIDENCING TRUST COMMON SECURITIES
OF
HECO CAPITAL TRUST III
[ ]% Trust Common Securities
(Liquidation Preference $25 Per Common Security)
HECO Capital Trust III, a statutory 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 one hundred twenty three thousand seven hundred twelve (123,712) 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”). Except as provided in 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 January 1, 2004, 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 undersigned Administrative Trustees of the Trust have executed this certificate this [ ] day of [ ], 2004.
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HECO CAPITAL TRUST III |
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By: |
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By: |
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Name: Richard A. von Gnechten |
Name: Lorie Ann Nagata |
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Administrative Trustee |
Administrative Trustee |
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B-1
EXHIBIT C
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 referred to herein and no transfer of this Trust Preferred Security (other than a transfer of this Trust 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 III 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.
C-1
THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT TO THE
EXTENT PROVIDED IN THE TRUST AGREEMENT (AS DEFINED BELOW)
|
CERTIFICATE NO. |
NO. OF PREFERRED SECURITIES |
|
|
TP-1 |
4,000,000 | |
|
CUSIP NO. |
AGGREGATE LIQUIDATION PREFERENCE |
|
| $100,000,000 | ||
CERTIFICATE EVIDENCING TRUST PREFERRED SECURITIES
OF
HECO CAPITAL TRUST III
[ ]% Cumulative Quarterly Income Trust Preferred Securities,
Series 2004
(Liquidation Preference $25 Per Preferred Security)
HECO Capital Trust III, a statutory trust created under the laws of the State of Delaware (the “Trust”), hereby certifies that Cede & Co. (the “Holder”) is the registered owner of four million (4,000,000) preferred securities of the Trust representing undivided preferred beneficial interests in the assets of the Trust and designated the HECO Capital Trust III [ ]% Cumulative Quarterly Income Trust Preferred Securities, Series 2004 (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 January 1, 2004, 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 (“HECO”), and The Bank of New York, as trust guarantee trustee, dated as of January 1, 2004 (the “Trust Guarantee”) to the extent provided therein, together with the benefits resulting from the obligations of HECO under the Trust Agreement, its [ ]% Junior Subordinated Deferrable Interest Debentures, Series 2004 (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, Limited and Hawaii Electric Light Company, Inc. (the “Subsidiary Guarantees”) under their respective [ ]% Junior Subordinated Deferrable Interest Debentures, Series 2004 (the “MECO Debentures” and the “HELCO Debentures,” respectively) and the Junior Indentures related thereto. 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.
C-2
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, 2004. 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 and the MECO Debentures and the HELCO Debentures (or payments by HECO pursuant to the Subsidiary Guarantees). 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 date shall be the date which is 15 days prior to the relevant payment date, 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 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.
C-3
IN WITNESS WHEREOF, the undersigned Administrative Trustees of the Trust have executed this certificate this [ ] day of [ ], 2004.
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HECO CAPITAL TRUST III |
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By: |
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Name: Richard A. von Gnechten |
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Administrative Trustee |
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By: |
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Name: Lorie Ann Nagata |
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Administrative Trustee |
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C-4
CERTIFICATE OF AUTHENTICATION
This Certificate is one of the issue of Trust Preferred Securities described in the Trust Agreement.
Date of Authentication: [ ], 2004.
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THE BANK OF NEW YORK, |
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as Property Trustee |
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By: |
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Authorized Signatory |
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C-5
ASSIGNMENT
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FOR VALUE RECEIVED, the undersigned assigns and transfers to: |
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(Insert assignee’s social security or tax identification number)
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(Insert address and zip code of assignee) |
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Trust Preferred Securities represented by this Trust Preferred Securities Certificate and irrevocably appoints
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| agent to transfer said Trust Preferred Securities on the books of the Trust. The agent may substitute another to act for him or her. | ||||||||
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Date: |
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Signature: |
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| (Sign exactly as your name appears in this Trust Preferred Securities Certificate) | ||||||||
C-6
Exhibit 4(d)
HAWAIIAN ELECTRIC COMPANY, INC.
AND
THE BANK OF NEW YORK, AS TRUSTEE
JUNIOR INDENTURE
Dated as of January 1, 2004
Providing for the Issuance of
Junior Subordinated Deferrable Interest Debentures in Series
including
% Junior Subordinated Deferrable Interest Debentures,
Series 2004
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
Note: This reconciliation and tie sheet shall not, for any purpose, be deemed to be a part of the Junior Indenture.
TABLE OF CONTENTS
|
PAGE
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ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE |
1 | |||
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SECTION 1.01. |
Definitions | 1 | ||
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SECTION 1.02. |
Other Definitions | 7 | ||
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SECTION 1.03. |
Incorporation by Reference of Trust Indenture Act | 8 | ||
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SECTION 1.04. |
Rules of Construction | 8 | ||
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SECTION 1.05. |
Acts of Holders and Holders of Trust Preferred Securities | 8 | ||
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ARTICLE 2. THE DEBENTURES; THE SERIES 2004 DEBENTURES |
9 | |||
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SECTION 2.01. |
Issue of Debentures Generally | 9 | ||
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SECTION 2.02. |
Terms and Form of the Series 2004 Debentures | 11 | ||
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SECTION 2.03. |
Payment of Principal and Interest | 13 | ||
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SECTION 2.04. |
Execution, Authentication and Delivery | 14 | ||
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SECTION 2.05. |
Registrar and Paying Agent | 16 | ||
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SECTION 2.06. |
Paying Agent to Hold Money in Trust | 17 | ||
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SECTION 2.07. |
Debentureholder Lists | 17 | ||
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SECTION 2.08. |
Transfer and Exchange | 18 | ||
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SECTION 2.09. |
Replacement Debentures | 18 | ||
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SECTION 2.10. |
Outstanding Debentures; Determinations of Holders’ Action | 19 | ||
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SECTION 2.11. |
Temporary Debentures | 20 | ||
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SECTION 2.12. |
Book-Entry System | 20 | ||
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SECTION 2.13. |
Cancellation | 22 | ||
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SECTION 2.14. |
CUSIP Numbers | 22 | ||
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ARTICLE 3. REDEMPTION |
22 | |||
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SECTION 3.01. |
Redemption; Notice to Trustee | 22 | ||
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SECTION 3.02. |
Selection of Debentures to be Redeemed | 23 | ||
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SECTION 3.03. |
Notice of Redemption | 23 | ||
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SECTION 3.04. |
Effect of Notice of Redemption | 24 | ||
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SECTION 3.05. |
Deposit of Redemption Price | 25 | ||
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SECTION 3.06. |
Debentures Redeemed in Part | 25 | ||
-i-
TABLE OF CONTENTS
(continued)
|
PAGE
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ARTICLE 4. COVENANTS |
25 | |||
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SECTION 4.01. |
Payment of Debentures | 25 | ||
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SECTION 4.02. |
Prohibition on Distributions, Etc | 26 | ||
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SECTION 4.03. |
SEC Reports | 27 | ||
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SECTION 4.04. |
Compliance Certificates | 27 | ||
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SECTION 4.05. |
Further Instruments and Acts | 28 | ||
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SECTION 4.06. |
Additional Sums | 28 | ||
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SECTION 4.07. |
Payment of Expenses of Trust | 28 | ||
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SECTION 4.08. |
Ownership of Trust Common Securities | 28 | ||
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ARTICLE 5. SUCCESSOR CORPORATION |
28 | |||
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SECTION 5.01. |
When the Company May Merge, Etc | 28 | ||
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ARTICLE 6. DEFAULTS AND REMEDIES |
29 | |||
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SECTION 6.01. |
Events of Default | 29 | ||
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SECTION 6.02. |
Acceleration | 31 | ||
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SECTION 6.03. |
Other Remedies | 31 | ||
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SECTION 6.04. |
Waiver of Past Defaults | 32 | ||
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SECTION 6.05. |
Control by Majority | 32 | ||
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SECTION 6.06. |
Limitation on Suits | 33 | ||
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SECTION 6.07. |
Rights of Holders to Receive Payment | 33 | ||
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SECTION 6.08. |
Collection Suit by the Trustee | 34 | ||
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SECTION 6.09. |
The Trustee May File Proofs of Claim | 34 | ||
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SECTION 6.10. |
Priorities | 34 | ||
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SECTION 6.11. |
Undertaking for Costs | 35 | ||
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SECTION 6.12. |
Waiver of Stay; Extension or Usury Laws | 35 | ||
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SECTION 6.13. |
Suits by Holders of Trust Preferred Securities | 35 | ||
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ARTICLE 7. THE TRUSTEE |
36 | |||
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SECTION 7.01. |
Duties of the Trustee | 36 | ||
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SECTION 7.02. |
Rights of the Trustee | 37 | ||
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SECTION 7.03. |
Individual Rights of the Trustee | 37 | ||
-ii-
TABLE OF CONTENTS
(continued)
-iii-
TABLE OF CONTENTS
(continued)
|
Page
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SECTION 10.04. |
Rights of Holders of Senior Indebtedness Not To Be Impaired | 48 | ||
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SECTION 10.05. |
Trustee May Take Action to Effectuate Subordination | 48 | ||
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SECTION 10.06. |
Subrogation | 48 | ||
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SECTION 10.07. |
Obligations of Company Unconditional; Reinstatement | 49 | ||
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SECTION 10.08. |
Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice | 49 | ||
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SECTION 10.09. |
Right of Trustee to Hold Senior Indebtedness | 50 | ||
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SECTION 10.10. |
Reliance on Judicial Order or Certificate of Liquidating Agent | 50 | ||
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SECTION 10.11. |
Trustee Not Fiduciary for Holders of Senior Indebtedness | 51 | ||
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ARTICLE 11. MISCELLANEOUS |
51 | |||
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SECTION 11.01. |
Trust Indenture Act Controls | 51 | ||
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SECTION 11.02. |
Notices | 51 | ||
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SECTION 11.03. |
Communication by Holders with Other Holders | 52 | ||
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SECTION 11.04. |
Certificate and Opinion as to Conditions Precedent | 52 | ||
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SECTION 11.05. |
Statements Required in Certificate or Opinion | 52 | ||
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SECTION 11.06. |
Severability Clause | 53 | ||
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SECTION 11.07. |
Rules by Trustee, Paying Agent and Registrar | 53 | ||
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SECTION 11.08. |
Legal Holidays | 53 | ||
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SECTION 11.09. |
Governing Law | 53 | ||
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SECTION 11.10. |
No Recourse Against Others | 54 | ||
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SECTION 11.11. |
Successors | 54 | ||
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SECTION 11.12. |
Multiple Original Copies of this Junior Indenture | 54 | ||
|
SECTION 11.13. |
No Adverse Interpretation of Other Agreements | 54 | ||
|
SECTION 11.14. |
Table of Contents; Headings, Etc | 54 | ||
|
SECTION 11.15. |
Benefits of this Junior Indenture | 54 | ||
-iv-
JUNIOR INDENTURE (this “Indenture” or “Junior Indenture”), dated as of January 1, 2004, by and between Hawaiian Electric Company, Inc., a corporation duly organized and existing under the laws 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 trusts for the purpose of issuing undivided beneficial interests in the assets thereof (the “Trust Securities”) and using the proceeds thereof to acquire the Company’s Debentures.
WHEREAS, the Company, as depositor, The Bank of New York, as Property Trustee (the “Property Trustee III”), The Bank of New York, as Delaware Trustee (the “Delaware Trustee III”), and the Administrative Trustees named therein have heretofore duly declared and established HECO Capital Trust III, a Delaware statutory trust (“Trust III”), by entering into a Trust Agreement dated as of November 20, 2003 (the “Original Trust Agreement”) and by executing and filing with the Secretary of State of the State of Delaware a Certificate of Trust on November 20, 2003.
WHEREAS, the Original Trust Agreement has been amended and restated pursuant to an Amended and Restated Trust Agreement dated as of January 1, 2004 among the Company, as depositor, the Property Trustee III, the Delaware Trustee III, the Administrative Trustees named therein and the holders, from time to time, of undivided beneficial interests in the assets of Trust III (the “Trust III Agreement”).
WHEREAS, the Company has authorized the issuance of its % Junior Subordinated Deferrable Interest Debentures, Series 2004 (the “Series 2004 Debentures”) to be purchased by Trust III with a portion of the proceeds from the issuance and sale of the Trust Securities of Trust III, 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 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 2004 Debentures:
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
“Additional Series 2004 Debentures” means % Junior Subordinated Deferrable Interest Debentures, Series 2004 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 III and having the same terms as the Series 2004 Debentures then held by Trust III.
“Additional Sums” means the additional amounts, as provided in Section 4.06 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 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 Obligation” 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” of a Person 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 III pursuant to Section 2.05(b) of the Trust III Agreement.
“Debentureholder” or “Holder” means a Person in whose name a Debenture is registered on the Registrar’s books.
2
“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.
“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), provided that no Extension Period shall extend beyond the Stated Maturity Date or the Redemption Date of any Debenture of such series.
“GAAP” means accounting principles generally accepted in the United States of America set forth in the opinions, statements and pronouncements of the Accounting Principles Board, the American Institute of Certified Public Accountants and the Financial Accounting Standards Board.
“HELCO” means Hawaii Electric Light Company, Inc., a corporation duly organized under the laws of the Republic of Hawaii, or any successor thereto.
“HELCO Indenture” means the Junior Indenture, dated as of January 1, 2004, by and among HELCO, the Company, as guarantor, 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.
3
“Issue Date”, with respect to a series of Debentures, means the date on which the Debentures of such series are originally issued.
“MECO” means Maui Electric Company, Limited, a corporation duly organized under the laws of the Territory of Hawaii, or any successor thereto.
“MECO Indenture” means the Junior Indenture, dated as of January 1, 2004, by and among MECO, the Company, as guarantor, 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 Person (other than an individual), the Chairman of the Board, the President, any Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any Assistant Secretary of such corporation and, for HECO, includes the Controller.
“Officer’s Certificate” means a written certificate containing the applicable information specified in Sections 11.04 and 11.05, 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, 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 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 III” means The Bank of New York and its successors and assigns, as property trustee under the Trust III 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.
“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.
4
“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.
“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 2004 Debentures” means any of the Company’s % Junior Subordinated Deferrable Interest Debentures, Series 2004 issued under this Junior Indenture, including, on or after the date of the Debenture Exchange, any Additional Series 2004 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).
“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.
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“Subsidiary Debentures” means, collectively the % Junior Subordinated Deferrable Interest Debentures, Series 2004 of HELCO issued pursuant to the HELCO Indenture and the % Junior Subordinated Deferrable Interest Debentures, Series 2004 of MECO issued pursuant to the MECO Indenture.
“Subsidiary Guarantees” means 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 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 III 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 III” means HECO Capital Trust III, a Delaware statutory trust created under the Delaware Statutory Trust Act, Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. § 3801, et seq.
“Trust III Agreement” means the Amended and Restated Trust Agreement, dated as of January 1, 2004, among the Company, as depositor, the Property Trustee III, the Delaware Trustee III, the Administrative Trustees named therein and the holders, from time to time, of undivided beneficial interests in the assets of Trust III, as the same may be amended and modified from time to time.
“Trust III Common Securities” means the Trust Common Securities of Trust III, representing the undivided beneficial interests, excluding the interests represented by Trust III Preferred Securities, in the assets of Trust III.
“Trust III Guarantee Agreement” means the Trust Guarantee Agreement dated as of January 1, 2004 from the Company, as guarantor, to The Bank of New York, as Trust Guarantee Trustee, with respect to the Trust III Preferred Securities.
“Trust III Preferred Securities” means the Trust Preferred Securities of Trust III, representing the undivided preferred beneficial interests in the assets of Trust III, having a liquidation preference of $25 per security and having rights provided therefor in the Trust III Agreement, including a preference under certain circumstances with respect to cash distributions and amounts payable on liquidation, redemption or otherwise, as set forth therein.
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“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.
“Trust Securities” means the undivided beneficial interests in the assets of a Trust.
“Trustee” means The Bank of New York, solely in its capacity as trustee under this Junior Indenture, 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
|
TERM |
DEFINED IN SECTION
|
|
|
“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) | |
|
“Registrar” |
2.05(a) | |
|
“Securities Register” |
2.05(a) | |
|
“Special Event” |
3.01(a) | |
|
“Successor” |
5.01(a) | |
|
“Tax Action” |
3.01(a) | |
|
“Tax Event” |
3.01(a) |
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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. |
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
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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 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 2004 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 providing for such indebtedness being junior and subordinate in right of payment to all Senior Indebtedness.
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(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 2004 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 2004 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;
(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, the identity of the Depository and any other terms relating thereto to the extent not set forth in Section 2.12, and
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(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 2004 Debentures.
(a) The Series 2004 Debentures shall be designated “Hawaiian Electric Company, Inc., % Junior Subordinated Deferrable Interest Debentures, Series 2004.” The Series 2004 Debentures and the Trustee’s Certificate of Authentication shall be substantially in the form of Exhibit A attached hereto. The Series 2004 Debentures shall initially be represented by a single certificate registered in the name of The Bank of New York as Property Trustee III for the benefit of Trust III. The terms and provisions contained in the Series 2004 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 2004 Debentures shall be issued at 100% of their principal amount.
(c) The aggregate principal amount of Series 2004 Debentures outstanding at any time may not exceed $63,092,800, except, if the Debenture Exchange has occurred, the aggregate principal amount of Series 2004 Debentures outstanding at any time (including the Additional Series 2004 Debentures) may not exceed $103,092,800, except as provided in Section 2.09. The Series 2004 Debentures shall be authenticated and delivered upon receipt by the Trustee of the items specified in Section 2.04(d).
(d) The Stated Maturity Date of the Series 2004 Debentures is January , 2034. The Stated Maturity Date for the Series 2004 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 January , 2009 or to a date later than January , 2053; 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) 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 each of the MECO Indenture and the HELCO Indenture has not occurred and is continuing, (ii) Trust III is not delinquent in payment of distributions on the Trust III Preferred Securities for more than one full quarterly distribution period, (iii) no deferred distributions on the Trust III Preferred Securities are accumulated, and (iv) the Trust III Preferred Securities, or, if the Debenture Exchange has occurred, the Series 2004 Debentures, are rated not 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.
(e) The interest rate for the Series 2004 Debentures is % per annum. The Interest Payment Dates for the Series 2004 Debentures are March 31, June 30, September 30 and December 31 of each year, commencing March 31, 2004. In the event that any date on which
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interest is payable on the Series 2004 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 2004 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 2004 Debentures are issued in definitive form while they are not held by Trust III, the Regular Record Date for each Interest Payment Date for the Series 2004 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 2004 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 2004 Debenture; except that, so long as there is no existing Defaulted Interest or Extension Period on the Series 2004 Debentures, any Series 2004 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) Overdue principal of any Series 2004 Debenture shall bear interest at a rate per annum equal to the interest rate per annum payable on such Series 2004 Debenture.
(h) Interest on any Series 2004 Debenture which has been deferred pursuant to Section 4.01(b) 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 2004 Debenture compounded quarterly from the most recent Interest Payment Date therefor.
(i) The Series 2004 Debentures shall be redeemable prior to maturity as provided in Section 3.01(a).
(j) The Series 2004 Debentures shall be issuable only in registered form without coupons and only in denominations of $25 and any integral multiple thereof.
(k) The maximum Extension Period for the Series 2004 Debentures shall be 20 consecutive quarters.
(l) If the Series 2004 Debentures are distributed to the holders of Trust III Preferred Securities upon liquidation of Trust III, the Company shall use its best efforts to list the Series 2004 Debentures on the New York Stock Exchange or on such other stock exchange or other organization, if any, on which the Trust III Preferred Securities are then listed. Upon any such distribution, if the Trust III Preferred Securities are then in the book-entry system, the Series 2004 Debentures will be issued in the form of a Global Debenture, subject to Section 2.12.
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SECTION 2.03. Payment of Principal and Interest.
(a) Unless otherwise specified pursuant to Section 2.01(d), 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 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 2004 Debentures to Trust III as the sole holder thereof or in respect of Global Debentures shall be made in immediately available funds to Property Trustee III on behalf of Trust III or to the Depository pursuant to Section 2.12, 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 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 (aa) 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 (bb) payments of such interest made in respect of the Series 2004 Debentures to Trust III as the sole holder thereof or in respect of Global Debentures shall be made in immediately available funds to Property Trustee III on behalf of Trust III or the Depository pursuant to Section 2.12, as the case may be.
(c) Except as specified pursuant to Section 2.01 or Section 4.01(b), 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
13
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 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, its Treasurer 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.
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(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 2004 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);
(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 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 (whether considered in a proceeding in equity or at law); and
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(C) 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 to laws relating to or affecting creditors’ rights, including, without limitation, bankruptcy and insolvency laws and to general principles of equity (whether considered in a proceeding in equity or at law); and
(D) 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 and are in full force and effect.
(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 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 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 2004 Debentures and agent for service of notice or demands on the Company, and the Trustee shall initially be the Paying Agent for the Series 2004 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
16
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. 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. 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 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 monies 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
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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 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 bond 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.
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(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, 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, those redeemed by the Company pursuant to Article 3, those paid, satisfied and discharged pursuant to Article 8, 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, 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.
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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, 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 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, a Global Debenture may be transferred in whole but not in part and in the manner provided in Section 2.08 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.
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(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, (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.
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SECTION 2.13. Cancellation.
All Debentures surrendered for payment, redemption by the Company pursuant to Article 3 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.
ARTICLE 3. REDEMPTION
SECTION 3.01. Redemption; Notice to Trustee.
(a) At the option of the Company, the Series 2004 Debentures shall be redeemable prior to maturity (i) at any time on or after January , 2009, in whole or in part, and (ii) if a Special Event shall occur and be continuing, in whole (but not in part), within 90 days following the occurrence of such Special Event, in each case at 100% of the principal amount thereof plus accrued and unpaid interest to the Redemption Date. The Series 2004 Debentures shall not be subject to any sinking fund. Series 2004 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 III shall have received 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) Trust III 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 2004 Debentures, (ii) interest payable by the Company to Trust III on the Series 2004 Debentures or by MECO or HELCO to Trust III 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 III is, or will be within 90 days of the date of said opinion,
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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 III Preferred Securities. An “Investment Company Event” shall mean the receipt by the Company or Trust III 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 III 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 III 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), 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 optional redemption may state that such redemption shall be conditional upon the receipt by the Trustee not later than the close of business on the Business Day next preceding the Redemption Date of moneys sufficient to pay in full the Redemption Price of such Debentures. If the redemption notice states that it is conditional and such moneys shall not be so received by the close of business on the Business Day next preceding the Redemption Date (i) such notice of redemption shall be of no force and effect; (ii) the Trustee shall not redeem such Debentures; and (iii) the Trustee shall give notice, in the manner in which the notice of redemption was given, that such moneys were not so received and that such redemption did not occur. In such event, the Trustee shall promptly return Debentures which it has received to the registered owners thereof.
(d) 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 and, in the case of notice given under Section 3.03(c), moneys sufficient to pay the Redemption Price of the Debentures are held for the purpose of such payment by the Trustee, Debentures called for redemption shall become due and payable on the Redemption Date and at the Redemption Price and from and after the Redemption
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Date (unless the Company shall default in the payment of the Redemption Price and accrued interest, in which event interest shall continue to accrue at the same rate until the Redemption Price is paid in full), 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.
Except as provided in Section 3.03(c), 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) 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
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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 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 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, either directly or indirectly through a Subsidiary, (a) 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, (b) 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 (c) 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 (aa) 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 (bb) in respect of which the Company shall not have taken reasonable steps to cure in accordance with this Junior Indenture, (ii) the Company shall be in default with respect to its payment of any obligations under any Trust Guarantee
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Agreement or either Subsidiary Guarantee 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 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, 2004, 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.
(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.
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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 a Trust is the Holder of all Debentures of a particular series, the Company shall pay to such Trust such Additional Sums on the Debentures of such series in proportion to the amount of assets of such Trust made up by the Debentures of such series.
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 (a) 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, (b) not voluntarily dissolve, wind-up or liquidate said Trust, except (i) in connection with a distribution of said Debentures to the holders of said Trust’s Trust Preferred Securities in liquidation of said Trust or (ii) in connection with certain mergers, consolidations or amalgamations as permitted by said Trust’s trust agreement, and (c) 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
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other than the Company, (i) is organized under the laws of the United States of America or any State thereof or the District of Columbia, and (ii) 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 (i) 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 (ii) 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
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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;
(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
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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 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 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 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 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
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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.
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 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 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, 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, 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 a majority in aggregate principal amount of the Debentures of that series or the holders of a majority in aggregate liquidation preference of such Trust Preferred Securities do not give the Trustee a direction inconsistent with the request.
In addition, except as provided in Sections 6.07 and 6.13, 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.
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)) 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.
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SECTION 6.08. Collection Suit by the Trustee.
If an Event of Default described in Section 6.01(1) 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.
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 monies 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.
(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, pay out the money in the following order:
|
FIRST: |
to the Trustee for amounts due under Section 7.07; | |
|
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 | |
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|
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 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.
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.
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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 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);
(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.
(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.
(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.
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.
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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(a)(1), 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(a)(1)) 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.
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
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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.
(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, 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 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;
(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 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 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.
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(b) If the Trustee fails to comply with Section 7.10, any Debentureholder may petition any court of competent 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 MONIES
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 (i) 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 (ii) 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 (iii) 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:
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(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 and the satisfaction of the above conditions, provisions of this Junior Indenture with respect to such series of Debentures shall no longer be in effect (except as to (i) the rights of registration of transfer and exchange of Debentures of such series, (ii) the replacement of apparently mutilated, defaced, destroyed, lost or stolen Debentures of such series, (iii) 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, (iv) 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, (v) the obligation of the Company to maintain an office or agency for payments on and registration of transfer of the Debentures of such series, (vi) the rights, obligations and immunities of the Trustee hereunder, and (vii) the obligations of the Company to the Trustee for compensation and indemnity under Section 7.07); 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 (i) cash (which may be held in a non-interest bearing account insured by the Federal Deposit Insurance Corporation), in the
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currency or currencies in which such Debentures are payable, in an amount, or (ii) 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 (iii) 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) is concerned, at any time during the period ending on the 91 st 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);
(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 and the satisfaction of the above conditions, provisions of this Junior Indenture with respect to such series of Debentures shall no longer be in effect (except as to (i)
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the rights of registration of transfer and exchange of Debentures of such series, (ii) the replacement of apparently mutilated, defaced, destroyed, lost or stolen Debentures of such series, (iii) 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, (iv) 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, (v) the obligation of the Company to maintain an office or agency for payments on and registration of transfer of the Debentures of such series, (vi) the rights, obligations and immunities of the Trustee hereunder, and (vii) the obligations of the Company to the Trustee for compensation and indemnity under Section 7.07); 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, all monies deposited with the Trustee pursuant to Section 8.01 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 monies 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 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 Monies Held by Paying Agent.
In connection with the satisfaction and discharge of this Junior Indenture, all monies 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 monies.
| SECTION 8.04. Return | of Monies Held by the Trustee and Paying Agent Unclaimed for Two Years . |
Any monies 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 liability of the Trustee or any Paying Agent with respect to such monies shall thereupon cease.
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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;
(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 2004 Debentures), that are to be issued hereunder and the form of Debentures of such series;
provided that (except with respect to any such action under clause (v) above) 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 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;
(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;
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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 a majority of the aggregate liquidation preference of the outstanding Trust Preferred Securities of that Trust or the holder of each such Trust 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.
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.
(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
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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.
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 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 paid, satisfied and 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.
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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 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 paid, satisfied and 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) 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 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.
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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, 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) 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).
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, 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.
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
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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.
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 shall not be construed as preventing the occurrence of an Event of Default under Section 6.01, 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
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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 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. 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.
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
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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 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:
if to the Company:
Hawaiian Electric Company, Inc.
900 Richards Street
Honolulu, Hawaii 96813
Facsimile No.: (808) 543-7396
Attention: Treasurer
51
if to the Trustee:
The Bank of New York
101 Barclay Street, 8W
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).
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) 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) 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:
52
(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.
SECTION 11.07. 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 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 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.
53
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.
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.
54
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. | ||
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By: |
|
|
|
Richard A. von Gnechten |
||
|
Financial Vice President |
||
|
By: |
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|
|
Lorie Ann Nagata |
||
|
Treasurer |
||
| THE BANK OF NEW YORK, | ||
| as Trustee | ||
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By: |
|
|
|
Name: |
||
|
Title: |
||
55
Exhibit A
|
No. HE-1 |
$63,092,800 |
HAWAIIAN ELECTRIC COMPANY, INC.
% Junior Subordinated Deferrable Interest Debenture,
Series 2004
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 III (the “Trust”) or registered assigns, the principal sum of Sixty-Three Million Ninety-Two Thousand Eight Hundred Dollars ($63,092,800) on January , 2034, 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 January , 2009 or a date later than January , 2053, and to pay interest on said principal sum from January , 2004 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, 2004 (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, as more fully provided in the Junior Indenture. 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 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 2004 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 Date 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 2004 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 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 2004 Debentures”), specified in the Junior Indenture, limited in aggregate principal amount to $63,092,800, except if the Debenture Exchange has occurred, the aggregate principal amount may not exceed $103,092,800, issued under and pursuant to a Junior Indenture dated as of January 1, 2004 (the “Junior Indenture”) executed and delivered between the Company and The Bank of New York, as trustee (the “Trustee”). The Series 2004 Debentures are initially being issued to the Trust, to be held on behalf of the Trust by the Property Trustee. Concurrently with the issuance of the Series 2004 Debentures, the Trust is issuing its trust securities, including the Trust’s % Cumulative Quarterly Income Preferred Securities, Series 2004 (the “Trust Preferred Securities”), representing common and preferred undivided beneficial interests in the assets of the Trust and having an aggregate liquidation
2
preference equal to the aggregate principal amount of (i) the Series 2004 Debentures and (ii) the junior subordinated deferrable interest debentures issued by the Company’s subsidiaries, Hawaii Electric Light Company, Inc. (“HELCO”) and Maui Electric Company, Limited (“MECO”). 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 the option of the Company, the Series 2004 Debentures are redeemable prior to maturity (i) at any time on or after January , 2009, in whole or in part, and (ii) if a Special Event shall occur and be continuing, in whole (but not in part), within 90 days following the occurrence of such Special Event, 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, 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 2004 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 Trustee 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 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.
3
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 2004 Debentures to be redeemed.
The Series 2004 Debentures shall not be subject to any sinking fund. Series 2004 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 2004 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 2004 Debentures occurs and is continuing, the principal of and interest on the Series 2004 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 Date 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 a majority in aggregate principal amount of the Series 2004 Debentures if affected thereby, provided that if the Series 2004 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 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 2004 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 2004 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 2004 Debentures for up to 20 consecutive quarters (the “Extension Period”), provided that no Extension Period shall extend beyond the
4
Stated Maturity Date or Redemption Date of any Series 2004 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 2004 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, directly or indirectly through a subsidiary, (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 2004 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 2004 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 2004 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 2004 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 2004 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 2004 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,
5
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. | ||||
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(SEAL) |
By: |
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Richard A. von Gnechten Financial Vice President |
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By: |
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Lorie Ann Nagata Treasurer |
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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.
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THE BANK OF NEW YORK, as Trustee |
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By: |
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Authorized Signatory |
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Dated: |
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6
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.
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Dated: |
Signature: |
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| (Sign exactly as your name appears on the other side of this Debenture) | ||
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Signature Guaranty: |
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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
January 1, 2004
CROSS-REFERENCE TABLES 1
|
Section of Trust Indenture Act of 1939, as Amended |
Section of Guarantee 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) |
| 1 | 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. |
TABLE OF CONTENTS
|
PAGE
|
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ARTICLE 1. DEFINITIONS AND INTERPRETATION |
2 | |||
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SECTION 1.01. Definitions and Interpretation |
2 | |||
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ARTICLE 2. TRUST INDENTURE ACT |
5 | |||
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SECTION 2.01. Trust Indenture Act; Application |
5 | |||
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SECTION 2.02. List of Holders |
5 | |||
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SECTION 2.03. Reports by the Trust Guarantee Trustee |
6 | |||
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SECTION 2.04. Periodic Reports to Trust Guarantee Trustee |
6 | |||
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SECTION 2.05. Evidence of Compliance with Conditions Precedent |
6 | |||
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SECTION 2.06. Events of Default; Waiver |
7 | |||
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SECTION 2.07. Event of Default; Notice |
7 | |||
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ARTICLE 3. POWERS, DUTIES AND RIGHTS OF THE TRUST GUARANTEE TRUSTEE |
7 | |||
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SECTION 3.01. Powers and Duties of the Trust Guarantee Trustee |
7 | |||
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SECTION 3.02. Certain Rights of Trust Guarantee Trustee |
9 | |||
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SECTION 3.03. Not Responsible for Recitals or Issuance of the Trust Guarantee |
11 | |||
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SECTION 3.04. Compensation and Reimbursement |
11 | |||
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ARTICLE 4. TRUST GUARANTEE TRUSTEE |
12 | |||
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SECTION 4.01. Trust Guarantee Trustee; Eligibility |
12 | |||
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SECTION 4.02. Appointment, Removal and Resignation of the Trust Guarantee Trustee |
12 | |||
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ARTICLE 5. GUARANTEE |
13 | |||
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SECTION 5.01. Guarantee |
13 | |||
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SECTION 5.02. Waiver of Notice and Demand |
13 | |||
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SECTION 5.03. Obligations Not Affected |
13 | |||
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SECTION 5.04. Rights of Holders |
14 | |||
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SECTION 5.05. Guarantee of Payment |
15 | |||
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SECTION 5.06. Subrogation |
15 | |||
i
TABLE OF CONTENTS
(continued)
|
PAGE
|
||||
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SECTION 5.07. Independent Obligations |
15 | |||
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ARTICLE 6. SUBORDINATION AND RANKING |
15 | |||
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SECTION 6.01. Subordination |
15 | |||
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SECTION 6.02. Pari Passu Guarantees |
16 | |||
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ARTICLE 7. TERMINATION |
16 | |||
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SECTION 7.01. Termination |
16 | |||
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ARTICLE 8. INDEMNIFICATION |
16 | |||
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SECTION 8.01. Indemnification |
16 | |||
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ARTICLE 9. MISCELLANEOUS |
16 | |||
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SECTION 9.01. Successors and Assigns |
16 | |||
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SECTION 9.02. Amendments |
17 | |||
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SECTION 9.03. Notices |
17 | |||
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SECTION 9.04. Benefit |
18 | |||
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SECTION 9.05. Governing Law |
18 | |||
ii
TRUST GUARANTEE AGREEMENT
This TRUST GUARANTEE AGREEMENT (this “Trust Guarantee”), dated as of January 1, 2004, 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 III, a Delaware statutory trust (the “Trust”).
WHEREAS, pursuant to an Amended and Restated Trust Agreement for the Trust (the “Trust Agreement”), dated as of January 1, 2004 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 4,000,000 % Cumulative Quarterly Income Trust Preferred Securities, Series 2004 (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 the Common Securities (as defined herein), 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.
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.
“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.
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“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 Trust 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.
“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 January 1, 2004, between HECO and The Bank of New York, as trustee thereunder (the “HECO Indenture”), (ii) the Junior Indenture dated as of January 1, 2004 among Maui
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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 January 1, 2004 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.
“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 customari1y 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.
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“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.
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.
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.
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(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).
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
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(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 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 or Responsible Officers of the Trust Guarantee Trustee in good faith determine 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 Title 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.
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(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 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;
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(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 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
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Guarantor or any of its Affiliates and may be one of 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).
(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
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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 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.
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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.
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
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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.
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;
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(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;
(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 irrevocable, 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
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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 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.
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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 past or 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 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 charges 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
16
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.
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 III
c/o The Bank of New York
101 Barclay Street, 8W
New York, New York 10286
Facsimile No: (212) 815-5915
Attention: Corporate Trust Trustee Administration
17
with a copy to:
Hawaiian Electric Company, Inc.
900 Richards Street
Honolulu, Hawaii 96813
Facsimile No.: (808) 543-7966
Attention: Treasurer
(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, 8W
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
18
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.
THIS TRUST GUARANTEE is executed as of the day and year first above written.
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HAWAIIAN ELECTRIC COMPANY, INC., |
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as Guarantor |
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By: |
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Richard A. von Gnechten Financial Vice President |
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By: |
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Lorie Ann Nagata Treasurer |
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THE BANK OF NEW YORK, |
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as Trust Guarantee Trustee |
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By: |
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Name: Thomas Knight |
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Title: Assistant Vice President |
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19
Exhibit 4(h)
MAUI ELECTRIC COMPANY, LIMITED
AND
HAWAIIAN ELECTRIC COMPANY, INC., as Guarantor
AND
THE BANK OF NEW YORK, as Trustee
JUNIOR INDENTURE
Dated as of January 1, 2004
Providing for the Issuance of
Junior Subordinated Deferrable Interest Debentures in Series
including
% Junior Subordinated Deferrable Interest Debentures,
Series 2004
Junior Indenture—Maui Electric Company, Limited
Certain Sections of this Junior Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939
| Note: | This reconciliation and tie sheet shall not, for any purpose, be deemed to be a part of the Junior Indenture. |
TABLE OF CONTENTS
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Page
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ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE |
2 | |||
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SECTION 1.01. |
Definitions | 2 | ||
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SECTION 1.02. |
Other Definitions | 8 | ||
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SECTION 1.03. |
Incorporation by Reference of Trust Indenture Act | 8 | ||
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SECTION 1.04. |
Rules of Construction | 9 | ||
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SECTION 1.05. |
Acts of Holders and Holders of Trust Preferred Securities | 9 | ||
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ARTICLE 2. THE DEBENTURES; THE SERIES 2004 DEBENTURES |
10 | |||
|
SECTION 2.01. |
Issue of Debentures Generally | 10 | ||
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SECTION 2.02. |
Terms and Form of the Series 2004 Debentures | 11 | ||
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SECTION 2.03. |
Payment of Principal and Interest | 13 | ||
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SECTION 2.04. |
Execution, Authentication and Delivery | 15 | ||
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SECTION 2.05. |
Registrar and Paying Agent | 16 | ||
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SECTION 2.06. |
Paying Agent to Hold Money in Trust | 17 | ||
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SECTION 2.07. |
Debentureholder Lists | 18 | ||
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SECTION 2.08. |
Transfer and Exchange | 18 | ||
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SECTION 2.09. |
Replacement Debentures | 19 | ||
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SECTION 2.10. |
Outstanding Debentures; Determinations of Holders’ Action | 19 | ||
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SECTION 2.11. |
Temporary Debentures | 20 | ||
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SECTION 2.12. |
Book-Entry System | 20 | ||
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SECTION 2.13. |
Cancellation | 22 | ||
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SECTION 2.14. |
CUSIP Numbers | 22 | ||
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ARTICLE 3. REDEMPTION |
22 | |||
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SECTION 3.01. |
Redemption; Notice to Trustee | 22 | ||
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SECTION 3.02. |
Selection of Debentures to be Redeemed | 23 | ||
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SECTION 3.03. |
Notice of Redemption | 23 | ||
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SECTION 3.04. |
Effect of Notice of Redemption | 24 | ||
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SECTION 3.05. |
Deposit of Redemption Price | 25 | ||
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SECTION 3.06. |
Debentures Redeemed in Part | 25 | ||
-i-
TABLE OF CONTENTS
(continued)
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Page
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ARTICLE 4. COVENANTS |
25 | |||
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SECTION 4.01. |
Payment of Debentures | 26 | ||
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SECTION 4.02. |
Prohibition on Distributions, Etc | 26 | ||
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SECTION 4.03. |
SEC Reports | 26 | ||
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SECTION 4.04. |
Compliance Certificates | 27 | ||
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SECTION 4.05. |
Further Instruments and Acts | 27 | ||
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SECTION 4.06. |
Additional Sums | 27 | ||
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SECTION 4.07. |
Payment of Expenses of Trust | 28 | ||
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SECTION 4.08. |
Ownership of Trust Common Securities | 28 | ||
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ARTICLE 5. SUCCESSOR CORPORATION |
28 | |||
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SECTION 5.01. |
When the Company May Merge, Etc | 28 | ||
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ARTICLE 6. DEFAULTS AND REMEDIES |
29 | |||
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SECTION 6.01. |
Events of Default | 29 | ||
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SECTION 6.02. |
Acceleration | 31 | ||
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SECTION 6.03. |
Other Remedies | 31 | ||
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SECTION 6.04. |
Waiver of Past Defaults | 32 | ||
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SECTION 6.05. |
Control by Majority | 32 | ||
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SECTION 6.06. |
Limitation on Suits | 32 | ||
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SECTION 6.07. |
Rights of Holders to Receive Payment | 33 | ||
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SECTION 6.08. |
Collection Suit by the Trustee | 33 | ||
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SECTION 6.09. |
The Trustee May File Proofs of Claim | 34 | ||
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SECTION 6.10. |
Priorities | 34 | ||
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SECTION 6.11. |
Undertaking for Costs | 35 | ||
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SECTION 6.12. |
Waiver of Stay; Extension or Usury Laws | 35 | ||
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SECTION 6.13. |
Suits by Holders of Trust Preferred Securities | 35 | ||
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ARTICLE 7. THE TRUSTEE |
36 | |||
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SECTION 7.01. |
Duties of the Trustee | 36 | ||
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SECTION 7.02. |
Rights of the Trustee | 37 | ||
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SECTION 7.03. |
Individual Rights of the Trustee | 37 | ||
-ii-
TABLE OF CONTENTS
(continued)
-iii-
TABLE OF CONTENTS
(continued)
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Page
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SECTION 10.05. |
Trustee May Take Action to Effectuate Subordination | 48 | ||
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SECTION 10.06. |
Subrogation | 48 | ||
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SECTION 10.07. |
Obligations of Company Unconditional; Reinstatement | 49 | ||
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SECTION 10.08. |
Trustee Entitled to Assume Payments Not Prohibited in Absence of Notice | 49 | ||
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SECTION 10.09. |
Right of Trustee to Hold Senior Indebtedness | 50 | ||
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SECTION 10.10. |
Reliance on Judicial Order or Certificate of Liquidating Agent | 50 | ||
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SECTION 10.11. |
Trustee Not Fiduciary for Holders of Senior Indebtedness | 51 | ||
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ARTICLE 11. GUARANTEE OF OBLIGATIONS OF THE COMPANY |
51 | |||
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SECTION 11.01. |
Guarantee | 51 | ||
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SECTION 11.02. |
Waiver of Notice and Demand | 51 | ||
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SECTION 11.03. |
Obligations Not Affected | 52 | ||
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SECTION 11.04. |
Prohibition on Distributions, Etc | 52 | ||
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SECTION 11.05. |
Rights of Holders | 53 | ||
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SECTION 11.06. |
Guarantee of Payment | 53 | ||
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SECTION 11.07. |
Subrogation | 53 | ||
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SECTION 11.08. |
Independent Obligations | 54 | ||
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SECTION 11.09. |
Subordination | 54 | ||
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SECTION 11.10. |
Pari Passu Guarantees | 54 | ||
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SECTION 11.11. |
Termination | 54 | ||
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SECTION 11.12. |
Exculpation | 54 | ||
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SECTION 11.13. |
Indemnification | 55 | ||
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ARTICLE 12. MISCELLANEOUS |
55 | |||
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SECTION 12.01. |
Trust Indenture Act Controls | 55 | ||
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SECTION 12.02. |
Notices | 55 | ||
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SECTION 12.03. |
Communication by Holders with Other Holders | 56 | ||
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SECTION 12.04. |
Certificate and Opinion as to Conditions Precedent | 57 | ||
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SECTION 12.05. |
Statements Required in Certificate or Opinion | 57 | ||
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SECTION 12.06. |
Severability Clause | 57 | ||
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SECTION 12.07. |
Rules by Trustee, Paying Agent and Registrar | 58 | ||
-iv-
TABLE OF CONTENTS
(continued)
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Page
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SECTION 12.08. |
Legal Holidays | 58 | ||
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SECTION 12.09. |
Governing Law | 58 | ||
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SECTION 12.10. |
No Recourse Against Others | 58 | ||
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SECTION 12.11. |
Successors | 58 | ||
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SECTION 12.12. |
Multiple Original Copies of this Junior Indenture | 58 | ||
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SECTION 12.13. |
No Adverse Interpretation of Other Agreements | 58 | ||
|
SECTION 12.14. |
Table of Contents; Headings, Etc | 59 | ||
|
SECTION 12.15. |
Benefits of this Junior Indenture | 59 | ||
-v-
JUNIOR INDENTURE (this “Indenture” or “Junior Indenture”), dated as of January 1, 2004, by and among Maui Electric Company, Limited, a corporation duly organized and existing under the laws of Hawaii (the “Company”), Hawaiian Electric Company, Inc., a corporation duly organized and existing under the laws 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 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 the Company’s Debentures.
WHEREAS, HECO, as depositor, The Bank of New York, as Property Trustee (the “Property Trustee III”), The Bank of New York, as Delaware Trustee (the “Delaware Trustee III”), and the Administrative Trustees named therein have heretofore duly declared and established HECO Capital Trust III, a Delaware statutory trust (“Trust III”), by entering into a Trust Agreement dated as of November 20, 2003 (the “Original Trust Agreement”) and by executing and filing with the Secretary of State of the State of Delaware a Certificate of Trust on November 20, 2003.
WHEREAS, the Original Trust Agreement has been amended and restated pursuant to an Amended and Restated Trust Agreement dated as of January 1, 2004 among HECO, as depositor, the Property Trustee III, the Delaware Trustee III, the Administrative Trustees named therein and the holders, from time to time, of undivided beneficial interests in the assets of Trust III (the “Trust III Agreement”).
WHEREAS, HECO has authorized the issuance of its % Junior Subordinated Deferrable Interest Debentures, Series 2004 (the “HECO Series 2004 Debentures”) to be purchased by Trust III with the proceeds from the issuance and sale of the Trust Securities of Trust III and HECO has duly authorized the execution and delivery of a related Junior Indenture dated as of January 1, 2004 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 2004 (the “Series 2004 Debentures”) to be purchased by Trust III with a portion of the proceeds from the issuance and sale of the Trust Securities of Trust III, 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 any series of Debentures, and has performed all acts necessary to make its guarantee the valid obligation 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 2004 Debentures:
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions .
“Additional Sums” means the additional amounts, as provided in Section 4.06, 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 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 Obligation” 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” of a Person means any and all shares, interests, rights to purchase, warrants, options, participation or other equivalents of or interests in (however designated) corporate stock.
2
“Company” means Maui Electric Company, Limited, 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 2004 Debentures in exchange for Debentures of the Company held by Trust III pursuant to Section 2.05(b) of the Trust III 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.
“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) provided that no Extension Period shall extend beyond the Stated Maturity Date or the Redemption Date of any Debenture of such series.
“GAAP” means accounting principles generally accepted in the United States of America set forth in the opinions, statements and pronouncements of the Accounting Principles Board, the American Institute of Certified Public Accountants and the Financial Accounting Standards Board.
“Guarantee” means the guaranty by HECO of the obligations of the Company as provided for in Article 11.
“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.
3
“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 Law, or otherwise enforceable against the Company, and including, in any event, interest accruing 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 Kingdom of Hawaii, or any successor thereto.
“HECO Junior Indenture” means the Junior Indenture, dated as of January 1, 2004, 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.
“HECO Series 2004 Debentures” means HECO’s % Junior Subordinated Deferrable Interest Debentures, Series 2004 issued under the HECO Junior Indenture.
“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.
“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.
4
“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.
“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 Person (other than an individual), 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, 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, 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 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 III” means The Bank of New York and its successors and assigns, as property trustee under the Trust III 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.
“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.
5
“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.
“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 2004 Debentures” means any of the Company’s % Junior Subordinated Deferrable Interest Debentures, Series 2004 issued under this Junior Indenture.
“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).
“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 any 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.
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“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 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 III” means HECO Capital Trust III, a Delaware statutory trust created under the Delaware Statutory Trust Act, Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. (S) 3801, et seq.
“Trust III Agreement” means the Amended and Restated Trust Agreement dated as of January 1, 2004, among the Company, as depositor, the Property Trustee III, the Delaware Trustee III, the Administrative Trustees named therein and the holders, from time to time, of undivided beneficial interests in the assets of Trust III, as the same may be amended and modified from time to time.
“Trust III Common Securities” means the Trust Common Securities of Trust III, representing the undivided beneficial interests, excluding the interests represented by Trust III Preferred Securities, in the assets of Trust III.
“Trust III Guarantee Agreement” means the Trust Guarantee Agreement dated as of January 1, 2004 from HECO, as guarantor, to The Bank of New York, as Trust Guarantee Trustee, with respect to the Trust III Preferred Securities.
“Trust III Preferred Securities” means the Trust Preferred Securities of Trust III, representing the undivided preferred beneficial interests in the assets of Trust III, having a liquidation preference of $25 per security and having rights provided therefor in the Trust III Agreement, including with a preference under certain circumstances with respect to cash distributions and amounts payable on liquidation, redemption or otherwise, as set forth therein.
“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 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.
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“Trustee” means The Bank of New York, solely in its capacity as trustee under this Junior Indenture, 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.
|
TERM |
DEFINED IN SECTION
|
|
|
“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) | |
|
“Legal Holiday” |
12.08 | |
|
“Notice of Default” |
6.01(a) | |
|
“Registrar” |
2.05(a) | |
|
“Securities Register” |
2.05(a) | |
|
“Special Event” |
3.01(a) | |
|
“Successor” |
5.01(a) |
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.
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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.
(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.
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(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 2004 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 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 2004 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 2004 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;
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(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, the identity of the Depository and any other terms relating thereto to the extent not set forth in Section 2.12; 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 2004 Debentures .
(a) The Series 2004 Debentures shall be designated “Maui Electric Company, Limited, % Junior Subordinated Deferrable Interest Debentures, Series 2004.” The Series 2004 Debentures and the Trustee’s Certificate of Authentication shall be substantially in the form of Exhibit A attached hereto. The Series 2004 Debentures shall initially be represented by a single certificate registered in the name of The Bank of New York as Property Trustee III for the benefit of Trust III. The terms and provisions contained in the Series 2004 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.
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(b) The Series 2004 Debentures shall be issued at 100% of their principal amount.
(c) The aggregate principal amount of Series 2004 Debentures outstanding at any time may not exceed $20,000,000, except as provided in Section 2.09. The Series 2004 Debentures shall be authenticated and delivered upon receipt by the Trustee of the items specified in Section 2.04(d).
(d) The Stated Maturity Date of the Series 2004 Debentures is January , 2034. Upon the shortening or extension of the fixed date on which the principal of the HECO Series 2004 Debentures is due and payable pursuant to the HECO Junior Indenture, the Stated Maturity Date for the Series 2004 Debentures shall be shortened or extended at the same time for the same period as the HECO Series 2004 Debentures, without any action on the part of the Company or any other Person.
(e) The interest rate for the Series 2004 Debentures is % per annum. The Interest Payment Dates for the Series 2004 Debentures are March 31, June 30, September 30 and December 31 of each year, commencing March 31, 2004. In the event that any date on which interest is payable on the Series 2004 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 2004 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 2004 Debentures are issued in definitive form while they are not held by Trust III, the Regular Record Date for each Interest Payment Date for the Series 2004 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 2004 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 2004 Debenture; except that, so long as there is no existing Defaulted Interest or Extension Period on the Series 2004 Debentures, any Series 2004 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) Overdue principal of any Series 2004 Debenture shall bear interest at a rate per annum equal to the interest rate per annum payable on such Series 2004 Debenture.
(h) Interest on any Series 2004 Debenture which has been deferred pursuant to Section 4.01(b) 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 2004 Debenture, compounded quarterly from the most recent Interest Payment Date therefor.
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(i) The Series 2004 Debentures shall be redeemable prior to maturity as provided in Section 3.01(a).
(j) The Series 2004 Debentures shall be issuable only in registered form without coupons and only in denominations of $25 and any integral multiple thereof.
(k) The maximum Extension Period for the Series 2004 Debentures shall be 20 consecutive quarters.
(l) The Guarantee with respect to the Series 2004 Debentures shall terminate as set forth in Section 11.11 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 III Preferred Securities.
SECTION 2.03. Payment of Principal and Interest .
(a) Unless otherwise specified pursuant to Section 2.01(d), 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 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 2004 Debentures to Trust III as the sole holder thereof or in respect of Global Debentures shall be made in immediately available funds to Property Trustee III on behalf of Trust III or to the Depository pursuant to Section 2.12, 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 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 (aa) 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
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Securities Register by the Registrar and (bb) payments of such interest made in respect of the Series 2004 Debentures to Trust III as the sole holder thereof or in respect of Global Debentures shall be made in immediately available funds to Property Trustee III on behalf of Trust III or the Depository pursuant to Section 2.12, as the case may be.
(c) Except as specified pursuant to Section 2.01 or Section 4.01(b), 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 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.
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(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, its Treasurer 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.
(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 2004 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);
(5) an Officer’s Certificate certifying that no Default or Event of Default has occurred and is continuing; and
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(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 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 (whether considered in a proceeding in equity or at law); and
(C) 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 to laws relating to or affecting creditors’ rights, including, without limitation, bankruptcy and insolvency laws and to general principles of equity (whether considered in a proceeding in equity or at law); and
(D) 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 and are in full force and effect.
(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 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
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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 2004 Debentures and agent for service of notice or demands on the Company, and the Trustee shall initially be the Paying Agent for the Series 2004 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 12.02. 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. 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 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.
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(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 monies 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 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.
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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 bond 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, 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, those redeemed by the Company pursuant to Article 3, those paid, satisfied and discharged pursuant to Article 8, 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 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.
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(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, 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, 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 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.”
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(b) Notwithstanding any other provision of this Section 2.12 or of Section 2.08, a Global Debenture may be transferred in whole but not in part and in the manner provided in Section 2.08 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, (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.
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(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 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.
ARTICLE 3. REDEMPTION
SECTION 3.01. Redemption; Notice to Trustee .
(a) At any time on or after January , 2009, at the option of the Company, the Series 2004 Debentures shall be redeemable in whole or in part. Notwithstanding the foregoing, if a Special Event (as defined in the HECO Junior Indenture) shall occur and be continuing, then,
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if HECO opts to redeem the HECO Series 2004 Debentures pursuant to the HECO Junior Indenture, the Series 2004 Debentures shall be redeemable in whole (but not in part), on the same terms and at the same time as the HECO Series 2004 Debentures. In the case of any redemption, the Series 2004 Debentures shall be redeemable at 100% of the principal amount thereof plus accrued and unpaid interest to the Redemption Date. The Series 2004 Debentures shall not be subject to any sinking fund. Series 2004 Debentures in denominations larger than $25 may be redeemed in part but only in integral multiples of $25.
(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 (b), 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.
(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;
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(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 optional redemption may state that such redemption shall be conditional upon the receipt by the Trustee not later than the close of business on the Business Day next preceding the Redemption Date of moneys sufficient to pay in full the Redemption Price of such Debentures. If the redemption notice states that it is conditional and such moneys shall not be so received by the close of business on the Business Day next preceding the Redemption Date (i) such notice of redemption shall be of no force and effect; (ii) the Trustee shall not redeem such Debentures; and (iii) the Trustee shall give notice, in the manner in which the notice of redemption was given, that such moneys were not so received and that such redemption did not occur. In such event, the Trustee shall promptly return Debentures which it has received to the registered owners thereof.
(d) 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 and, in the case of notice given under Section 3.03(c), moneys sufficient to pay the Redemption Price of the Debentures are held for the purpose of such payment by the Trustee, 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, in which event interest shall continue to accrue at the same rate until the Redemption Price is paid in full), 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.
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SECTION 3.05. Deposit of Redemption Price .
Except as provided in Section 3.03(c), 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) 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 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
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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 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, either directly or indirectly through a Subsidiary, (a) 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, (b) 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, 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 (aa) 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 (bb) in respect of which the Company shall not have taken reasonable steps to cure in accordance with this Junior Indenture, 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
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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; provided, however, that this requirement shall be satisfied if HECO files reports with the SEC that include the operations of the Company on a consolidated basis. 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, 2004, 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.
(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 a Trust is the Holder of all Debentures of a particular series, the Company shall pay to such Trust such Additional Sums on the Debentures of such series 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 (a) 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, (b) not voluntarily dissolve, wind-up or liquidate said Trust, except (i) in connection with a distribution of said Debentures to the holders of said Trust’s Trust Preferred Securities in liquidation of said Trust or (ii) in connection with certain mergers, consolidations or amalgamations as permitted by said Trust’s trust agreement, and (c) 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, (i) is organized under the laws of the United States of America or any state thereof or the District of Columbia, and (ii) 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;
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(3) such transaction is permitted under the Trust III Agreement (if applicable) and does not give rise to a breach or violation of the Trust III 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 (i) 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 (ii) 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 or HECO, pursuant to or within the meaning of any Bankruptcy Law:
(A) commences a voluntary case or proceeding;
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(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 or HECO in an involuntary case or proceeding;
(B) appoints a Custodian of the Company or HECO for all or substantially all of its properties;
(C) orders the liquidation of the Company or HECO; 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.”
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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 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 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 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 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 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 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, 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, 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;
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(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 a majority in aggregate principal amount of the Debentures of that series or the holders of a majority in aggregate liquidation preference of such Trust Preferred Securities do not give the Trustee a direction inconsistent with the request.
In addition, except as provided in Sections 6.07 and 6.13, 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.
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)) 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) 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.
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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 monies 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.
(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, pay out the money in the following order:
|
FIRST: |
to the Trustee for amounts due under Section 7.07; | |
|
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.
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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 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.
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.
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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 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);
(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.
(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.
(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.
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.
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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(a)(1), 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(a)(1)) 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.
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
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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.
(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, 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 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;
(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 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 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.
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(b) If the Trustee fails to comply with Section 7.10, any Debentureholder may petition any court of competent 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-l 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 MONIES |
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 (i) 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 (ii) 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 (iii) 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
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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 and the satisfaction of the above conditions, provisions of this Junior Indenture with respect to such series of Debentures shall no longer be in effect (except as to (i) the rights of registration of transfer and exchange of Debentures of such series, (ii) the replacement of apparently mutilated, defaced, destroyed, lost or stolen Debentures of such series, (iii) 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, (iv) 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, (v) the obligation of the Company to maintain an office or agency for payments on and registration of transfer of the Debentures of such series, (vi) the rights, obligations and immunities of the Trustee hereunder, and (vii) the obligations of the Company to the Trustee for compensation and indemnity under Section 7.07 ); 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 (i) cash (which may be held in a non-interest bearing account insured by the Federal Deposit Insurance Corporation), in the
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currency or currencies in which such Debentures are payable, in an amount, or (ii) 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 (iii) 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) 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);
(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 and the satisfaction of the above conditions, provisions of this Junior Indenture with respect to such series of Debentures shall no longer be in effect (except as to (i)
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the rights of registration of transfer and exchange of Debentures of such series, (ii) the replacement of apparently mutilated, defaced, destroyed, lost or stolen Debentures of such series, (iii) 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, (iv) 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, (v) the obligation of the Company to maintain an office or agency for payments on and registration of transfer of the Debentures of such series, (vi) the rights, obligations and immunities of the Trustee hereunder, and (vii) the obligations of the Company to the Trustee for compensation and indemnity under Section 7.07); 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, all monies deposited with the Trustee pursuant to Section 8.01 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 monies 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 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 Monies Held by Paying Agent .
In connection with the satisfaction and discharge of this Junior Indenture, all monies 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 monies.
SECTION 8.04. Return of Monies Held by the Trustee and Paying Agent Unclaimed for Two Years .
Any monies 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 liability of the Trustee or any Paying Agent with respect to such monies shall thereupon cease.
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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;
(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 2004 Debentures), that are to be issued hereunder and the form of Debentures of such series;
provided that (except with respect to any such action under clause (v) above) 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 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;
(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;
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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 a majority of the aggregate liquidation preference of the outstanding Trust Preferred Securities of that Trust or the holder of each such Trust 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.
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.
(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
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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.
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 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 paid, satisfied and 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.
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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 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 paid, satisfied and 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) 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 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.
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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, 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) 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).
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, 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.
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
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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.
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 shall not be construed as preventing the occurrence of an Event of Default under Section 6.01; 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
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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 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 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. 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.
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
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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 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.
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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 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;
(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 irrevocable, 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 (a) there shall have occurred any event of which the Company has actual knowledge that (i) 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 (ii) in respect of which the Company shall
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not have taken reasonable steps to cure and (b) the Guarantor defaults in the performance of the Guaranteed Obligations, the Guarantor shall not, directly or indirectly through a Subsidiary, (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 (aa) 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, (bb) payments by the Guarantor under any Trust Guarantee Agreement (as defined in the HECO Junior Indenture) and pursuant to this Guarantee, and (cc) 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
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and shall have the right to waive payment by the Company’s subsidiaries pursuant to Section 11.01, 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 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.
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 past or 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 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
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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.
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:
Maui Electric Company, Limited
210 West Kamehameha Avenue
Kahului, Hawaii 96732
Facsimile No.: (808) 871-2350
Attention: President
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with a copy to:
Hawaiian Electric Company, Inc.
900 Richards Street
Honolulu, Hawaii 96813
Facsimile No.: (808) 543-7396
Attention: Treasurer
if to the Trustee:
The Bank of New York
101 Barclay Street, 8W
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) 543-7396
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.
(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).
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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) 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) 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;
(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.
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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, 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.
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.
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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.
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MAUI ELECTRIC COMPANY, LIMITED |
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By: |
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Richard A. von Gnechten |
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Financial Vice President |
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By: |
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Lorie Ann Nagata |
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Treasurer |
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THE BANK OF NEW YORK, As Trustee |
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By: |
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Name: |
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Title: |
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HAWAIIAN ELECTRIC COMPANY, INC., As Guarantor |
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By: |
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Richard A. von Gnechten |
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Financial Vice President |
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By: |
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Lorie Ann Nagata |
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Treasurer |
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Exhibit A
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[No. ME-1] |
$20,000,000 |
MAUI ELECTRIC COMPANY, LIMITED
% Junior Subordinated Deferrable Interest Debenture,
Series 2004
MAUI ELECTRIC COMPANY, LIMITED, 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 III (the “Trust”) or registered assigns, the principal sum of Twenty Million Dollars ($20,000,000) on January , 2034, 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 January , 2009, or a date later than January , 2053, and to pay interest on said principal sum from January , 2004 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, 2004 (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, as more fully provided in the Junior Indenture. 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 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 2004 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 Date 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 2004 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 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 2004 Debentures”), specified in the Junior Indenture, limited in aggregate principal amount to $20,000,000, issued under and pursuant to a Junior Indenture dated as of January 1, 2004 (the “Junior Indenture”) executed and delivered between the Company and The Bank of New York, as trustee (the “Trustee”). The Series 2004 Debentures are initially being issued to the Trust, to be held on behalf of the Trust by the Property Trustee. Concurrently with the issuance of the Series 2004 Debentures, the Trust is issuing its trust securities, including the Trust’s % Cumulative Quarterly Income Preferred Securities, Series 2004 (the “Trust Preferred Securities”), representing common and preferred 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 2004 Debentures, (ii) the
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junior subordinated deferrable interest debentures issued by Hawaiian Electric Company, Inc., a Hawaii corporation and the sole owner of the Company’s common stock (“HECO”), and (iii) the junior subordinated deferrable interest debentures issued by Hawaii Electric Light Company, Inc., 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 January , 2009, at the option of the Company, the Series 2004 Debentures shall be redeemable in whole or in part. Notwithstanding the foregoing, if a Special Event (as defined in the HECO Junior Indenture) shall occur and be continuing, then, if HECO opts to redeem the HECO Series 2004 Debentures pursuant to the HECO Junior Indenture, the Series 2004 Debentures shall be redeemable in whole (but not in part) on the same terms and at the same time as the HECO Series 2004 Debentures. In the case of any redemption, a Series 2004 Debenture shall be redeemable at 100% of the principal amount thereof plus accrued and unpaid interest to the Redemption Date.
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 2004 Debentures to be redeemed.
The Series 2004 Debentures shall not be subject to any sinking fund. Series 2004 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 2004 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 2004 Debentures occurs and is continuing, the principal of and interest on the Series 2004 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 Date 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 a majority in aggregate principal amount of the Series 2004 Debentures if affected thereby, provided that if the Series 2004 Debentures are held by the Trust, no such amendment or waiver that adversely affects the holders of the Trust Preferred Securities shall be
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effective without the prior consent of the holders of 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 2004 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 2004 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 2004 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 2004 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 2004 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, directly or indirectly through a subsidiary, (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 2004 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 2004 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 2004 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 2004 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
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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 2004 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.
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.
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MAUI ELECTRIC COMPANY, LIMITED |
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By: |
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Richard A. von Gnechten |
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Financial Vice President |
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Seal
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By: |
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Lorie Ann Nagata |
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Treasurer |
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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.
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THE BANK OF NEW YORK, as Trustee |
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By: |
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Authorized Signatory |
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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.
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Dated: |
Signature: |
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(Sign exactly as your name appears on the other side
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Signature Guaranty:
Exhibit 4(i)
EXPENSE AGREEMENT
AGREEMENT dated as of January 1, 2004, 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 III, a Delaware statutory 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 its % Cumulative Quarterly Income Preferred Securities, Series 2004 (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 January 1, 2004, 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 2004 (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 2004 (together with the 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, each of HECO, MECO and HELCO hereby agrees 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, its Pro Rata Share (as hereinafter defined) of any and all Obligations (as hereinafter defined) to such Beneficiaries. As used herein, “Pro Rata Share” means the proportionate share of
the Obligations of each of HECO, MECO and HELCO based on the aggregate principal amount of its 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 its Pro Rata Share 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 irrevocable, 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
2
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:
(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;
3
(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, 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):
4
If to the Trust:
HECO Capital Trust III
c/o The Bank of New York
101 Barclay Street, 8W
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
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.
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HAWAIIAN ELECTRIC COMPANY, INC. |
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By: |
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Richard A. von Gnechten
Financial Vice President |
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By: |
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Lorie Ann Nagata
Treasurer |
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MAUI ELECTRIC COMPANY, LIMITED |
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By: |
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Richard A. von Gnechten
Financial Vice President |
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By: |
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Lorie Ann Nagata
Treasurer |
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HAWAII ELECTRIC LIGHT COMPANY, INC. |
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By: |
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Richard A. von Gnechten
Financial Vice President |
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By: |
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Lorie Ann Nagata
Treasurer |
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HECO CAPITAL TRUST III |
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By: |
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| T. Michael May, not in his individual capacity, but solely as Administrative Trustee | ||
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By: |
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| Richard A. von Gnechten, not in his individual capacity, but solely as Administrative Trustee | ||
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By: |
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| Lorie Ann Nagata, not in her individual capacity, but solely as Administrative Trustee | ||
6
[LETTERHEAD OF GOODSILL ANDERSON QUINN & STIFEL LLP]
December 10, 2003
Hawaiian Electric Company, Inc.
Maui Electric Company, Limited
Hawaii Electric Light Company, Inc.
900 Richards Street
Honolulu, Hawaii 96813
HECO Capital Trust III
c/o The Bank of New York, as Trustee
101 Barclay Street, 8W
New York, New York 10286
Ladies and Gentlemen:
Hawaiian Electric Company, Inc., a Hawaii corporation (“HECO”), its subsidiaries, Maui Electric Company, Limited, a Hawaii corporation (“MECO”), and Hawaii Electric Light Company, Inc., a Hawaii corporation (“HELCO” and, together with HECO and MECO, the “Companies”), and HECO Capital Trust III, a statutory trust created under the laws of the State of Delaware (the “Trust”), have filed with the Securities and Exchange Commission (the “Commission”) a registration statement on Form S-3 (the “Registration Statement”) under the Securities Act of 1933 (the “Act”), registering: (i) 4,000,000 Cumulative Quarterly Income Preferred Securities (liquidation preference $25 per preferred security) of the Trust (the “QUIPS”), (ii) $100 million aggregate principal amount of Junior Subordinated Deferrable Interest Debentures of the Companies (the ‘‘QUIDS”) and (iii) HECO’s guarantees with respect to: (a) the QUIPS (the “Trust Guarantee”) and (b) the QUIDS of MECO and HELCO (together with the Trust Guarantee, the “Guarantees”).
We have reviewed the Registration Statement and, for purposes of this opinion, we have assumed that it has become effective. We have also reviewed the Articles of Incorporation and Bylaws of the Companies, as amended, and such appropriate records of the Companies, certificates of public officials and other documents as we deem pertinent as a basis for the opinions hereinafter expressed.
On the basis of such review:
1. We are of the opinion that each of the Companies is a corporation duly incorporated, validly existing and in good standing under the laws of Hawaii.
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G
OODSILL
A
NDERSON
Q
UINN
&
S
TIFEL
A L IMITED L IABILITY L AW P ARTNERSHIP LLP |
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Hawaiian Electric Company, Inc.
Maui Electric Company, Limited
Hawaii Electric Light Company, Inc.
HECO Capital Trust III
December 10, 2003
Page 2
2. When, (i) the applicable provisions of the Act, the Trust Indenture Act of 1939, as amended, and the securities or “blue sky” laws of various states shall have been complied with, (ii) appropriate resolutions have been adopted by the Board of Directors of each of the Companies (or a duly appointed committee or representative thereof) authorizing the issuance and sale of the QUIPS, the QUIDS and the Guarantees, as applicable, (iii) the respective indentures of the Companies and the Trust Guarantee 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 Companies, as applicable, and (iv) the QUIPS, the QUIDS and the Guarantees have been issued and sold in return for the consideration specified therefor and as contemplated in the Registration Statement and in the order or orders of the Hawaii Public Utilities Commission or other applicable regulatory authorities, we are of the opinion that (1) the QUIDS will be legally issued and will be the valid and binding obligations of each of the respective Companies and (2) the Guarantees will be legally issued and will be the valid and binding obligations of HECO, in each case, subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights, to general equitable principles (whether considered in a proceeding in equity or at law) and to an implied covenant of reasonableness, good faith and fair dealing.
We are members of the Bar of the State of Hawaii and, for purposes of this opinion, do not hold ourselves out as experts of the law of any jurisdiction other than the State of Hawaii. We have relied, with your approval, as to all matters of New York law related to this opinion upon the opinion of Pillsbury Winthrop LLP addressed to us and submitted concurrently herewith as Exhibit 5(c) to the Registration Statement.
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 or will be 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 (other than the Companies) and (iii) that all documents examined by us have been or will be duly authorized, executed and delivered by all parties thereto (other than the Companies).
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.
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G
OODSILL
A
NDERSON
Q
UINN
&
S
TIFEL
A L IMITED L IABILITY L AW P ARTNERSHIP LLP |
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Hawaiian Electric Company, Inc.
Maui Electric Company, Limited
Hawaii Electric Light Company, Inc.
HECO Capital Trust III
December 10, 2003
Page 3
We hereby consent to the filing of this opinion as Exhibit 5(a) to the Registration Statement and to the references 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 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
A Limited Liability Law Partnership LLP
EXHIBIT 5(b)
R ICHARDS , L AYTON & F INGER
A PROFESSIONAL ASSOCIATION
O NE R ODNEY S QUARE
P.O. BOX 551
W ILMINGTON , D ELAWARE 19899
(302) 651-7700
F AX : (302) 651-7701
WWW.RLF.COM
December 10, 2003
Hawaiian Electric Company, Inc.
900 Richards Street
Honolulu, Hawaii 96813
HECO Capital Trust III
c/o The Bank of New York
101 Barclay Street, 8W
New York, New York 10286
| Re: | HECO Capital Trust III |
Ladies and Gentlemen:
We have acted as special Delaware counsel for Hawaiian Electric Company, Inc., a Hawaii corporation (the “Company”), and HECO Capital Trust III, a Delaware statutory 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) | A certified copy of the Certificate of Trust of the Trust, dated as of November 20, 2003 (the “Certificate”), as filed with the office of the Secretary of State of the State of Delaware (the “Secretary of State”) on November 20, 2003; |
| (b) | The Trust Agreement of the Trust, dated as of November 20, 2003, by and among the Company, as Depositor, and the trustees of the Trust named therein; |
| (c) | The Registration Statement (the “Registration Statement”) on Form S-3, including a preliminary prospectus (the “Prospectus”) relating to the 4,000,000 Cumulative Quarterly Income Preferred Securities |
Hawaiian Electric Company, Inc.
HECO Capital Trust III
December 10, 2003
Page 2
| (liquidation preference $25 per preferred security) of the Trust (the “QUIPS”) 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 December 10, 2003; |
| (d) | A form of Amended and Restated Trust Agreement for 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, B, and C thereto) (the “Trust Agreement”), incorporated by reference into the Registration Statement; and |
| (e) | A Certificate of Good Standing for the Trust, dated December 10, 2003, 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 of each party to the documents examined by us under the laws of the jurisdiction governing its creation,
Hawaiian Electric Company, Inc.
HECO Capital Trust III
December 10, 2003
Page 3
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 (other than the Trust), (v) the due authorization, execution and delivery by all parties thereto of all documents examined by us (other than the Trust), (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 statutory trust under the Delaware Statutory Trust Act, 12 Del. C. §3801, et seq.
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.
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
Hawaiian Electric Company, Inc.
HECO Capital Trust III
December 10, 2003
Page 4
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/ R ICHARDS , L AYTON & F INGER , P.A.
BJK/DSG/cac
EXHIBIT 5(c)
[Letterhead of Pillsbury Winthrop LLP]
December 10, 2003
Goodsill Anderson Quinn & Stifel
A Limited Liability Law Partnership LLP
1099 Alakea Street
Honolulu, Hawaii 96813
Ladies and Gentlemen:
Hawaiian Electric Company, Inc., a Hawaii corporation (“ HECO ”), its subsidiaries, Maui Electric Company, Limited, a Hawaii corporation (“ MECO ”), and Hawaii Electric Light Company, Inc., a Hawaii corporation (“ HELCO ” and, together with HECO and MECO, the “ Companies ”), and HECO Capital Trust III, a statutory trust created under the laws of the State of Delaware (the “ Trust ”), have filed with the Securities and Exchange Commission (the “ Commission ”) a Registration Statement on Form S-3 (the “ Registration Statement ”) under the Securities Act of 1933 (the “ Securities Act ”), registering: (i) 4,000,000 Cumulative Quarterly Income Preferred Securities (liquidation preference $25 per preferred security) of the Trust (the “ QUIPS ”), (ii) $100 million aggregate principal amount of Junior Subordinated Deferrable Interest Debentures of the Companies (the “ QUIDS ”) and (iii) HECO’s guarantees with respect to: (a) the QUIPS (the “ Trust Guarantee ”), and (b) the QUIDS of MECO and HELCO (the “ Subsidiary Guarantees ” and, together with the Trust Guarantee, the “ Guarantees ”).
The QUIPS will be issued pursuant to an Amended and Restated Trust Agreement for the Trust among HECO, The Bank of New York, as property trustee, The Bank of New York (Delaware), as Delaware trustee, the administrative trustees named therein and the several holders as defined therein (the “ Trust Agreement ”), the QUIDS and the Subsidiary Guarantees will be issued pursuant to the respective Junior Indentures between the Companies and The Bank of New York, as indenture trustee (the “ Junior Indentures ”), and the Trust Guarantee will be issued pursuant to a Trust Guarantee Agreement between HECO and The Bank of New York, as trust guarantee trustee (the “ Guarantee Agreement ”), in each case in the respective forms filed as exhibits to the Registration Statement.
In connection with the filing of the Registration Statement by the Companies and the Trust, we have reviewed originals (or copies certified or otherwise identified to our satisfaction) of the Registration Statement (including the exhibits thereto), the Articles of Incorporation and Bylaws of the Companies, as in effect on the date hereof, corporate and other documents, records and papers and certificates of public officials.
We are members of the Bar of the State of New York and, for purposes of this opinion, do not hold ourselves out as experts of the laws of any jurisdiction other than the State of New
Goodsill Anderson Quinn & Stifel
December 10, 2003
York. We have relied upon your opinion of even date herewith addressed to HECO and the Trust as to all matters of Hawaii law related to this opinion.
On the basis of such review, when (i) the applicable provisions of the Securities Act, the Trust Indenture Act of 1939, as amended, and the securities or “blue sky” laws of various states shall have been complied with, (ii) appropriate resolutions have been adopted by the Board of Directors of each of the Companies (or a duly appointed committee or representative thereof) authorizing the issuance and sale of the QUIPS, the QUIDS and the Guarantees, as applicable, (iii) the Junior Indentures and the Guarantee Agreement 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 Companies, as applicable, and (iv) the QUIPS, the QUIDS and the Guarantees have been issued and sold in return for the consideration specified therefor upon the terms specified in such resolutions and in the order or orders of the Hawaii Public Utilities Commission or other applicable regulatory authorities, we are of the opinion that (1) the QUIDS will be legally issued and will be the valid and binding obligations of each of the respective Companies and (2) the Guarantees will be legally issued and will be the valid and binding obligations of HECO, in each case, subject to bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws affecting creditors’ rights, to general equitable principles (whether considered in a proceeding in equity or at law) and to an implied covenant of reasonableness, good faith and fair dealing.
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the references to us under the heading “Legal Matters” in the related prospectus. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours,
/s/ Pillsbury Winthrop LLP
2
Exhibit 8
[Letterhead of Goodsill Anderson Quinn & Stifel LLP]
December 10, 2003
Hawaiian Electric Company, Inc.
Maui Electric Company, Limited
Hawaii Electric Light Company, Inc.
900 Richards Street
Honolulu, Hawaii 96813
HECO Capital Trust III
c/o The Bank of New York
101 Barclay Street, 8W
New York, New York 10286
| Re: | HECO Capital Trust III’s issuance and sale of 4,000,000 |
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 (“HECO”), its subsidiaries, Maui Electric Company, Limited, a Hawaii corporation (“MECO”) and Hawaii Electric Light Company, Inc., a Hawaii corporation (“HELCO” and, together with HECO and MECO, the “Companies”), and HECO Capital Trust III, a statutory trust created under the Business Trust Act of the state of Delaware (the “Trust”), in connection with the preparation and filing by the Companies and the Trust with the Securities and Exchange Commission of a Registration Statement on Form S-3 (the “Registration Statement”) 1 under the Securities Act of 1933 with respect to the issuance and sale of (i) 4,000,000 Cumulative Quarterly Income Preferred Securities, liquidation preference $25 per preferred security of the Trust (the “QUIPS”), (ii) $100 million aggregate principal amount of the Companies’ Junior Subordinated Deferrable Interest Debentures (the “QUIDS”), (iii) HECO’s guarantee with respect to the QUIPS (the “Trust Guarantee”), and (iv) HECO’s guarantees of the QUIDS of MECO and HELCO (the “Subsidiary Guarantees”).
| 1 | Capitalized terms used but not defined herein have the meanings ascribed to them in the Registration Statement. |
Hawaiian Electric Company, Inc.
Maui Electric Company, Limited
Hawaii Electric Light Company, Inc.
HECO Capital Trust III
December 10, 2003
Page 2
In rendering our opinions, we have reviewed and relied upon (i) the facts set forth in the Registration Statement, (ii) the Trust Agreement and the forms the Amended and Restated Trust Agreement, the HECO Junior Indenture, the MECO Junior Indenture, the HELCO Junior Indenture, the QUIPS, the QUIDS, the Trust Guarantee and the Expense Agreement, each filed as an exhibit to the Registration Statement, and (iii) certain representations made by officers of the Companies.
On the basis of the foregoing, and assuming that the Trust is duly formed and will be maintained in compliance with the terms of the Amended and Restated Trust Agreement, we hereby confirm our opinions set forth in the Registration Statement under the caption “Certain United States Federal Income Tax Considerations,” subject to the qualifications set forth 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 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.
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Very truly yours, |
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/s/ Goodsill Anderson Quinn & Stifel |
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A Limited Liability Law Partnership LLP |
EXHIBIT 12(a)
HAWAIIAN ELECTRIC COMPANY, INC.
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
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NINE MONTHS ENDED
SEPTEMBER 30, |
YEARS ENDED DECEMBER 31,
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2003
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2002
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2002
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2001
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2000
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1999
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1998
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| (DOLLARS IN THOUSANDS) | ||||||||||||||||||||||||||||
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FIXED CHARGES |
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Total interest charges |
$ | 34,055 | $ | 33,248 | $ | 44,232 | $ | 47,056 | $ | 49,062 | $ | 48,461 | $ | 47,921 | ||||||||||||||
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Interest component of rentals |
625 | 491 | 663 | 728 | 696 | 784 | 730 | |||||||||||||||||||||
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Pretax preferred stock dividend requirements of subsidiaries |
1,094 | 1,080 | 1,434 | 1,433 | 1,438 | 1,479 | 4,081 | |||||||||||||||||||||
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Preferred securities distributions of trust subsidiaries |
5,756 | 5,756 | 7,675 | 7,675 | 7,675 | 7,665 | 4,197 | |||||||||||||||||||||
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TOTAL FIXED CHARGES |
$ | 41,530 | $ | 40,575 | $ | 54,004 | $ | 56,892 | $ | 58,871 | $ | 58,389 | $ | 56,929 | ||||||||||||||
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EARNINGS |
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Income before preferred stock dividends of HECO |
$ | 57,382 | $ | 70,629 | $ | 91,285 | $ | 89,380 | $ | 88,366 | $ | 76,400 | $ | 84,230 | ||||||||||||||
|
Fixed charges, as shown |
41,530 | 40,575 | 54,004 | 56,892 | 58,871 | 58,389 | 56,929 | |||||||||||||||||||||
|
Income taxes (see note below) |
36,777 | 44,196 | 56,658 | 55,416 | 55,375 | 48,047 | 54,572 | |||||||||||||||||||||
|
Allowance for borrowed funds used during construction |
(1,385 | ) | (1,392 | ) | (1,855 | ) | (2,258 | ) | (2,922 | ) | (2,576 | ) | (5,915 | ) | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
EARNINGS AVAILABLE FOR FIXED CHARGES |
$ | 134,304 | $ | 154,008 | $ | 200,092 | $ | 199,430 | $ | 199,690 | $ | 180,260 | $ | 189,816 | ||||||||||||||
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
RATIO OF EARNINGS TO FIXED CHARGES |
3.23 | 3.80 | 3.71 | 3.51 | 3.39 | 3.09 | 3.33 | |||||||||||||||||||||
|
|
|
|
|
|
|
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|
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|
|
|
||||||||
|
NOTE: |
||||||||||||||||||||||||||||
|
Income taxes is comprised of the following: |
||||||||||||||||||||||||||||
|
Income tax expense relating to operating income from regulated activities |
$ | 36,865 | $ | 44,110 | $ | 56,729 | $ | 55,434 | $ | 55,213 | $ | 48,281 | $ | 54,719 | ||||||||||||||
|
Income tax expense (benefit) relating to results from nonregulated activities |
(88 | ) | 86 | (71 | ) | (18 | ) | 162 | (234 | ) | (147 | ) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
| $ | 36,777 | $ | 44,196 | $ | 56,658 | $ | 55,416 | $ | 55,375 | $ | 48,047 | $ | 54,572 | |||||||||||||||
|
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|
||||||||
EXHIBIT 12(b)
HAWAIIAN ELECTRIC COMPANY, INC.
COMPUTATION OF RATIO OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
|
NINE MONTHS ENDED
SEPTEMBER 30, |
YEARS ENDED DECEMBER 31,
|
|||||||||||||||||||||||||||
|
2003
|
2002
|
2002
|
2001
|
2000
|
1999
|
1998
|
||||||||||||||||||||||
| (DOLLARS IN THOUSANDS) | ||||||||||||||||||||||||||||
|
FIXED CHARGES |
||||||||||||||||||||||||||||
|
Total interest charges |
$ | 34,055 | $ | 33,248 | $ | 44,232 | $ | 47,056 | $ | 49,062 | $ | 48,461 | $ | 47,921 | ||||||||||||||
|
Interest component of rentals |
625 | 491 | 663 | 728 | 696 | 784 | 730 | |||||||||||||||||||||
|
Pretax preferred stock dividend requirements |
2,358 | 2,354 | 3,127 | 3,123 | 3,134 | 3,323 | 9,606 | |||||||||||||||||||||
|
Preferred securities distributions of trust subsidiaries |
5,756 | 5,756 | 7,675 | 7,675 | 7,675 | 7,665 | 4,197 | |||||||||||||||||||||
|
|
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|
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|
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|
|
|
||||||||
|
TOTAL FIXED CHARGES AND PREFERRED STOCK DIVIDENDS |
$ | 42,794 | $ | 41,849 | $ | 55,697 | $ | 58,582 | $ | 60,567 | $ | 60,233 | $ | 62,454 | ||||||||||||||
|
|
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|
|
|
|
|
|
||||||||
|
EARNINGS |
||||||||||||||||||||||||||||
|
Net income for common stock |
$ | 56,572 | $ | 69,819 | $ | 90,205 | $ | 88,300 | $ | 87,286 | $ | 75,222 | $ | 80,776 | ||||||||||||||
|
Fixed charges, as shown |
42,794 | 41,849 | 55,697 | 58,582 | 60,567 | 60,233 | 62,454 | |||||||||||||||||||||
|
Income taxes (see note below) |
36,777 | 44,196 | 56,658 | 55,416 | 55,375 | 48,047 | 54,572 | |||||||||||||||||||||
|
Allowance for borrowed funds used during construction |
(1,385 | ) | (1,392 | ) | (1,855 | ) | (2,258 | ) | (2,922 | ) | (2,576 | ) | (5,915 | ) | ||||||||||||||
|
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|
||||||||
|
EARNINGS AVAILABLE FOR COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS |
$ | 134,758 | $ | 154,472 | $ | 200,705 | $ | 200,040 | $ | 200,306 | $ | 180,926 | $ | 191,887 | ||||||||||||||
|
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|
|
||||||||
|
RATIO OF EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS |
3.15 | 3.69 | 3.60 | 3.41 | 3.31 | 3.00 | 3.07 | |||||||||||||||||||||
|
|
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|
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|
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|
||||||||
|
NOTE: |
||||||||||||||||||||||||||||
|
Income taxes is comprised of the following: |
||||||||||||||||||||||||||||
|
Income tax expense relating to operating income from regulated activities |
$ | 36,865 | $ | 44,110 | $ | 56,729 | $ | 55,434 | $ | 55,213 | $ | 48,281 | $ | 54,719 | ||||||||||||||
|
Income tax expense (benefit) relating to results from nonregulated activities |
(88 | ) | 86 | (71 | ) | (18 | ) | 162 | (234 | ) | (147 | ) | ||||||||||||||||
|
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|
|
|
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|
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|
||||||||
| $ | 36,777 | $ | 44,196 | $ | 56,658 | $ | 55,416 | $ | 55,375 | $ | 48,047 | $ | 54,572 | |||||||||||||||
|
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||||||||
Exhibit 23(a)
Independent Auditors’ Consent
To Board of Directors
Hawaiian Electric Company, Inc.:
We consent to the incorporation by reference in the Registration Statement on Form S-3 of Hawaiian Electric Company, Inc., Maui Electric Company, Limited, Hawaii Electric Light Company, Inc., and HECO Capital Trust Ill registering 4,000,000 Cumulative Quarterly Income Preferred Securities, Series 2004, of our report dated January 20, 2003, relating to the consolidated balance sheets and consolidated statements of capitalization of Hawaiian Electric Company, Inc. and subsidiaries as of December 31, 2002 and 2001, 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, 2002, which report is incorporated by reference in the 2002 annual report on Form 10-K of Hawaiian Electric Company, Inc. We also consent to the incorporation by reference of our report dated January 20, 2003, relating to the financial statement schedule of Hawaiian Electric Company, Inc. in the aforementioned 2002 annual report on Form 10-K, which report is included in said Form 10-K and to the reference to our firm under the heading “Experts” in the prospectus.
/s/ KPMG LLP
Honolulu, Hawaii
December 10, 2003
EXHIBIT 24(a)
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS that the undersigned, HAWAIIAN ELECTRIC COMPANY, INC., a Hawaii corporation (“HECO”), and the officers and directors of said corporation whose names are signed hereto, hereby constitute and appoint T. Michael May, Richard A. von Gnechten, Lorie Ann Nagata, David J. Reber and Gregory R. Kim of Honolulu, Hawaii, and each of them, with full power of substitution in the premises (with full power to each of them to act alone), their true and lawful attorneys and agents, and in its and their name, place and stead, to do any and all acts and things and to execute and deliver any and all instruments and documents which said attorneys and agents or any of them may deem necessary or advisable to be done to enable HECO to comply with the Securities Act of 1933, as amended (the “Securities Act”) and with the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any rules, regulations or requirements of the Securities and Exchange Commission in respect thereof and/or to comply with the requirements of any other state regulatory authority, all in connection with the registration under the Securities Act on Form S-3 of up to 4,000,000 of Trust Preferred Securities with a liquidation preference of $25 per Preferred Security to be issued by HECO Capital Trust III, or of up to 2,000,000 of Trust Preferred Securities with a liquidation preference of $25 per Preferred Security to be issued by each of HECO Capital Trust III and HECO Capital Trust IV, for the benefit of the corporation and its subsidiaries, Hawaii Electric Light Company, Inc. (“HELCO”) and Maui Electric Company, Limited (“MECO”), and the related HECO Guarantees and underlying debt securities of HECO, MECO and HELCO, including specifically but without limiting the generality of the foregoing, power and authority to sign the name of Hawaiian Electric Company, Inc., and the names of the undersigned officers and directors thereof, in the capacities indicated below, to a
registration statement (or to two registration statements if HECO Capital Trust IV is to be organized and up to 2,000,000 of its Trust Preferred Securities are to be offered) to be filed with the Securities and Exchange Commission in respect of the aforementioned securities and to any and all amendments (including pre- and post-effective amendments) and supplements thereto (including specifically and without limiting the generality of the foregoing, any amendment or amendments changing the number of Trust Preferred Securities for which registration is being sought) and to any instruments or documents filed as a part of or in connection with said registration statements or amendments or supplements thereto, and each of the undersigned hereby ratifies and confirms all of the aforesaid that said attorneys and agents or any of them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, Hawaiian Electric Company, Inc. has caused this Power of Attorney to be executed in its name by its President and its Financial Vice President and attested by its Secretary, and the undersigned officers and directors of Hawaiian Electric Company, Inc. have hereunto set their hands, as of the 20 th day of June, 2003. This Power of Attorney may be executed in any number of counterparts by the corporation and by any one or more of the officers and directors named below.
|
ATTEST: |
HAWAIIAN ELECTRIC COMPANY, INC. |
|||||||
|
/s/ M OLLY M. E GGED |
By |
/s/ T. M ICHAEL M AY |
||||||
|
Molly M. Egged |
T. Michael May |
|||||||
|
Secretary |
President & Chief Executive Officer |
|||||||
|
By |
/s/ R ICHARD A. VON G NECHTEN |
|||||||
|
Richard A. von Gnechten |
||||||||
|
Financial Vice President |
||||||||
2
|
/s/ T. M ICHAEL M AY |
President & Chief Executive Officer |
|
|
T. Michael May |
||
|
/s/ R ICHARD A. VON G NECHTEN |
Financial Vice President and Principal Financial Officer |
|
|
Richard A. von Gnechten |
||
|
/s/ E RNEST T. S HIRAKI |
Controller and Principal Accounting Officer |
|
|
Ernest T. Shiraki |
||
|
/s/ R OBERT F. C LARKE |
Chairman of the Board of Directors |
|
|
Robert F. Clarke |
||
|
/s/ S HIRLEY J. D ANIEL |
Director |
|
|
Shirley J. Daniel |
||
|
/s/ D IANE J. P LOTTS |
Director |
|
|
Diane J. Plotts |
||
|
/s/ J AMES K. S COTT |
Director |
|
|
James K. Scott |
||
|
/s/ A NNE M. T AKABUKI |
Director |
|
|
Anne M. Takabuki |
||
|
/s/ B ARRY K. T ANIGUCHI |
Director |
|
|
Barry K. Taniguchi |
||
|
/s/ J EFFREY N. W ATANABE |
Director |
|
|
Jeffrey N. Watanabe |
||
3
EXHIBIT 24(c)
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS that the undersigned, MAUI ELECTRIC COMPANY, LIMITED, a Hawaii corporation (“MECO”), and the officers and directors of said corporation whose names are signed hereto, hereby constitute and appoint T. Michael May, Richard A. von Gnechten, Lorie Ann Nagata, David J. Reber and Gregory R. Kim of Honolulu, Hawaii, and each of them, with full power of substitution in the premises (with full power to each of them to act alone), their true and lawful attorneys and agents, and in its and their name, place and stead, to do any and all acts and things and to execute and deliver any and all instruments and documents which said attorneys and agents or any of them may deem necessary or advisable to be done to enable MECO to comply with the Securities Act of 1933, as amended (the “Securities Act”) and with the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any rules, regulations or requirements of the Securities and Exchange Commission in respect thereof and/or to comply with the requirements of any other state regulatory authority, all in connection with the registration under the Securities Act on Form S-3 of up to 4,000,000 of Trust Preferred Securities with a liquidation preference of $25 per Preferred Security to be issued by HECO Capital Trust III, or of up to 2,000,000 of Trust Preferred Securities with a liquidation preference of $25 per Preferred Security to be issued by each of HECO Capital Trust III and HECO Capital Trust IV, for the benefit of MECO and as guaranteed by MECO’s parent company, Hawaiian Electric Company, Inc. (“HECO”), and the related HECO Guarantees and underlying debt securities of HECO, MECO and Hawaii Electric Light Company, Inc., including specifically but without limiting the generality of the foregoing, power and authority to sign the name of Maui Electric Company, Limited, and the names of the undersigned officers and directors thereof, in the capacities indicated below, to a registration
statement (or to two registration statements if HECO Capital Trust IV is to be organized and up to 2,000,000 of its Trust Preferred Securities are to be offered) to be filed with the Securities and Exchange Commission in respect of the aforementioned securities and to any and all amendments (including pre- and post-effective amendments) and supplements thereto (including specifically and without limiting the generality of the foregoing, any amendment or amendments changing the number of Trust Preferred Securities for which registration is being sought) and to any instruments or documents filed as a part of or in connection with said registration statements or amendments or supplements thereto, and each of the undersigned hereby ratifies and confirms all of the aforesaid that said attorneys and agents or any of them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, Maui Electric Company, Limited has caused this Power of Attorney to be executed in its name by its President and its Financial Vice President and attested by its Secretary, and the undersigned officers and directors of Maui Electric Company, Limited have hereunto set their hands, as of the 1 st day of October, 2003. This Power of Attorney may be executed in any number of counterparts by the corporation and by any one or more of the officers and directors named below.
| ATTEST: |
MAUI ELECTRIC COMPANY, LIMITED |
|||
|
/s/ M OLLY M. E GGED Molly M. Egged |
By |
/s/ E DWARD L. R EINHARDT Edward L. Reinhardt |
||
|
Secretary |
President |
|||
|
By |
/s/ R ICHARD A. VON G NECHTEN |
|||
|
Richard A. von Gnechten Financial Vice President |
||||
2
|
/s/ E DWARD L. R EINHARDT Edward L. Reinhardt |
President and Director
|
|||
|
/s/ R ICHARD A. VON G NECHTEN Richard A. von Gnechten |
Financial Vice President
|
|||
|
/s/ T. M ICHAEL M AY T. Michael May |
Chairman of the Board of Directors |
|||
|
/s/ R OBERT F. C LARKE Robert F. Clarke |
Director |
|||
3
EXHIBIT 24(d)
POWER OF ATTORNEY
KNOW ALL PEOPLE BY THESE PRESENTS that the undersigned, HAWAII ELECTRIC LIGHT COMPANY, INC., a Hawaii corporation (“HELCO”), and the officers and directors of said corporation whose names are signed hereto, hereby constitute and appoint T. Michael May, Richard A. von Gnechten, Lorie Ann Nagata, David J. Reber and Gregory R. Kim of Honolulu, Hawaii, and each of them, with full power of substitution in the premises (with full power to each of them to act alone), their true and lawful attorneys and agents, and in its and their name, place and stead, to do any and all acts and things and to execute and deliver any and all instruments and documents which said attorneys and agents or any of them may deem necessary or advisable to be done to enable HELCO to comply with the Securities Act of 1933, as amended (the “Securities Act”) and with the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and any rules, regulations or requirements of the Securities and Exchange Commission in respect thereof and/or to comply with the requirements of any other state regulatory authority, all in connection with the registration under the Securities Act on Form S-3 of up to 4,000,000 of Trust Preferred Securities with a liquidation preference of $25 per Preferred Security to be issued by HECO Capital Trust III, or of up to 2,000,000 of Trust Preferred Securities with a liquidation preference of $25 per Preferred Security to be issued by each of HECO Capital Trust III and HECO Capital Trust IV, for the benefit of HELCO and as guaranteed by HELCO’s parent company, Hawaiian Electric Company, Inc. (“HECO”), and the related HECO Guarantees and underlying debt securities of HECO, HELCO and Maui Electric Company, Limited, including specifically but without limiting the generality of the foregoing, power and authority to sign the name of Hawaii Electric Light Company, Inc., and the names of the undersigned officers and directors thereof, in the capacities indicated below, to a registration
statement (or to two registration statements if HECO Capital Trust IV is to be organized and up to 2,000,000 of its Trust Preferred Securities are to be offered) to be filed with the Securities and Exchange Commission in respect of the aforementioned securities and to any and all amendments (including pre- and post-effective amendments) and supplements thereto (including specifically and without limiting the generality of the foregoing, any amendment or amendments changing the number of Trust Preferred Securities for which registration is being sought) and to any instruments or documents filed as a part of or in connection with said registration statements or amendments or supplements thereto, and each of the undersigned hereby ratifies and confirms all of the aforesaid that said attorneys and agents or any of them shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, Hawaii Electric Light Company, Inc. has caused this Power of Attorney to be executed in its name by its President and its Financial Vice President and attested by its Secretary, and the undersigned officers and directors of Hawaii Electric Light Company, Inc. have hereunto set their hands, as of the 1 st day of October, 2003. This Power of Attorney may be executed in any number of counterparts by the corporation and by any one or more of the officers and directors named below.
|
ATTEST: |
HAWAII ELECTRIC LIGHT COMPANY, INC. |
|||
|
/s/ M OLLY M. E GGED |
By |
/s/ W ARREN H. W. L EE |
||
|
Molly M. Egged |
Warren H. W. Lee |
|||
|
Secretary |
President |
|||
|
By |
/s/ R ICHARD A. VON G NECHTEN |
|||
|
Richard A. von Gnechten |
||||
|
Financial Vice President |
||||
2
|
/s/ W ARREN H. W. L EE Warren H. W. Lee |
President and Director
|
|||
|
/s/ R ICHARD A. VON G NECHTEN Richard A. von Gnechten |
Financial Vice President
|
|||
|
/s/ T. M ICHAEL M AY T. Michael May |
Chairman of the Board of Directors |
|||
|
/s/ R OBERT F. C LARKE Robert F. Clarke |
Director |
|||
3
EXHIBIT 25(a)
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 if not a U.S. national bank) |
(I.R.S. employer identification no.) |
|
| One Wall Street, New York, N.Y. | 10286 | |
| (Address of principal executive offices) | (Zip code) | |
HECO CAPITAL TRUST III
(Exact name of obligor as specified in its charter)
| Delaware | 20-0423831 | |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification no.) |
|
| c/o The Bank of New York | ||
| 101 Barclay Street, 8W | ||
| New York, New York | 10286 | |
| (Address of principal executive offices) | (Zip code) | |
Cumulative Quarterly Income Preferred Securities
(Title of the indenture securities)
| 1. | General information. Furnish the following information as to the Trustee: |
| (a) | Name and address of each examining or supervising authority to which it is subject. |
|
Name |
Address |
|
|
Superintendent of Banks of the State of New York |
2 Rector Street, 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 |
|
| (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 17 C.F.R. 229.10(d).
| 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-
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 25th day of November, 2003.
|
THE BANK OF NEW YORK |
||||
|
By: |
/S/ MARY LAGUMINA |
|||
|
Name: |
MARY LAGUMINA |
|||
|
Title: |
VICE PRESIDENT |
|||
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 2003, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
|
Dollar Amounts In Thousands |
|||
|
ASSETS |
|||
|
Cash and balances due from depository institutions: |
|||
|
Noninterest-bearing balances and currency and coin |
$ | 4,257,371 | |
|
Interest-bearing balances |
6,048,782 | ||
|
Securities: |
|||
|
Held-to-maturity securities |
373,479 | ||
|
Available-for-sale securities |
18,918,169 | ||
|
Federal funds sold in domestic offices |
6,689,000 | ||
|
Securities purchased under agreements to resell |
5,293,789 | ||
|
Loans and lease financing receivables: |
|||
|
Loans and leases held for sale |
616,186 | ||
|
Loans and leases, net of unearned income 38,342,282 |
|||
|
LESS: Allowance for loan and lease losses 819,982 |
|||
|
Loans and leases, net of unearned income and allowance |
37,522,300 | ||
|
Trading Assets |
5,741,193 | ||
|
Premises and fixed assets (including capitalized leases) |
958,273 | ||
|
Other real estate owned |
441 | ||
|
Investments in unconsolidated subsidiaries and associated companies |
257,626 | ||
|
Customers’ liability to this bank on acceptances outstanding |
159,995 | ||
|
Intangible assets |
|||
|
Goodwill |
2,554,921 | ||
|
Other intangible assets |
805,938 | ||
|
Other assets |
6,285,971 | ||
|
|
|
||
|
Total assets |
$ | 96,483,434 | |
|
|
|
||
|
LIABILITIES |
||||||
|
Deposits: |
||||||
|
In domestic offices |
$ | 37,264,787 | ||||
|
Noninterest-bearing |
$ | 15,357,289 | ||||
|
Interest-bearing |
21,907,498 | |||||
|
In foreign offices, Edge and Agreement subsidiaries, and IBFs |
28,018,241 | |||||
|
Noninterest-bearing |
1,026,601 | |||||
|
Interest-bearing |
26,991,640 | |||||
|
Federal funds purchased in domestic offices |
739,736 | |||||
|
Securities sold under agreements to repurchase |
465,594 | |||||
|
Trading liabilities |
2,456,565 | |||||
|
Other borrowed money:
|
8,994,708 | |||||
|
Bank’s liability on acceptances executed and outstanding |
163,277 | |||||
|
Subordinated notes and debentures |
2,400,000 | |||||
|
Other liabilities |
7,446,726 | |||||
|
|
|
|||||
|
Total liabilities |
$ | 87,949,634 | ||||
|
|
|
|||||
|
Minority interest in consolidated subsidiaries |
519,472 | |||||
|
EQUITY CAPITAL |
||||||
|
Perpetual preferred stock and related surplus |
0 | |||||
|
Common stock |
1,135,284 | |||||
|
Surplus |
2,056,273 | |||||
|
Retained earnings |
4,694,161 | |||||
|
Accumulated other comprehensive income |
128,610 | |||||
|
Other equity capital components |
0 | |||||
|
|
|
|||||
|
Total equity capital |
8,014,328 | |||||
|
|
|
|||||
|
Total liabilities minority interest and equity capital |
$ | 96,483,434 | ||||
|
|
|
|||||
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief.
Thomas J. Mastro,
Senior Vice President and Comptroller
We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct.
|
Thomas A. Renyi Gerald L. Hassell Alan R. Griffith |
] |
Directors |
EXHIBIT 25(b)
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 if not a U.S. national bank) |
(I.R.S. employer identification no.) |
|
| One 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 incorporation or organization) |
(I.R.S. employer identification no.) |
|
| 900 Richards Street | ||
| Honolulu, Hawaii | 96813 | |
| (Address of principal executive offices) | (Zip code) | |
Guarantee of Cumulative Quarterly Income Preferred Securities of
HECO CAPITAL TRUST III
(Title of the indenture securities)
| 1. | General information. Furnish the following information as to the Trustee: |
| (a) | Name and address of each examining or supervising authority to which it is subject. |
|
Name |
Address |
|
|
Superintendent of Banks of the State of New York |
2 Rector Street, 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 |
|
| (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 17 C.F.R. 229.10(d).
| 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-
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 25th day of November, 2003.
|
THE BANK OF NEW YORK |
||||
|
By: |
/S/ MARY LAGUMINA |
|||
|
Name: |
MARY LAGUMINA |
|||
|
Title: |
VICE PRESIDENT |
|||
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 2003, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
|
Dollar Amounts In Thousands |
|||
|
ASSETS |
|||
|
Cash and balances due from depository institutions: |
|||
|
Noninterest-bearing balances and currency and coin |
$ | 4,257,371 | |
|
Interest-bearing balances |
6,048,782 | ||
|
Securities: |
|||
|
Held-to-maturity securities |
373,479 | ||
|
Available-for-sale securities |
18,918,169 | ||
|
Federal funds sold in domestic offices |
6,689,000 | ||
|
Securities purchased under agreements to resell |
5,293,789 | ||
|
Loans and lease financing receivables: |
|||
|
Loans and leases held for sale |
616,186 | ||
|
Loans and leases, net of unearned income 38,342,282 |
|||
|
LESS: Allowance for loan and lease losses 819,982 |
|||
|
Loans and leases, net of unearned income and allowance |
37,522,300 | ||
|
Trading Assets |
5,741,193 | ||
|
Premises and fixed assets (including capitalized leases) |
958,273 | ||
|
Other real estate owned |
441 | ||
|
Investments in unconsolidated subsidiaries and associated companies |
257,626 | ||
|
Customers’ liability to this bank on acceptances outstanding |
159,995 | ||
|
Intangible assets |
|||
|
Goodwill |
2,554,921 | ||
|
Other intangible assets |
805,938 | ||
|
Other assets |
6,285,971 | ||
|
|
|
||
|
Total assets |
$ | 96,483,434 | |
|
|
|
||
|
LIABILITIES |
||||||
|
Deposits: |
||||||
|
In domestic offices |
$ | 37,264,787 | ||||
|
Noninterest-bearing |
$ | 15,357,289 | ||||
|
Interest-bearing |
21,907,498 | |||||
|
In foreign offices, Edge and Agreement subsidiaries, and IBFs |
28,018,241 | |||||
|
Noninterest-bearing |
1,026,601 | |||||
|
Interest-bearing |
26,991,640 | |||||
|
Federal funds purchased in domestic offices |
739,736 | |||||
|
Securities sold under agreements to repurchase |
465,594 | |||||
|
Trading liabilities |
2,456,565 | |||||
|
Other borrowed money:
|
8,994,708 | |||||
|
Bank’s liability on acceptances executed and outstanding |
163,277 | |||||
|
Subordinated notes and debentures |
2,400,000 | |||||
|
Other liabilities |
7,446,726 | |||||
|
|
|
|||||
|
Total liabilities |
$ | 87,949,634 | ||||
|
|
|
|||||
|
Minority interest in consolidated subsidiaries |
519,472 | |||||
|
EQUITY CAPITAL |
||||||
|
Perpetual preferred stock and related surplus |
0 | |||||
|
Common stock |
1,135,284 | |||||
|
Surplus |
2,056,273 | |||||
|
Retained earnings |
4,694,161 | |||||
|
Accumulated other comprehensive income |
128,610 | |||||
|
Other equity capital components |
0 | |||||
|
|
|
|||||
|
Total equity capital |
8,014,328 | |||||
|
|
|
|||||
|
Total liabilities minority interest and equity capital |
$ | 96,483,434 | ||||
|
|
|
|||||
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief.
Thomas J. Mastro,
Senior Vice President and Comptroller
We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct.
|
Thomas A. Renyi Gerald L. Hassell Alan R. Griffith |
] |
Directors |
EXHIBIT 25(c)
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 if not a U.S. national bank) |
(I.R.S. employer identification no.) |
|
| One 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 incorporation or organization) |
(I.R.S. employer identification no.) |
|
| 900 Richards Street | ||
| Honolulu, Hawaii | 96813 | |
| (Address of principal executive offices) | (Zip code) | |
Junior Subordinated Deferrable Interest Debentures (“QUIDS”)
(Title of the indenture securities)
| 1. | General information. Furnish the following information as to the Trustee: |
| (a) | Name and address of each examining or supervising authority to which it is subject. |
|
Name |
Address |
|
|
Superintendent of Banks of the State of New York |
2 Rector Street, 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 |
|
| (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 17 C.F.R. 229.10(d).
| 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-
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 25th day of November, 2003.
|
THE BANK OF NEW YORK |
||||
|
By: |
/S/ MARY LAGUMINA |
|||
|
Name: |
MARY LAGUMINA |
|||
|
Title: |
VICE PRESIDENT |
|||
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 2003, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
|
Dollar Amounts In Thousands |
|||
|
ASSETS |
|||
|
Cash and balances due from depository institutions: |
|||
|
Noninterest-bearing balances and currency and coin |
$ | 4,257,371 | |
|
Interest-bearing balances |
6,048,782 | ||
|
Securities: |
|||
|
Held-to-maturity securities |
373,479 | ||
|
Available-for-sale securities |
18,918,169 | ||
|
Federal funds sold in domestic offices |
6,689,000 | ||
|
Securities purchased under agreements to resell |
5,293,789 | ||
|
Loans and lease financing receivables: |
|||
|
Loans and leases held for sale |
616,186 | ||
|
Loans and leases, net of unearned income 38,342,282 |
|||
|
LESS: Allowance for loan and lease losses 819,982 |
|||
|
Loans and leases, net of unearned income and allowance |
37,522,300 | ||
|
Trading Assets |
5,741,193 | ||
|
Premises and fixed assets (including capitalized leases) |
958,273 | ||
|
Other real estate owned |
441 | ||
|
Investments in unconsolidated subsidiaries and associated companies |
257,626 | ||
|
Customers’ liability to this bank on acceptances outstanding |
159,995 | ||
|
Intangible assets |
|||
|
Goodwill |
2,554,921 | ||
|
Other intangible assets |
805,938 | ||
|
Other assets |
6,285,971 | ||
|
|
|
||
|
Total assets |
$ | 96,483,434 | |
|
|
|
||
|
LIABILITIES |
||||||
|
Deposits: |
||||||
|
In domestic offices |
$ | 37,264,787 | ||||
|
Noninterest-bearing |
$ | 15,357,289 | ||||
|
Interest-bearing |
21,907,498 | |||||
|
In foreign offices, Edge and Agreement subsidiaries, and IBFs |
28,018,241 | |||||
|
Noninterest-bearing |
1,026,601 | |||||
|
Interest-bearing |
26,991,640 | |||||
|
Federal funds purchased in domestic offices |
739,736 | |||||
|
Securities sold under agreements to repurchase |
465,594 | |||||
|
Trading liabilities |
2,456,565 | |||||
|
Other borrowed money:
|
8,994,708 | |||||
|
Bank’s liability on acceptances executed and outstanding |
163,277 | |||||
|
Subordinated notes and debentures |
2,400,000 | |||||
|
Other liabilities |
7,446,726 | |||||
|
|
|
|||||
|
Total liabilities |
$ | 87,949,634 | ||||
|
|
|
|||||
|
Minority interest in consolidated subsidiaries |
519,472 | |||||
|
EQUITY CAPITAL |
||||||
|
Perpetual preferred stock and related surplus |
0 | |||||
|
Common stock |
1,135,284 | |||||
|
Surplus |
2,056,273 | |||||
|
Retained earnings |
4,694,161 | |||||
|
Accumulated other comprehensive income |
128,610 | |||||
|
Other equity capital components |
0 | |||||
|
|
|
|||||
|
Total equity capital |
8,014,328 | |||||
|
|
|
|||||
|
Total liabilities minority interest and equity capital |
$ | 96,483,434 | ||||
|
|
|
|||||
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief.
Thomas J. Mastro,
Senior Vice President and Comptroller
We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct.
|
Thomas A. Renyi Gerald L. Hassell Alan R. Griffith |
] |
Directors |
EXHIBIT 25(d)
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 if not a U.S. national bank) |
(I.R.S. employer identification no.) |
|
| One Wall Street, New York, N.Y. | 10286 | |
| (Address of principal executive offices) | (Zip code) | |
MAUI ELECTRIC COMPANY, LIMITED
(Exact name of obligor as specified in its charter)
| Hawaii | 99-0047800 | |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification no.) |
|
| 210 West Kamehameha Avenue | ||
| Kahului, Hawaii | 96732 | |
| (Address of principal executive offices) | (Zip code) | |
Junior Subordinated Deferrable Interest Debentures (“QUIDS”)
(Title of the indenture securities)
| 1. | General information. Furnish the following information as to the Trustee: |
| (a) | Name and address of each examining or supervising authority to which it is subject. |
|
Name |
Address |
|
|
Superintendent of Banks of the State of New York |
2 Rector Street, 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 |
|
| (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 17 C.F.R. 229.10(d).
| 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-
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 25th day of November, 2003.
|
THE BANK OF NEW YORK |
||
|
By: |
/S/ MARY LAGUMINA |
|
|
Name: MARY LAGUMINA |
||
|
Title: VICE PRESIDENT |
||
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 2003, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
|
Dollar Amounts In Thousands |
|||
|
ASSETS |
|||
|
Cash and balances due from depository institutions: |
|||
|
Noninterest-bearing balances and currency and coin |
$ | 4,257,371 | |
|
Interest-bearing balances |
6,048,782 | ||
|
Securities: |
|||
|
Held-to-maturity securities |
373,479 | ||
|
Available-for-sale securities |
18,918,169 | ||
|
Federal funds sold in domestic offices |
6,689,000 | ||
|
Securities purchased under agreements to resell |
5,293,789 | ||
|
Loans and lease financing receivables: |
|||
|
Loans and leases held for sale |
616,186 | ||
|
Loans and leases, net of unearned income 38,342,282 |
|||
|
LESS: Allowance for loan and lease losses 819,982 |
|||
|
Loans and leases, net of unearned income and allowance |
37,522,300 | ||
|
Trading Assets |
5,741,193 | ||
|
Premises and fixed assets (including capitalized leases) |
958,273 | ||
|
Other real estate owned |
441 | ||
|
Investments in unconsolidated subsidiaries and associated companies |
257,626 | ||
|
Customers’ liability to this bank on acceptances outstanding |
159,995 | ||
|
Intangible assets |
|||
|
Goodwill |
2,554,921 | ||
|
Other intangible assets |
805,938 | ||
|
Other assets |
6,285,971 | ||
|
|
|
||
|
Total assets |
$ | 96,483,434 | |
|
|
|
||
|
LIABILITIES |
||||||
|
Deposits: |
||||||
|
In domestic offices |
$ | 37,264,787 | ||||
|
Noninterest-bearing |
$ | 15,357,289 | ||||
|
Interest-bearing |
21,907,498 | |||||
|
In foreign offices, Edge and Agreement subsidiaries, and IBFs |
28,018,241 | |||||
|
Noninterest-bearing |
1,026,601 | |||||
|
Interest-bearing |
26,991,640 | |||||
|
Federal funds purchased in domestic offices |
739,736 | |||||
|
Securities sold under agreements to repurchase |
465,594 | |||||
|
Trading liabilities |
2,456,565 | |||||
|
Other borrowed money:
|
8,994,708 | |||||
|
Bank’s liability on acceptances executed and outstanding |
163,277 | |||||
|
Subordinated notes and debentures |
2,400,000 | |||||
|
Other liabilities |
7,446,726 | |||||
|
|
|
|||||
|
Total liabilities |
$ | 87,949,634 | ||||
|
|
|
|||||
|
Minority interest in consolidated subsidiaries |
519,472 | |||||
|
EQUITY CAPITAL |
||||||
|
Perpetual preferred stock and related surplus |
0 | |||||
|
Common stock |
1,135,284 | |||||
|
Surplus |
2,056,273 | |||||
|
Retained earnings |
4,694,161 | |||||
|
Accumulated other comprehensive income |
128,610 | |||||
|
Other equity capital components |
0 | |||||
|
|
|
|||||
|
Total equity capital |
8,014,328 | |||||
|
|
|
|||||
|
Total liabilities minority interest and equity capital |
$ | 96,483,434 | ||||
|
|
|
|||||
I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief.
Thomas J. Mastro,
Senior Vice President and Comptroller
We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct.
|
Thomas A. Renyi Gerald L. Hassell Alan R. Griffith |
] |
Directors |
EXHIBIT 25(e)
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 if not a U.S. national bank) |
(I.R.S. employer identification no.) |
|
| One Wall Street, New York, N.Y. | 10286 | |
| (Address of principal executive offices) | (Zip code) | |
HAWAII ELECTRIC LIGHT COMPANY, INC.
(Exact name of obligor as specified in its charter)
| Hawaii | 99-0041070 | |
|
(State or other jurisdiction of incorporation or organization) |
(I.R.S. employer identification no.) |
|
| 1200 Kilauea Avenue | ||
| Hilo, Hawaii | 96720 | |
| (Address of principal executive offices) | (Zip code) | |
Junior Subordinated Deferrable Interest Debentures (“QUIDS”)
(Title of the indenture securities)
| 1. | General information. Furnish the following information as to the Trustee: |
| (a) | Name and address of each examining or supervising authority to which it is subject. |
|
Name |
Address |
|
|
Superintendent of Banks of the State of New York |
2 Rector Street, New York, |
|
|
N.Y. 10006, and Albany, N.Y. 12203 |
||
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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 |
|
| (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 17 C.F.R. 229.10(d).
| 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-
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 25th day of November, 2003.
|
THE BANK OF NEW YORK |
||
|
By: |
/S/ MARY LAGUMINA |
|
|
Name: MARY LAGUMINA |
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|
Title: VICE PRESIDENT |
||
EXHIBIT 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of One Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business June 30, 2003, published in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
|
Dollar Amounts In Thousands |
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|
ASSETS |
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|
Cash and balances due from depository institutions: |
|||
|
Noninterest-bearing balances and currency and coin |
$ | 4,257,371 | |
|
Interest-bearing balances |
6,048,782 | ||
|
Securities: |
|||
|
Held-to-maturity securities |
373,479 | ||
|
Available-for-sale securities |
18,918,169 | ||
|
Federal funds sold in domestic offices |
6,689,000 | ||
|
Securities purchased under agreements to resell |
5,293,789 | ||
|
Loans and lease financing receivables: |
|||
|
Loans and leases held for sale |
616,186 | ||
|
Loans and leases, net of unearned income 38,342,282 |
|||
|
LESS: Allowance for loan and lease losses 819,982 |
|||
|
Loans and leases, net of unearned income and allowance |
37,522,300 | ||
|
Trading Assets |
5,741,193 | ||
|
Premises and fixed assets (including capitalized leases) |
958,273 | ||
|
Other real estate owned |
441 | ||
|
Investments in unconsolidated subsidiaries and associated companies |
257,626 | ||
|
Customers’ liability to this bank on acceptances outstanding |
159,995 | ||
|
Intangible assets |
|||
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Goodwill |
2,554,921 | ||
|
Other intangible assets |
805,938 | ||
|
Other assets |
6,285,971 | ||
|
|
|
||
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Total assets |
$ | 96,483,434 | |
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|
|
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LIABILITIES |
||||||
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Deposits: |
||||||
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In domestic offices |
$ | 37,264,787 | ||||
|
Noninterest-bearing |
$ | 15,357,289 | ||||
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Interest-bearing |
21,907,498 | |||||
|
In foreign offices, Edge and Agreement subsidiaries, and IBFs |
28,018,241 | |||||
|
Noninterest-bearing |
1,026,601 | |||||
|
Interest-bearing |
26,991,640 | |||||
|
Federal funds purchased in domestic offices |
739,736 | |||||
|
Securities sold under agreements to repurchase |
465,594 | |||||
|
Trading liabilities |
2,456,565 | |||||
|
Other borrowed money:
|
8,994,708 | |||||
|
Bank’s liability on acceptances executed and outstanding |
163,277 | |||||
|
Subordinated notes and debentures |
2,400,000 | |||||
|
Other liabilities |
7,446,726 | |||||
|
|
|
|||||
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Total liabilities |
$ | 87,949,634 | ||||
|
|
|
|||||
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Minority interest in consolidated subsidiaries |
519,472 | |||||
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EQUITY CAPITAL |
||||||
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Perpetual preferred stock and related surplus |
0 | |||||
|
Common stock |
1,135,284 | |||||
|
Surplus |
2,056,273 | |||||
|
Retained earnings |
4,694,161 | |||||
|
Accumulated other comprehensive income |
128,610 | |||||
|
Other equity capital components |
0 | |||||
|
|
|
|||||
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Total equity capital |
8,014,328 | |||||
|
|
|
|||||
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Total liabilities minority interest and equity capital |
$ | 96,483,434 | ||||
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|
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I, Thomas J. Mastro, Senior Vice President and Comptroller of the above-named bank do hereby declare that this Report of Condition is true and correct to the best of my knowledge and belief.
Thomas J. Mastro,
Senior Vice President and Comptroller
We, the undersigned directors, attest to the correctness of this statement of resources and liabilities. We declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions and is true and correct.
|
Thomas A. Renyi Gerald L. Hassell Alan R. Griffith |
] |
Directors |